Case 1: "Locked
one room"
"Locked one room" used to be a common advertisement in the Straits Times HDB
rentals classifieds in 1998 but rarely seen in 2001. It meant that the Owner will
keep one room locked for his own stay and therefore, he is not subletting the whole HDB
apartment.
If you sublet the whole HDB apartment without official approval, but keep one room locked
as proof that you are still residing in the apartment, you may have breached the
Housing and Development Act and Lease Agreement.
Penalties may be a fine up to $20,000 or repossession of the flat by the
HDB for subletting the entire flat or for renting all but one room without HDB approval.
Between 1997 and August 1999, the HDB repossessed 12 flats and fined 268 others up to
$20,000 for subletting their flats illegally. From 1994 to 1996, it took action
against 579 owners.
The ploy of keeping "one room locked" is a common practice and apparently not a
valid defence, if you can afford lawyers to defend you.
Expatriates who rent HDB apartments must be aware of the need to get the
official approval before parting with their deposits. It is extremely difficult to get
money back, in many cases.
Case study 2.
Handling abusive clients and legal threats
The January - June 1999 period could be considered a booming residential real estate
period. In a rising property market, bank valuers tend to underprice the properties
resulting in some unpleasant incidents for the Sales Agent as Sellers know that properties
have been sold above valuation.
For HDB apartments, the valuation is based on the transaction prices of the previous
months, according to a Straits Times report. Therefore, the market prices are not
reflected in a valuation report when the prices change in a dynamic fluid property market.
This report presents 2 incidents, though uncommon, of Singaporeans looking for cheap and
good properties.
Rookie agents may get emotionally upset by such incidents. Two examples are
illustrated:
Incident 1:
Handling abusive phone calls
"Don't play games with me, you ignorant s.o.b!" shouted an angry telephone
prospective Buyer when he was told that I would call him back 2 hours before going to open
the apartment for him to view. He slammed down the phone before any explanation could be
offered.
There were hundreds of prospective Buyers for this Mount Sinai View house but still all
prospects must be accommodated at reasonable times which will include evenings and
weekends if you want to get the best offer for the Seller and be a successful realtor.
Many prospective Buyers and a few realtors do not keep or cancel appointments when they
can't make it. As an agent, time is a valuable commodity. You get paid on
performance as you don't get a salary unless you work for some big firms.
Time management and qualifying genuine Buyers will be important. If the prospect is
genuine, he would be most happy to be called 2 hours before meeting to ensure that he
would be available.
In all abusive case, do not make comments, count up to ten and be courteous. You will be
be provoked to shout at the abusive telephone caller. |
Incident 2:
Handling legal threats"I am
going to sue you!" shouted a prospective Buyer when he saw the advertisement of
property he had "offered" to buy still be put up by the Asia USA Realtor.
His lawyer had faxed the amendments in the Seller's option to purchase. He said these were
minor amendments. Therefore, since he had engaged a lawyer and would incur legal costs, he
was incensed to see the property being advertised in "Open House".
"Minor" amendments from the prospective Buyer
were as follows:
1. On completion, the Vendor shall execute
in favour of the Purchaser a proper assurance of the said property, such assurance to be
prepared by and at the expense of the Purchaser.
(DIFFICULT FOR THE SELLER TO UNDERSTAND WHAT ASSURANCE IS NEEDED)
2. Notwithstanding completion of the sale and purchase herein, the terms and conditions
herein contain shall remain in full force and effect as between the Vendor and the
Purchaser in so far as the same are not fulfilled and shall not merge in the assurance of
the said property to the Purchaser on completion of the sale and purchase or upon
registration of such assurance.
(THIS CLAUSE REALLY KNOCKED OUT THE SELLER - COULDN'T UNDERSTAND WHAT IT MEANT!).
3. All charges (including retrofitting charges) levied by the Management Corporation (save
and except for the monthly management and sinking fund contributions which shall be
apportioned as outgoing on completion) and payable in one lump sum shall be borne by the
Vendor if the same is imposed, levied and due on or before the date fixed for completion
but if such charges are payable by monthly or other periodic instalments over a period of
time extending beyond the date herein fixed for completion, the same shall be apportioned
so that the Vendor shall be liable to pay the same down to and including the date fixed
for completion after which date they shall be discharged by the Purchaser.
(THIS CLAUSE IS TO MAKE SURE THAT THE SELLER PAYS ADDITIONAL MONIES ASKED IN A LUMP SUM
ASKED BY THE MANAGEMENT CORPORATION BEFORE COMPLETION OF SALE)
4. There shall be a joint inspection of the said property on or before completion.
(CAN THE BUYER BACK OUT IF INSPECTION IS UNSATISFACTORY?).
5. In addition, there were the pencil scribbling on the Seller's Option to purchase with
particular reference to "the balance of the 10% deposit shall be forthwith released
to the Vendor" being struck off by the Buyer's lawyer. All Buyers' lawyer without
fail will replace with "and to hold the same as stakeholders pending completion of
the sale and purchase herein". Therefore, there were major changes.
Some threats would be made personally at the "Open House". We had a case of a
lawyer's father making such threats when the Seller refused to sign the Option to Purchase
unless he was given $10,000 more. The Seller had been to the Open House several times and
since it was Open House every weekend for 3 months, he thought that the house must be
difficult to sell. Actually, in a rising market, it was the changing mind of the Seller
that resulted in this situation. Valuations were not up to date. The Mount Sinai View
terrace house was sold for $1.145 million in March 1999. The valuation was $1.0 million
and $1.11 million would have had closed the deal for the lawyer's father had he agreed to
put up $10,000 more. In the end, the Seller had an extra $45,000 above his $1.1 million
offer.
Do you need a gun or a Chemical Mace spray to protect yourself during "Open
House?" Be cool and do not respond to verbal threats. Just say repeatedly you will
contact the Owner. Also contact your seniors for advice. Know your Law of Contract which
states that there should be at least 3 elements in a legally binding contract. The 3 main
ones are:
1. Offer. The Seller
offers to buy the apartment. He had engaged a lawyer to present his Option to Purchase.
2. Acceptance. The
Buyer has to accept this offer by signing the Option to Purchase.
3. Consideration. The
Seller has to give the 1% of the Purchase Price to the Seller.
Once the Option to Purchase is signed and
handed to the Seller, together with the 1% deposit, the Buyer has usually 2 weeks to
proceed or lose the deposit. The Seller cannot sell his property to anybody.
Obviously, it will be a waste of time and
money for you to advertise or have an "Open House" after the above 3 conditions
are met.
Rookies tend to congratulate themselves when they have a Buyer who has sent in an Option
to Purchase to the Seller. The 3 conditions have not been satisfied yet.
We had a case of a Buyer complaining angrily that he had given the 1% deposit to the Agent
of another company and yet the Agent was still advertising the house for sale.
It is best not to promise the prospective Buyer that you will not advertise and promote
the property just because you have got the 1% and the Buyer's signature on the Option to
Purchase. As long as the Option to Purchase is not signed by both the Buyer
and Seller and exchanged, and the consideration of 1% deposit has not been accepted by the
Seller, do not celebrate.
As for first-time Buyers, you will have to decide yourself as to whether you want many
conditions added to protect your interest. The HDB which controls public housing has a
standard sales and purchase agreement and therefore all have no choice.
For private properties, there is a maze of terms and conditions from various lawyers and
if you don't control the situation in a rising market and make decisions, there is no end
to the number of terms and conditions to "protect your interest".
Operators of agencies to note: It does look good that you are supporting your realtor by
issuing legal threats. But if you have a case, why threaten? |
