SINGAPORE: Real estate agency HSR International Realtors has been fined S$12,500 over its agents' failure to properly advise investors of the risks involved in purchasing properties in Bangkok.
For breaching the Council for Estate Agencies’ (CEA) Practice Guidelines, the agency was also barred from marketing or selling foreign properties for six months, starting Sep 10, CEA said in a media release on Tuesday (Sep 11).
In 2014, two investors each purchased a unit in the Manhattan Park Peninsular project in Bangkok through HSR. They each paid a refundable S$3,000 booking fee and 30 per cent of the purchase price to the developer, Euro-Thai Property. One of the investors paid S$32,000 while the other paid S$20,327.
Before the execution of the Sale and Purchase Agreement a few days later, HSR's property agents were supposed to provide both investors with a written advisory message stating that they must conduct due diligence. This message would highlight the risks involved in buying foreign properties, and that their transactions were subject to foreign laws and to any change in policies and rules in Thailand.
However, HSR's property agents failed to do so. The agents also neglected to explain to the first investor that the Sale and Purchase Agreement did not contain a dispute resolution mechanism or a jurisdiction for the resolution of disputes, as required under CEA's guidelines.
Subsequently, both investors were informed that the developer had abandoned the Manhattan Park Peninsular project and they were offered units in other developments instead. The first investor rejected the offer as he felt that the locations of the replacement units were not ideal. The second investor accepted the offer and paid an additional S$5,000 for 30 per cent of the replacement unit's purchase price.
BE VIGILANT WHEN PURCHASING FOREIGN PROPERTIES: CEA
In its press release, CEA advised potential investors to be wary of the pitfalls involved in foreign property transactions as they can be complex affairs that carry additional risks when compared with local property transactions.
"They should thus exercise due diligence before entering into any agreement to buy foreign properties," CEA said. "In addition, consumers should exercise greater care and be more vigilant when purchasing foreign properties directly from foreign developers or when the intermediaries involved fall under the jurisdiction of another country."
Consumers should also not rely solely on the advice of property agents, CEA said, adding that it has published a guide on buying foreign properties.