HDB Considerations in Divorce

The consequences for an HDB flat in the event of a divorce depend on several things. The first matter to consider is whether you and your spouse agree on what should happen to the flat. If not, a court will decide. In this article, we explore some different scenarios and what the courts will take into account, where there is no spousal agreement.

As HDB flats are often part of matrimonial assets in Singapore, couples understandably have many questions about this matter. For example:

  • Must I sell the flat?
  • Is one partner able to keep it?
  • How should proceeds of any sale be split?

If there is agreement between parties as to what happens to an HDB flat

Where both parties agree, they can record the terms that they have agreed on. These terms will be confirmed by the court in a consent order, which is ‘sealed’ by the court and is therefore legally binding on both spouses. This is the least stressful and easiest solution.

Parties have the choice of whether to sell the flat or transfer the shares to one of the parties (as long as that person is eligible to be an HDB flat owner). HDB will need to approve the agreement also.

Agreeing to the flat sale

The parties should sell the flat on the open market, with proceeds being split in pre-agreed amounts. When an HDB flat is sold after a divorce, CPF refunds should be arranged.

Transferring shares to the other spouse

Where one or both spouses is eligible to take ownership of the flat, they may transfer ownership of it with or without cash transfers. In a scenario where there is a mortgage on the HDB property, the loan must be refinanced by the party taking over ownership.

Transferring shares from one spouse to another has many benefits. For example, it can be less disruptive for any children involved, if the spouse who has care and control of them gets to keep the flat. It also means parties can agree terms for the CPF refunds.

If there is no agreement between parties as to what happens to an HDB flat

In the event that the spouses can’t agree on what should happen to the flat, an ancillary hearing must be held so the court can decide what should happen.

The first matter to be decided is whether the flat forms part of the matrimonial property that can be split up when a divorce happens.

Is an HDB flat matrimonial property?

An HDB flat is likely to be classed as matrimonial property, however a spouse cannot automatically regard it as such, simply because they are married; the flat must be classed as matrimonial property for the purposes of the Women’s Charter.

Matrimonial property is defined in section 112 of the Women’s Charter as an asset that is acquired by one or both parties in the course of a marriage.

Matrimonial property can also include assets acquired prior to marriage, provided that:

  • Both parties (or one or more of their children) ordinarily used or enjoyed the asset, whilst cohabiting for the purposes of household, shelter, social purposes or recreation; or
  • One or both parties substantially improved the asset during the marriage.

Where an HDB flat is gifted or inherited by a party before marriage, it will not be classed as matrimonial property. However, the matrimonial asset pool can include the flat if:

  • The flat had become the marital home; or
  • One or both parties had substantially improved it during the marriage.

The circumstances of the case will dictate whether the flat was ordinarily used as the marital home. For instance, if the parties resided only occasionally in the flat which was inherited by one of them, the court is unlikely to define it as matrimonial property. But if the parties lived there for a significant time period as a family in marriage, the court is more likely to say the flat falls within the matrimonial pool.

Where a flat doesn’t fall in this marital asset pool, it will not get divided between the parties.

How will a court divide an HDB flat between parties if it classed as a matrimonial asset?

The court has two options; either it will order that the parties sell the flat with proceeds divided between them, or they will rule that shares in the flat should be transferred to one party.

The court will listen to both parties during an ancillary hearing, and they’ll then rule on division of the matrimonial property. There is no requirement for equal division of marital property; the court will give just and fair portions to each party.

Selling the flat

Following a court order to sell a flat, the court will rule on how sale proceeds should be apportioned. To do this justly and fairly, they’ll consider several things, set out in section 112(2) of the Women’s Charter. The most important ones include:

  • Any obligations or debts that are owed by either spouse, taken on for their mutual benefit or the benefit of children of the marriage.
  • Any agreements concerning ownership or division of marital assets, made before the divorce. These include prenuptial agreements or deeds of separation.
  • How much each party contributed whilst married – for example, monetary contributions, or indirect contributions which improved or maintained the marital assets. It may also include contributions of a non-financial nature for family welfare or help with a spouse’s business or career. Also included would be caring for family members or older relatives, and looking after the home.
  • Needs of the children. Consideration by the court will be given to who should have care and control of the children, to ensure their general welfare.
  • How long the marriage lasted and the living standard the family had before the divorce.
  • The physical and mental abilities of the spouses, and their age.
  • The financial needs of each party after the divorce. Factors the court will consider include the working ability, earning capacity, and actual income that each party is capable of in the future. A court would also consider the financial obligations of each party, and any responsibilities they have going forward.
  • Any time one party enjoyed rent-free occupation in the matrimonial home, which had the effect of excluding the other party.

Transfer to one spouse

A spouse must be eligible to own an HDB flat if the court is to consider transferring ownership of the flat to them.

A party is eligible when:

  • They have care and control of the children, which has created a family ‘nucleus’; or
  • There are no children belonging to the couple but the party is older than 35 years and is eligible under the Single Singapore Citizen Scheme to own an HDB flat. (In other words, they are a citizen of Singapore and the flat was purchased as resale on the open market, without a CPF Housing Grant); or
  • Where the party is less than 35 years old, they can form a family nucleus with their siblings, parents or new spouse, provided the scheme’s eligibility criteria are satisfied.

Based on the party’s sole income, they must be able to refinance the current mortgage loan, and make suitable CPF refunds or cash payments to the other party.

Surrender the flat to the HDB

You may have to surrender the flat to the HDB at current compensation prices, if the Minimum Occupation Period (MOP) has not elapsed. This period is five years for flats that were bought directly from the Housing and Development Board.

However, since the compensation from the HDB is usually less than what you can achieve on the open market, surrendering the flat is the least desirable option. But prior to reaching the MOP, the parties cannot agree to the sale of the flat.

Avoiding surrendering

You can ask the HDB for permission to sell the property, before meeting the MOP requirement, on the open market. Or you may enter a Deed of Separation and wait until the MOP is reached.

In the event that you have to surrender your flat, any outstanding reimbursements or mortgage loans to CPF will be taken out of the compensation. The balance remaining may be apportioned between the parties as set out in the court order.

What the right course of action is for you depends on your personal circumstances. It is advisable to ask an experienced lawyer to explain your options to you, and ensure you use the most suitable option for your situation.

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