Perfection of Charge

Lets discuss on what is perfection of charge.

1. Why do you have to do perfection of charge

2. Who will usually pay for perfection of charge

3. Who do you have to appoint to do perfection of charge

4. What do you have to prepare for perfection of charge

1. Why do you have to do perfection of charge

Perfection of charge is when the bank would like to secure the loan made by the purchaser. Previously without an individual title, a purchaser had to use a deed of assignment as a replacement to a charge as a security to the bank's loan. Once an individual title has been issued, the bank would prefer the security to its loan via a charge to the land title.

In short, a perfection of charge is when the individual title is being charge for the benefit of the financial institution ie bank for the loan made by the purchaser. The charge replaces the deed of assignment as security to the loan.

2. Who will usually pay for perfection of charge

In most cases, it will be the bank paying the fee. However, this depends on the letter of offer initially signed between you and the bank when you agreed to the loan agreement.

The process for this perfection of charge will start on paying the progressive payment. For example, where the title is charged to a bank for bridging loan (a loan given by bank to the developer to fund the cost of developing a house project), the purchaser’s lawyer has to write to the developer for the bank’s redemption statement to state on how much is owing to the bank on account of that title.

The redemption sum is the amount owing by the developer to the bank for that property to be sold to the purchaser. To free that title, the redemption sum must be paid. Moreover, the payment has to come from the purchase price.

Instead of paying it to the developer, the progress payment is paid to the bank who gives bridging loan called as bridging financier.

3. Who do you have to appoint to do perfection of charge

As for this transaction, the bank will be responsible ensure that the title or the ownership is transferred to the bank as a security for the loan. Therefore, when the title is issued, the bank must execute a discharge document (F orm 16N) to discharge their charge over the title.

Hence, at this juncture, the bank’s lawyer is appointed for the registration of transfer. The title and the MOT are forwarded to the bank’s lawyer to enable them to register the charge in favour of the bank.

4. What do you have to prepare for perfection of charge

These are the documents that the purchaser needs to prepare :-

• Copy of identity card (IC) of the Purchaser

• Copy of Deed of Assignment (DOA)

• Copy of Loan/Facility Agreement

• Latest assessment receipt

• Quit rent receipt