Paper 1 · Landlord & Tenant Law · 9 min read
Lease vs Licence in Singapore (and a Mortgagee's Power of Sale)
Practise this section (115 questions) → · 2.3 Landlord and tenant law, in sets of about 30
Must-know for the exam
- A lease grants exclusive possession for a term at a rent and is an interest in land that can bind third parties; a licence binds only the person who granted it.
- Exclusive possession is the decisive hallmark; courts apply substance over form (Street v Mountford), so a document labelled 'licence' granting exclusive possession is a lease.
- A lease exceeding 7 years is registered (LTA s 87(1)), and an option to renew counts towards the 7 years (s 87(3)(a)).
- A tenant in occupation under a tenancy of 7 years or less, options included, binds a new registered owner without a caveat (LTA s 46(1)(h)).
- Singapore implies no 'consent not unreasonably withheld' rule; CLPA s 17 only bars a fine for consent unless the lease provides for one.
- Lease duty is 0.4% of total rent for up to 4 years, 0.4% of 4 times the AAR beyond, and exempt where AAR is $1,000 or less (IRAS, 1 Oct 2026).
- A tenancy must be stamped within 14 days of signing (if signed abroad, 30 days from first receipt in Singapore); an unstamped agreement is inadmissible in court until stamped.
- A registered mortgage does not transfer the land: it has effect as a security only (LTA s 68(3)).
- The power of sale needs no court order once triggered, for example 3 months' default after a notice demanding payment (CLPA s 25).
- Sale proceeds go to costs, the selling bank's debt, later mortgages, then the owner (LTA s 74(1)); a shortfall stays the borrower's debt.
On this page · 10 sections
This Paper 1 day covers three things examiners love: the lease-versus-licence line, when a tenancy binds a buyer, and what a lender can do when a borrower defaults. The label on a document decides none of them.
Lease vs licence
A lease (tenancy) grants exclusive possession for a term at a rent — it is an interest in land that can bind third parties. A licence is mere permission to be on the property; it creates no proprietary interest and is personal between the parties.
- Exclusive possession — the decisive hallmark of a lease (the right to exclude others, even the owner).
- Certainty of term — a defined or ascertainable duration.
- Rent — usual, though not strictly essential.
Courts apply substance over form — if the occupier has exclusive possession for a term, it is a lease however the document is labelled. Genuine exceptions (a lodger receiving services, a family/charitable arrangement) lack true exclusive possession and remain licences.
| Lease (tenancy) | Licence | |
|---|---|---|
| Nature | An interest in land | A personal permission, enforceable only as a contract between the parties |
| Binds a buyer of the property? | Yes, if registered or within the short-tenancy protection below | No: it binds only the person who granted it |
| Occupier can sue a trespasser? | Yes, in their own name | No; the owner must |
| Death of landlord or tenant | The lease continues and passes to the estate | Usually ends, being personal |
| Stamp duty | Lease duty payable | Generally none if it is truly a licence (IRAS, Renting a property, read 1 Oct 2026) |
Types of tenancy & registration
- Fixed-term (e.g. 2 years), periodic (rolls month-to-month), tenancy at will, tenancy at sufferance.
- Registration: a lease of registered land exceeding 7 years is made by an instrument of lease and registered (Land Titles Act 1993 s 87(1), current at 1 Oct 2026). An option to renew counts: 6 years plus a 3-year option is 9 years, so it is registrable (s 87(3)(a)).
- Short tenancies bind a buyer anyway. A new registered owner takes subject to the rights of a tenant in occupation under a tenancy of 7 years or less, options included (s 46(1)(h)). A longer lease left unregistered and uncaveated does not bind the buyer.
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Quick self-check · 5 questions
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What is the decisive hallmark that makes an arrangement a lease rather than a licence?Show answer
Exclusive possession for a term. Courts look at substance over form, so a document labelled 'licence' that grants exclusive possession for a term is a lease (Street v Mountford).
A tenancy is for 6 years with a 3-year option to renew. Must it be registered to bind a buyer?Show answer
Yes. The option counts, making the term 9 years, and a lease of registered land exceeding 7 years is registered (LTA s 87). Only a tenant in occupation under a tenancy of 7 years or less binds a buyer unregistered (s 46(1)(h)).
How is stamp duty calculated on a lease of up to 4 years, and when is it due?Show answer
0.4% of the total rent, usually paid by the tenant within 14 days of signing in Singapore. Leases over 4 years use 0.4% of 4 times the average annual rent; an AAR of $1,000 or less is exempt.
Does a bank need a court order to exercise its power of sale, and what triggers it?Show answer
No court order. A trigger is a notice demanding payment followed by 3 months' default, interest 1 month in arrears, or breach of another mortgage term (CLPA s 25, applied by LTA s 69).
A bank sells under its power of sale for $700,000 on an $800,000 loan. What happens to the shortfall, and to any surplus?Show answer
The borrower still owes the ~$100,000 shortfall. A surplus never goes to the bank: after costs and later mortgages in priority order, the residue goes to the borrower (LTA s 74(1)).
Common questions
- What is the difference between a lease and a licence?
- A lease grants exclusive possession for a term and is an interest in land; a licence is only permission to use a space, with no exclusive possession. Courts look at substance, not the document's title.
- Does a bank need a court order to sell a mortgaged property on default?
- Generally no. The power of sale is exercisable without a court order once a statutory trigger is met, such as 3 months' default after a notice demanding payment (Conveyancing and Law of Property Act s 25). But it must act in good faith and take reasonable care to obtain the property's true market value, and any shortfall after sale remains the borrower's debt.
- Does an existing tenancy bind someone who buys the property?
- Only a short one automatically. A tenant in occupation under a tenancy of 7 years or less, counting any option to renew, binds a new registered owner without a caveat (Land Titles Act s 46(1)(h)). A longer lease binds a buyer only if it is registered, or protected by a caveat until registration. A licence never binds a buyer.
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