SINGAPORE: A Singapore property agency that marketed a US hotel project to an investor has been fined S$7,500, for failing to inform him in writing of the risks involved in buying foreign properties. The US developer was later charged with alleged fraudulent activities.
According to the Council for Estate Agencies (CEA) in a news release on Thursday (Jan 19), Square Yards Singapore and US developer North Dakota Developments had conducted a seminar in Singapore in August 2014 to promote the Transhudson Hotel Parshall project.
The investor bought a unit for US$74,950 (S$106,990) through the Singapore agency. He paid about half of the amount to the US developer in mid-September 2014 for the booking fee, closing fee and balance of the first stage payment. Square Yards received US$3,900 as commission.
Throughout the transaction process, CEA said Square Yards' key executive officer, Shermaine Wai Yin Peng, and her property agents did not provide the investor with any written advisory - as required under the regulations for estate agents - stating the need for due diligence, highlighting the risks involved for foreign property consumers and that the transaction is subject to US laws, policies and rules.
Square Yards also facilitated the sale of two other units developed by North Dakota Developments - one at the Transhudson Hotel project and the other at another project called the Great American Lodge. Altogether, the three investors paid a total of US$112,279.50 to the US developer for the units.
In May 2015, the US Securities and Exchange Commission charged North Dakota Developments for allegedly fraudulently raising more than US$62 million from investors worldwide through the sale of interests in the development of housing projects based in the US, including the Transhudson and the Great American Lodge.
The three investors have not recovered any part of the amounts they paid to North Dakota Developments, CEA said, adding that its disciplinary committee took into consideration charges relating to the other two investors in sentencing Square Yards.
In its news release, CEA advised consumers to exercise due diligence before entering into any agreement to buy foreign properties as they are a big investment.
"Given the complexities and risks involved, consumers should find out and understand pertinent information such as the foreign country’s rules and restrictions on property purchases and ownership, whether the property has obtained approvals from the authorities, taxes payable, pricing and terms and conditions of the purchase, the foreign property market condition, currency exchange risks," it said.
"They should not rely solely on the advice from representatives of the foreign developer."