Problems with
property purchases
19/11/2002 The Star Articles of Law with Bhag Singh
PROPERTY buyers must understand the transaction that they are entering into
and exercise diligence.
Some buyers may find this rather troublesome and may opt
for the more convenient way of signing what is perceived to be a standard agreement
and hope that all will go well. Often it does but when it does not, the headache
starts.
The challenges that the buyer faces are numerous.
A reader asks how he can find out the type of land and the
terms of the lease including the unexpired term as well as the terms of the
lease for facilities such as swimming pool and playground.
The reader goes on to ask whether he can obtain this information
from a government department rather than the developer. The starting point has
to be the developer. Even if the buyer wants to verify the information with
the relevant government department he will need to know the title number and
exact location of the land.
This will have to be obtained from the developer. Once this
information is obtained it can be verified with the appropriate land authorities.
However such verification may not necessarily provide the house buyer with the
correct eventual position.
This is because in some cases the master title of the land,
if the land has not been subdivided, may not necessarily be what the buyer is
going to receive. In some cases the land in the master title may be surrendered
to be realienated and then subdivided. In some cases the realienated land may
not be freehold.
Therefore what is of importance is to examine the Sale and
Purchase Agreement (SPA) to find out what exactly the developer is selling.
In the case of residential accommodation the SPA is already prescribed by law.
However what has to be carefully examined are the parts of the agreement which
deal with specific aspects that have to be completed.
Regarding problems concerning the swimming pool and recreational
facilities being on land that has a shorter lease period than the condominium
block, this is also something that has to be looked out for in the SPA.
It will be clear that all the important things a buyers needs
to know are in the SPA. While the SPA for a residential property is standard,
it does not mean that every clause and term is standard. It is standard in the
sense that there are matters that must be stated in the SPA. It is inevitable
that certain items have to be filled in and these cannot be the same in every
SPA. This is where the potential for difficulties can exist.
Another grievance is the lack of opportunity for the buyer
to read the SPA. Another reader says, “Normally property buyers are not given
time to read the SPA before signing. Can we take our time to read it thoroughly
before signing it?”
If this is true, it is certainly unfair and wrong. A potential
buyer has every right to study the SPA. It is up to the buyers to stand firm
and report such wrongdoings.
However such problems continue to exist because most house
buyers are not bothered to assert their rights.
In most cases the transaction proceeds smoothly and house
buyers can get careless with subsequent deals.
Another problem concerns verbal promises of facilities and
features which are not mentioned in the SPA.
One more reader writes: “If a car park is not included in
the SPA and it’s just a verbal confirmation from the developer, can I include
it in the SPA? If the developer is reluctant to do so, what should I do?”
In such a situation if a car park is not provided when the
project is ready, it is most unlikely that the buyer will have a legal basis
to assert his right This is because if the matter goes to court, a very high
value is placed on the SPA.
Furthermore it is also likely that the developer will deny
knowledge of any such representation being made by their employee.
The employee who made the verbal promise may not be employed
by the developer by the time the matter goes to court. However even if he/she
is still there, it is also possible that he/she may have forgotten what he/she
promised when making the sales presentation. He/she may also choose to deny
having made any such promise.
Finally it is not so much a question of knowing the necessary
terms and conditions that are to be included in the SPA because generally the
terms are standard.
What is important is to look into the parts of the agreement
which have details that can vary.
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