Can I get money back if flat sale fails?

Source : Sunday Times - 19 Oct 2008

Q Recently, I exercised an option to purchase and put down a $5,000 deposit to buy a resale three-room HDB flat. I did not appoint an agent, but had agreed to pay the seller’s agent a 1 per cent commission.

Later, I was told by the seller’s agent that the resale application had not been approved by the HDB as the seller had not completed the minimum occupation period of five years.

This was due to a grant the seller had taken when the flat was bought under the Single Singapore Citizen Scheme in 2004. The agent claimed that the seller had earlier told her she had not taken any grant.

What legal recourse do I have against the seller and her agent?

A You have not mentioned whether you have in fact paid the agent her commission. I would assume that you have not, but will deal also with a situation in which you have paid it.

The agent’s commission is usually paid upon legal completion of a sale to ensure that she has done what is necessary under her commission agreement.

But there appear to be cases where agents ask for their commission or introductory fee immediately upon signing the Sale and Purchase Agreement, whether the sale is successful or not.

A lot thus depends on the agreement, whether spoken between the agent and yourself or written in a commission agreement.

If you have not paid the commission, you may not need do so as she did not help you secure the purchase of the new flat, unless you had agreed to pay something for an abortive deal.

If you have paid the commission, you are entitled to get a refund of either all of it, or half of it if you have signed an Agent’s Commission Agreement, which usually provides that the agent still be paid half the agreed commission if the sale is abortive through no fault of the agent.

If you have signed such a commission agreement, you should look at the specific terms governing abortive sales.

You have paid the $5,000 deposit to the flat owner. You are entitled to a refund if the sale does not materialise.

In the case of the flat owner, you have only a claim for damages resulting from this aborted sale.

However, your claim for damages is unlikely to be significant or assessable as the damages payable are what you would have lost out on had the contract been fulfilled as it should have been.

Lim Choi Ming
Partner
KhattarWong

Advice provided in this column is not meant as a substitute for comprehensive professional advice.