When co-owners refuse to sell their HDB flats

The sale of a Housing Board flat that has almost doubled in value would normally be a happy affair for its owners, but not so for an elderly woman and her son, who got embroiled in a dispute over it.

They were equal owners of the $700,000 flat in Toa Payoh, but the 90-year-old woman had been living elsewhere with her eldest daughter for the past two decades.

So her son, a 69-year-old retired artist, lived in the flat and had rented out two bedrooms for a total of $1,500 a month, which he used for his living expenses.

All was well until 2023 when the daughter asked the High Court for an order to sell the flat because her mother, who has dementia, needed money for medical and nursing care as her condition was worsening.

The daughter, 71, and also a retiree, had insufficient savings and so told the court that the proceeds from the sale of the flat would come in handy for her mother’s long-term care.

But the son objected to the sale, as it would render him homeless. He argued that he was no longer working, had suffered a stroke, and had no means to move out as he would lose his rental income.

High Court Judge Choo Han Teck noted that the son’s main point was that he would not have sufficient resources for his upkeep if the property were to be sold.

“This, however, must be balanced against the best interests of his ailing and aged mother. She cannot be kept out of the property and have the (son) taking over the benefits of ownership entirely. Nothing can be more inequitable,” the judge said.

So Justice Choo approved the application to sell the flat, noting that it would be the equitable solution in the circumstances.

As the flat was estimated to be worth over $700,000, mother and son would receive lump sums of at least $350,000 each as they were equal owners.

While the son would need to look for a new home, the judge noted that his share of the sale proceeds would allow him to find a suitable new home.

The case highlights the importance of having adequate retirement savings so that you will not face the risk of being asset rich but cash poor in old age. Here are three planning tips that home owners should know.

‘Sell’ but still live in the same flat   

Only HDB flat owners enjoy the privilege of “selling” their units and, yet, still being able to live there. They can do so under the Lease Buyback Scheme, which lets them sell part of their leases back to HDB.

Launched in 2009, the scheme allows owners aged above 65 to supplement their retirement income by retaining lease lengths of between 15 and 35 years (in increments of five years), as long as the remaining lease covers the flat’s youngest owner until the age of 95.

Take the example of two people, both aged 65, who own a flat with 60 years left on the lease. They could sell 30 years of the lease, as the remaining 30 years would be enough to last them through to the age of 95.

As at June 2024, over 12,600 households have benefited from the scheme, with most receiving between $100,000 and $300,000 in proceeds for selling part of their leases back to HDB.

The sale proceeds are used to top up the owners’ CPF Retirement Accounts so they can enjoy monthly payouts for life under the CPF Life national annuity plan. Any balance proceeds after this top-up will be paid to the owners in cash.

Depending on the quantum of the CPF top-up, HDB also provides owners with an additional cash bonus ranging from $7,500 to $30,000.

But in the case cited, the elderly woman would not benefit from the Lease Buyback Scheme because only her son was living in the flat. Moreover, the daughter needed more cash to keep up with her ailing mother’s healthcare expenses.

Share of sale proceeds

When the mother and son bought the flat in 2001, they were listed as joint owners. But the joint ownership was severed in December 2022 and they became equal owners holding 50 per cent each.

This was likely done because the mother probably did not want the son to automatically own the whole flat upon her death, and she wanted to leave her half-share to her beneficiaries.

But such legal ownership tells only half the story in some family disputes, especially if one of the owners claims a bigger share for contributing more to the purchase of the flat.

Despite holding the unit as equal owners, the son claimed he was entitled to about 60 per cent of the sale proceeds because he had contributed more to the purchase, which was funded by the sale of another flat owned by the pair.

However, the loan records showed that in both instances, it was the mother who had repaid the bulk of the mortgage. Moreover, the son did not share the rental proceeds with his mother, an amount that exceeded $400,000 since 2003.

So, instead of nitpicking over who paid more over the last 20 years, a task that would be impossible without proper records, Justice Choo found that it would be appropriate to divide the sale proceeds equally in this case, based on their shares.

Cash is king in old age

Instead of viewing their properties as just another asset that can be cashed out in times of need, some people take things to the extreme and prefer to stay put in their homes, even though they face money problems.

For instance, the owner of a $10 million bungalow featured previously in Invest would rather face mounting cash flow problems in keeping his big house than selling it and buying a luxurious but smaller home at half the price, and still have plenty of cash left to spare.

Similarly, another owner continued to live in her $4 million condominium unit, which had fallen into a decrepit state, because she had no money and had even chalked up over $250,000 in bank loans to fund her living expenses.

If you enjoy living in your home and do not want to consider moving in your old age, you should ensure that you have sufficient savings so you do not have to be forced to downgrade.

An easy option is to plan for a continuous monthly income by using CPF Life, the national annuity plan, as it enables you to get decent payouts without any fuss.

For instance, those turning 55 in 2025 who save $213,000 (the full retirement sum) in their CPF Retirement Accounts stand to receive about $1,730 a month when they hit the age of 65. This sum is more than the $1,500 in room rental income the son in the case featured here had been receiving.

Those with more savings can opt for the enhanced retirement sum of $426,000, which would enable them to get about $3,300 a month.

If a couple plan for the maximum CPF Life payouts for their retirement, they stand to receive over $6,000 in total a month – an income that would go a long way to paying for their most essential expenses, including the occasional home repairs.

Just like having a balanced diet, you need to have a balanced financial plan that is not over-leveraged on property so that you never have to face the risk of not having enough money in your old age.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

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