Friday, December 9, 2011

My Day In Court

A few months ago, I placed a booking fee for a sub-sale property in KL through an agent. Prior to signing the S&P and paying the balance 10% downpayment, my ever vigilant lawyer asked to see the Deed of Assignment from the seller since the property has yet to gain a strata title. The owner was unable to produce one for weeks. He claimed he never had one despite having taken a loan out from EON Bank to purchase the unit. The agent advised me, in his "years of experience", such a document is not needed to conclude a transaction. That is bad advice. How then would my bank be able to confirm that the seller is indeed the rightful owner of the property without the existence of a title.

So, after ding dong for almost 3 months, I decided to call off the sale. According to the terms of any transaction, I should then be compensated with the same amount of the booking fee since it is the seller's default. But all the agent could do was to refund my booking fee and I am left to take the necessary actions against the seller. So, as far as the agent is concerned, his responsibility ends after returning the booking fee. Before that, he demanded a letter from me stating no liability on his part. I had to give him this letter.

After that, I called the owner and asked him what is the problem. He said he has family issues to deal with, therefore he could not sell the property. I therefore gave him a few more months to settle this and on top of that offered him an even higher price. He said he would get back to me.

After months, and silence, I decided to sue him.

Fortunately, the amount was less than RM5000, so I could take it up in a small claims court. The process is much faster and cheaper. Within a month of lodging the case, we all received a letter from the court. In the 1st sitting, the seller didn't turn up. So, the court set another date 2 weeks later.

After 2 weeks, the seller turned up and decided to settle the case out of court. Basically, if the court case was to be followed and if I received a judgement in my favour, the defendant would have to pay me. If the defendant fails to pay up, I have to fork out an additional RM1500 to "exercise the judgement". This is where the court will do whatever necessary means within the law to get the defendant to pay. So basically, I gave him the RM1500 discount and settled it out of court. He paid in cash and we informed the judge.

So, what have we learnt here?

1. There are too many property agents in Malaysia - they are all competing for business to the extent they fail to place proper checks if the owners or sellers are ready to sell their properties or not

2. Property agents in Malaysia don't really do much but in my case, if I had dealt with the owner directly, I'd probably have lost my booking fee totally. However, I would have used a lawyer to hold the booking fee in trust

3. Don't rush and succumb to pressure - make sure the seller has all the documents to enable the transaction and transfer to be completed within the time set within the S&P

4. Always limit the booking fee to RM5000 or less - if it is more than RM5000, the seller would be pretty confident you won't pursue it because the process outside a Small Claims Court takes much longer and costs more expensive

5. Get a good lawyer, NOT a property agent

15 comments:

johnchew said...

Hi, I want to start by saying that I like your blog very much. My comment is not really a comment but a request for help. You see, I found out that my tenant has tampered with the TNB meter by sticking a chopstick into it. The chopstick has dropped into the meter and I am lost at what to do. Should I inform TNB? Am I liable? Please advice. Thanks.

Toys said...

Another good lesson for me! Thank you very much.

Anonymous said...

Always so much to learn reading yr blog. Thanks so much for always sharing.

sinleong said...

hi John,
Yes, you should immediately report this to TNB.

SL

Haruki said...

sinleong, how much lawyer fees you had to pay your lawyer to get the RM3500?

sinleong said...

Just RM500 which includes registration

Anonymous said...

if the seller bought from the developer and strata title not issue yet, it could be exactly the case you experienced. although some primary sales do have DOA but again to assume 100% do is not correct in real situation. (your lawyer competencies could be in question)

putting blame purely on the agent is not justified by failing to 'make sure' it was a genuine seller or not. there are numerous cases of flip flop sellers keep changing mind, even to the extend after signing SPA!

however i do agree there are many irresponsible agents out there.

Jobless Girl said...

Thanks for sharing. This is good learning lesson to all the investor out there.

Anonymous said...

Thanks SL for sharing. Good lessons to learn.

Andrew said...

Every person who chanted support for your statement does not purchase property regularly.

Lawyers are worse than estate agents!
I've lost more money to lawyers incompetence than estate agents doing poor due diligence.

Your advice on the 5k earnest deposit only works if the property is below 250k!

sinleong said...

Therefore, find a good lawyer and stick to this firm... you only have to deal with 1 party instead of 2 parties, lawyers and estate agents if both turn out to be incompetent.

The RM5k earnest money for property below RM250k is not set in stone. These things are negotiable as with the payment terms and receipt of vacant possession. My advice is to set it below RM5k so that your recourse is less painful in case it ends up messy.

Kent said...

i did hav a same case as your almost 2 yrs ago, my deposit also below 5k. my lawyer js advised me not worth it to sue BUT i still can sue within 6 yrs time. Coz i have no idea about the Small Claims Court at tat moment till i saw ur blog here. Do u know about what my lawyer said abt is correct?

sinleong said...

nothing to lose...just sue!

kent said...

kent said..

2 yrs ago case small claims court will still accept? SCC means i no need to hav lawyer represent me rite? btw thx for advised..

Kacte Ko said...

Hi I need your help, can u give me ur lawyer contact please? Thanks