Introduction
Purchasing a property with an existing tenant is a common investment strategy in Singapore. However, many buyers overlook the fact that they aren’t just buying real estate—they are also bound by the terms of a legal contract made with an existing tenant.
Upon completion of the sale, the purchaser effectively “steps into the shoes” of the original landlord, inheriting both the rights and obligations of the existing lease.
The Legal Framework: CLPA Sections 10 & 11
The transition of rights is governed primarily by Sections 10 and 11 of the Conveyancing and Law of Property Act 1886 (CLPA). Sections 10 and 11 create privity of estate. This ensures that the benefits and burdens of a lease “run with the land”. The lease remains attached to the title of the property, regardless of who the owner is.
Specifically:
- Section 10: The right to receive rent and the benefit of the tenant’s covenants (promises) transfer to the new owner. This allows the new owner to enforce the tenant’s obligations.
- Section 11: The obligations of the landlord’s covenants also transfer to the new owner. This ensures the new owner is bound by the terms in the tenancy agreement made by the original landlord.
The Personal Obligation to Repay Security Deposit
Under Singapore law, a landlord’s promise to repay the security deposit is a personal obligation of the original landlord.
According to the landmark case Hua Chiao Commercial Bank Ltd v Chiaphua Industries Ltd [1987] 2 W.L.R. 179, PC, this obligation does not automatically transfer by law.
- The Risk: Legally, a tenant could still demand the deposit from the original landlord unless a formal Novation Agreement (a three-way contract) is signed.
- The Solution: For the new owner to be liable (and the old owner released), the debt must be clearly assigned or the contract formally novated.
- A Novation Agreement legally replaces the old landlord with the new owner/new landlord while keeping the original lease terms intact. It transfers all rights and obligations to the new owner, creating a direct contractual relationship (privity of contract). However, be aware that the novation agreement will involve additional legal costs for all parties involved.
Recent Case: Century Housing Services Pte Ltd v Koh Chiep Chong (Xu Jiecong) [2026]
In the recent case Century Housing Services Pte Ltd v Koh Chiep Chong (Xu Jiecong) [2026] SGMC 11, the court clarified the rights of a new owner/new landlord regarding previous breaches of the tenant.
The tenant had sublet and partitioned the premises in contravention of Clause 2(k) of the Tenancy Agreement, which prohibited the tenant from assigning, subletting or parting with possession of the premises without the written consent of the landlord. The tenant claimed that they had the agreement of the previous landlord to operate their business of renting out co living residential premises to individuals. To this end, they also had approval to install removable partitions to accommodate individual tenants.
The Decision:
- Right to Enforce: The Judge ruled that even if the previous landlord had waived compliance with the “no subletting” rule, the new owner/new landlord was entitled to decide whether to continue that waiver or enforce his rights under the tenancy agreement.
- Swift Action: Because the new owner acted quickly after the purchase was completed to address the breaches he discovered during his viewing, it was held that his termination of the tenancy was deemed lawful and appropriate.
Practical Checklist for Buyers
Before you sign the Option to Purchase (OTP), ensure you have conducted the following:
Action: Review the Tenancy & Inventory list
Ensure all the terms in the tenancy agreement are acceptable; you are legally bound by them once the sale is complete.
Action: Request the IRAS Stamp Certificate
Unstamped agreements are inadmissible in court, making it difficult to sue for unpaid rent.
Action: Verify the Occupants
Physically check that the residents match the names on the lease to avoid illegal subletting or illegal occupants.
Action: Check for “Option to Renew” Clause
If the lease has a fixed-rate option to renew clause and market rents have spiked, your potential yield could be significantly capped.
Action: Notice of Assignment
Your solicitors will serve a formal notice to the tenant on completion day to redirect rent to your account and inform the transfer of ownership.
