Housing and insurance loopholes

A friend of mine who works in insurance recently got some certificate enabling him to provide legal consultation on certain matters. He was telling me about how it is possible to exploit certain legal loopholes in the housing and insurance industry. One example he gave was about how a person can own 2 HDB flats at the same time. This is a strategy, he says, that is necessary if one were to inherit a HDB flat from one’s parents when one already has a HDB flat for himself. Otherwise, under prevailing laws in Singapore regarding the ownership of HDB flats, it is necessary for the house owner to sell one of the HDB flat within a period of 6 months.

 

The strategy is to continually apply for extension of the period to hold onto the extra HDB flat. I think I remember him mentioning about how the owner can extend the period for up to 20 years. The application to extend however, requires the applicant to cite reasons for the extension. A good lawyer, he says, would be able to help the applicant extend his application for quite a long time.

Another example was on how a house owner living in a HDB flat can own a private house even if he had not reside in the HDB flat for the requisite 5 years. This, he says, requires the homeowner to incorporate a private limited company to buy the private house under the company’s holding. The incorporation of the company for this purpose can be done for quite a low cost of $11. Next, the owner makes himself the sole shareholder of the company, and appoint himself director of the company. He can vote to allocate rights to the private house on the basis of director’s benefits. The drawback however with this method is that the owner has to pay company taxes.

 

My friend mentioned something about a particular type of insurance that pays out the insured on the simple basis that the insured admits into a hospital for more than a week. He says that this can be exploited by some freeloaders, who check in to a hospital indefinitely after obtaining the insurance. In particular, these people would check into private hospitals which are profit-making, and which would not refuse admission on a needs-based basis. The payout from the insurance would cover the hospital cost, and have leftovers that the insured can keep. The insurance company would however be able to refuse to renew the insurance contract with the insured after the insurance expires at the end of the year.