House buyers unite
29/04/2003 The Star Articles of Law with Bhag Singh
ISSUES relating to the purchase of a house from developers are unlikely to
completely disappear despite the changes made to the law and the various strategies
adopted by the authorities.
Such transactions are based on a contract entered into
between a house buyer and a housing developer. Despite the existence of a
standard agreement many house buyers have found themselves financially hurt
when the project is abandoned. They have paid downpayments to the developer
and borrowed money from the bank and all that they are left holding is a Sale
& Purchase Agreement (SPA).
If the house buyer is entangled with a dishonest or incompetent
housing developer, the only option is to take legal action against the delinquent
party involved and the house buyer is faced with engaging solicitors to pursue
legal action.
Many house buyers at this point of time have exhausted
their financial resources . They are also demoralised by events where the
dream home portrayed through brochures, newspaper advertisements and pamphlets
and the sweet words of the sales staff gradually begins to exist only in the
dream world.
One exasperated reader asks what remedy can there be for
such a house buyer. Is there any way out or should such a house buyer just
accept what has happened as a matter of destiny?
All I can say in response to this is that not all is always
completely lost. Whilst in some rare cases that may be the only option that
is available, there are also remedies available to get what the house buyer
bargained for and in other cases to minimise the loss.
The basic problem lies in the relative strength of the
parties involved in the transaction. The individual house buyer is in a weak
situation compared to the housing developer which is a corporate entity.
The situation is aggravated by the fact that the housing
developer has the help of consultants and experts whose services are indirectly
if not directly eventually paid for by the house buyer but whose loyalties
are with the developer.
This places the house buyer in an even more disadvantaged
position. Even at the very beginning when the house buyer signs the SPA through
solicitors and pays their fees, their loyalties may not be towards the house
buyer.
In many cases the solicitors get to do conveyancing work
because of their links to the developer. These links and loyalties are further
strengthened by the volume of work generated and expectation of further work.
At the same time house buyers are persuaded sometimes gently
and on other occasions not so gently to make use of these solicitors for reasons
of convenience and by offers of something or other being “free” though it
is not always clear what is free.
Many house buyers are inclined to go along. After all,
they feel that they are protected and since the lawyers claim to act for them
these lawyers would help them when a problem arises.
When things do go wrong and the buyer approaches the solicitors
for advice with hope of getting justice, the solicitors are often reluctant
to advise and may even discourage the buyers from taking any legal action
against the developer.
This further demoralises the buyer. The situation arises
because the solicitors have only acted for the SPA and related transfers and
at that point of time have committed themselves to nothing more. The solicitors
do not tell the client that they will act no further especially if there are
any defaults on the part of the developer.
Legally they do not have to do so because they have been
engaged for the specific job to be done. Whether morally they should do so
is a matter for the lawyers involved and public to make their own judgement.
Perhaps some solicitors in such a situation are inclined to hope that all
will be well in the end and therefore the less said about unpleasant possibilities
the better for everyone.
The only way out of this is of course for buyers to become
more aware of the transaction that they are entering into at the very outset
and when problems arise, to unite to increase their strength and become more
potent to enforce their rights.
The need to unite has many benefits. When house buyers
unite they can pool their financial resources to aggressively pursue the matter.
In this way they can engage advisers as well as solicitors to claim their
rights against the often mighty developer.
There are many such consultants and solicitors who are
prepared to help unfortunate house buyers at reasonable cost.
Furthermore house buyers acting in a group are more likely
to have an impact in terms of publicity and the developer will also have to
contend with the voice of many buyers.
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