Suspensions and Financial Penalties imposed on RESs for Failing to Verify Property Details

30 July 2020

Two real estate salespersons (RESs) failed to take reasonable steps to verify the accuracy of the property details in a transaction.

Suspensions and financial penalties imposed on salespersons for failing to verify property details

July 2020 - 3 min read

In early 2017, a couple appointed Salesperson B to help them find a HDB resale flat that was in the Tiong Bahru area, located on a high floor, and was at least 90 square metres in size.

Meanwhile, sometime in March 2017, a seller appointed Salesperson S to market his HDB flat at Tanglin Halt Road to potential buyers. Prior to advertising the flat for sale on property portal X, Salesperson S retrieved information on the flat’s details through a mobile application provided by another third-party property portal Y, in which the floor area of the flat was listed as 90 square metres.

Salesperson S did not take any steps to verify the accuracy of the information he had retrieved from the mobile application, and proceeded to advertise the flat on property portal X as being 969 square feet in size (which was equivalent to approximately 90.02 square metres) and stated in an accompanying photograph that the flat was 90 square metres. Salesperson S did not conduct a title search under the Singapore Land Authority’s Integrated Land Information Service to verify that the seller was the legal owner of the flat; such a search would have revealed that the actual floor area of the flat was 85 square metres instead.

On 26 March 2017, Salesperson B brought her clients to view the flat as, based on Salesperson S’ advertisement, it appeared to meet her clients’ requirements. On 28 March 2017, her clients visited the flat for a second viewing, and agreed to a price of $768,000 with the seller. The buyers paid the option fee of $1,000 through Salesperson B. The next day, Salesperson B forwarded the Option to Purchase (OTP) to the buyers and arranged for a valuer to carry out the valuation of the flat.

On 1 April 2017, the buyers came across a floor plan of the flat on property portal X that stated the floor area of the flat was 85 square metres. They asked Salesperson B for confirmation that the floor area of the flat was indeed 90 square metres. Without taking any steps to verify the floor area of the flat on her own, Salesperson B affirmed to the buyers that the flat was 90 square metres in size. It was only when her clients forwarded a screenshot of the floor plan that Salesperson B indicated that she would verify the information with Salesperson S.

When approached by Salesperson B, Salesperson S said that the flat was 90 square metres, on the basis that he had retrieved this information from property portal Y but he had not taken any steps to verify the accuracy of this information. Salesperson B then conveyed the information to her clients and said that Salesperson S had retrieved the information from property portal Y.

On 3 April 2017, the valuation conducted on the flat confirmed the floor area to be 85 square metres. At the same time, the buyers also checked with HDB, and were informed that the flat was indeed 85 square metres. The buyers informed Salesperson B, who then requested through Salesperson S that the parties be allowed to renegotiate the purchase price of the flat, or have the seller refund the $1,000 option fee.

The seller agreed to reducing the purchase price by $2,000 but refused to refund the option fee. The buyers, however, were not interested in proceeding with the purchase as the flat was smaller than stated, and they eventually did not exercise the OTP. The option fee was forfeited by the seller.

Both Salesperson B and Salesperson S failed to conduct their work with due diligence by not conducting independent checks to verify the actual size of the flat when facilitating the potential transaction for their respective clients.

Charges

Salesperson S was charged with the following:

Breach of paragraph 4(1) read with 4(2)(a) of the Code of Ethics and Professional Client Care (CEPCC) for failing to conduct a title search to verify the owner of the flat and failing to give a copy of the title search to his client, as required by paragraph 1.7.2 of the Professional Service Manual (PSM).
Breach of paragraph 5(1) of the CEPCC for failing to take reasonable steps to verify the accuracy of the information obtained from a third-party property listing portal about the floor area of the flat.
Breach of paragraph 12(4) of the CEPCC for placing an advertisement that contained inaccurate information, namely that the flat had a floor area of 90 square metres when it was in fact 85 square metres.

Salesperson S pleaded guilty to the second charge and consented to the remaining two charges to be taken into consideration for sentencing purposes. On 21 Jan 2020, CEA’s Disciplinary Committee (DC) sentenced him to a financial penalty of $2,000 and a suspension term of two months.

Meanwhile, Salesperson B was charged with the following:

Breach of paragraph 4(1) read with 4(2)(a) of the CEPCC for failing to conduct a title search to verify the owner of the flat and failing to give a copy of the title search to her clients, as required by paragraph 1.7.2 of the PSM.
Breach of paragraph 5(1) of the CEPCC for failing to take reasonable steps to verify the floor area of the flat and failing to verify the accuracy of the information obtained from Salesperson S as to the floor area of the flat.

Salesperson B pleaded guilty to the second charge and consented to the first charge to be taken into consideration for the purposes of sentencing. On 31 Mar 2020, CEA’s DC sentenced her to a financial penalty of $2,000 and a suspension term of two months.

Industry Perspective

By Mr Tan Hong Boon, Regional Director, Capital Markets, Singapore
Jones Lang LaSalle Property Consultants Pte Ltd

When undertaking an appointment or instruction from a client to sell his property, it is imperative for a salesperson to ascertain the identity of the client vis-à-vis the subject property in the first instance. It is fundamental that a salesperson enters into an agency contract with the right party with the proper ownership and authority to instruct.

In addition, verifying the accuracy of all the relevant information on the subject property for sale is also part and parcel of the important due diligence process a salesperson must carry out prior to any marketing exercise. This is especially so on such important information like the floor area of the property.

The same onus to verify whatever information provided or obtained is accurate must also fall on the salesperson acting for a buyer so as to protect his client’s interest, more so when a specific and important requirement has also been conveyed by the client to the salesperson.

All the above missteps could have been avoided and easily achieved by simply conducting a title search under the Singapore Land Authority’s Integrated Land Information Service.

Both salespersons involved in the above case should not simply rely on third party sources of information and representing it without checking for its accuracy. When in doubt or if asked, the salespersons should take early rectification steps to verify with formal or official sources to correct any mistakes that might be.

These are not only rules or Code of Ethics and Professional Client Care but also part of a set of Standard Operating Procedures of all estate agents that all salespersons must be very well versed with and practise all the time.

Information accurate as at 30 July 2020