Property Legal Brief: Inheriting a Property, Boon or Bane?

Can an inherited property be sold when the will says "nay," but the living says "yay"? In Donald Tan Boon Teck v. Lum Shih Kai [2023] SGHC 347, the High Court of Singapore was called upon to determine whether the desires of the living could prevail over the will of the deceased.

Background

Donald was named the executor and trustee of his late sister, who died on 22 January 2023. There was another executor and trustee under the will, but that person predeceased the testatrix. Donald was, therefore, the sole executor and trustee of his late sister's estate, which consists of a condo at 79 Farrer Drive (the "Property") and a DBS Bank account. There was an overdraft on the Property, as well as unpaid management fees, sinking funds, and cumulative interest on those fees.

Family meetings were held, and a decision to sell the Property was reached, culminating in an Option to Purchase the Property being issued at $4.45 million in favour of Lum (the "Option"). Lum exercised the Option on 4 August 2023, but his solicitors noticed that the testatrix's name was still listed as the registered proprietor in the title. Lum's solicitors questioned Donald's capacity to issue the Option, and Donald's solicitors provided them with the will.

Lum's solicitors noticed Clause 8 of the will, which imposed a restriction on the sale of the Property. The relevant parts of Clause 8 are reproduced below:

"8. Subject to the payment of all my debts, legacies testamentary, funeral expenses, and estate duty payable upon or by reason of my death and subject to the abovementioned bequests, I devise and bequeath upon trust all my remaining monies, shares, unit trusts, properties movable and immovable whatsoever and wheresoever situate (hereinafter called 'my Estate') to my Trustees to carry out the directions, acts, and conditions following:

(a) to sell, call in, and convert into cash as part of my Estate (except that my Trustees will not sell [the Property] or any of my immovable property wherever situate within the first three years of my demise), with the power to sell all or part thereof and to postpone at their discretion as they shall think fit, if possible, to achieve a profit but without any liability for loss;"

There is a clear three-year moratorium from the date of the testatrix's death during which the Property cannot be sold. There was also a trust to be set up under the will with the sales proceeds of the Property, but this will not be discussed in this article.

The discovery of Clause 8 prompted Lum to ask Donald to obtain a court order sanctioning the sale. An application was subsequently made to the court on the broad ground that, because the estate did not possess any funds to service the outstanding mortgage on the Property and also the debt owed to the management corporation, the only reasonable course of action was to sell the Property to pay off these debts and thereafter set up a fund as per the will.

The Court's decision

The lawyers sought to persuade the Court to sanction the sale based on:

(a) Section 4 of the Conveyancing and Law of Property Act 1886 (2020 Rev Ed);

(b) the court's inherent powers; and

(c) Section 56(1) of the Trustees Act 1967 (2020 Rev Ed).

After hearing arguments from both parties' solicitors, the High Court was unconvinced and refused to sanction the sale. In the final analysis, the parties failed to persuade the court that the will was "of no benefit" to the estate and that it was an overriding consideration of the testatrix to sell the Property for a profit. The High Court, therefore, held that it had neither the jurisdiction nor the power to rewrite the will.

Take-aways

Previous Property Legal Brief articles discussed conflicts among family members due to disagreements related to the last will and testament of the deceased, along with key learning points. For this piece, it is not the author's intention to caution against the inclusion of restrictions or prohibitions on the sale of properties, as there are valid and good reasons for such provisions. Rather, the impact and effect of such provisions must be fully understood and appreciated in order to avoid unintended consequences, such as the present case where the Property could not be sold and debts continue to snowball for the estate with no funds in sight to settle them.

Though it is important to ensure substantive or major provisions in a will are crafted correctly, other points which are equally important to note include:

1. The will must be dated and signed by the maker, and witnessed by at least two adults who are not also beneficiaries, or spouses of beneficiaries under the will.

2. All parties are to be identified clearly, including full name, identification numbers, and address.

3. Appoint at least two executors (who are preferably younger than the maker) in case one of them predecease the maker or is unwilling to serve.

4. Appoint at least two guardians if beneficiaries are too young.

5. Appoint an advisor to advise the executors if the will contains potentially complex arrangements, or diverse asset types.

6. Clearly describe all assets (e.g. immovable property, bank accounts, investments, personal items).

7. Specify clearly the beneficiaries or class of beneficiaries and what each of them will receive.

8. Include a "Residual Clause" to cover any assets not specifically mentioned in the will in order to prevent potential disputes by ensuring all assets are distributed according to the maker's wishes.

It is also important to review and update your will periodically, especially after major life events (e.g. marriage, divorce, birth of children, children attaining age of majority) or update as and when needed to reflect the maker's current wishes.

Last but not least, always seek legal advice to ensure that the will meets all legal requirements and also accurately reflects the maker's wishes for his family.

About the writer

Heng Eam joined PropNex Realty Pte Ltd in March 2021, and is presently the Assistant Director of PropNex's Legal and Compliance Department. A lawyer by training, he was called to the Malaysian Bar in 2005. From 2007, he practiced law in Singapore for several years before being called to the Singapore Bar in 2014. He then served as legal counsel for another real estate agency, from 2015 till 2021. Besides his specialisation in litigation, he also provides legal counsel for corporate regulatory issues such as the Personal Data Protection Act (PDPA), as well as advises clients on employment, property, and landlord and tenant disputes.