How the law prevents ‘ineligible people’ from staking claims to HDB flats

Claiming a stake in an HDB property is a far trickier proposition than in the private real estate market, as some have discovered to their cost.

Those termed in law as “ineligible people” cannot hold a share in an HDB unit, such as by asking someone else to buy the property on their behalf.

The Housing and Development Act specifically deems “trusts”, or arrangements to hold assets for another person’s benefit, as “null and void”.

This is because HDB flats are considered protected assets and ineligible owners – non-residents or those who already own residential property – cannot benefit from a scheme designed to provide affordable housing.

Courts in recent years have cited the law to deny some people the chance to hold shares in their relatives’ HDB flats because they either did not fulfil the ownership requirements or they already had their own homes.

But in an unusual case, a man tried to use the same law to prevent his five siblings from having a share in an HDB shophouse that was registered in his sole name.

This family used to own farms in Yio Chu Kang and when the land was acquired by the Government, they bought the shophouse and used it for a family business. The property was registered in one name but they all knew that it was meant for everyone’s retirement.

All was well until the parents died and the man claimed he was the sole owner of the shophouse. The dispute eventually went to the High Court, which found that the HDB law did not apply to the siblings as all of them were eligible to be named as owners if they had chosen to do so.

The Court of Appeal upheld the decision, ruling that all six siblings were eligible to share the HDB shophouse because that special law is not aimed at barring deserving relatives from having stakes in their families’ assets.

The court concluded that Parliament’s intention in passing that special law was meant to prevent ineligible persons from circumventing regulatory restrictions imposed by the HDB in acquiring property. 

As the siblings’ had a “common intention” to share the shophouse equally, the property was sold so that they could share the proceeds equally.

Law professor Tang Hang Wu noted in his recent research paper that the law was introduced together with changes relating to moneylenders and procedures on property claims. Debate in Parliament then focused on the issue of moneylenders staking claims to a debtor’s HDB flat.

So the change was likely aimed at stopping ineligible people from staking claims to HDB flats because there was no mention that existing court cases were incorrect, he added.

“Instead, the amendments may be seen as Parliament ‘tidying up’ the provision without intending to change the interpretation of the courts. Otherwise, if a change was intended but not articulated, this would constitute lawmaking by stealth,” Prof Tang noted.

For example, the correct usage of the law was seen in a dispute involving a three-way claim on a divorcing couple’s HDB flat.

The mother of the husband claimed that as an occupier of the flat, she owned a 50 per cent interest in it.

But the court found that the mother was no longer eligible to hold any beneficial interest in her son’s flat because she was the joint owner of another HDB flat. So the HDB law prevented her from being entitled to any interest in her son’s flat by way of a constructive trust.

What this means is that the law will stop ineligible people from claiming a share in HDB assets but will not prevent rightful claimants, such as the siblings in the shophouse case, from having stakes in their family’s property.

Prof Tang noted that if lawmakers had wanted to stop all unnamed owners from making claims on HDB real estate, such moves should be debated and considered in Parliament.

“There is simply no trace of such a debate. Therefore, it is suggested that it could not be Parliament’s intention to deprive eligible owners of accrued property rights,” he said.

Tan Ooi Boon is the Invest Editor of The Straits Times

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

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