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Check before marketing foreign properties

If you are marketing or facilitating the sale of foreign property in Singapore, ensure that you adhere to the Practice Guidelines for estate agents and salespersons marketing foreign properties.

Before you represent the foreign developer or property agency in marketing the project, you should conduct due diligence on the following:

  • Foreign developer – Ensure that it has good financial standing and a proven track record.
  • Foreign property agency – Ensure that it is reliable and has a good track record.
  • Property – Check the property details such as the land title, tenure, location, features, and amenities. Ensure you have a good knowledge and understanding of the property and its surroundings.
  • Claims related to the property – Confirm the rate of return, rental returns, or yields, and ask for evidence to substantiate these claims.

If you are engaging third parties to do due diligence, ensure they are suitably qualified and are aware of what they should check. You should also review the results that they provide.

Before you close the transaction, remember to give buyers a written advisory message drawing their attention to the risks involved in purchasing foreign properties.

If your agency or the foreign developer has made a commitment to provide regular updates on the progress of the project construction to the buyer of the foreign property, such commitment should be stated in the written advisory message.

Read the other guidelines that you have to abide by when marketing foreign properties.

You can also get your clients to try out this fun quiz before they purchase foreign properties.

Case Study 1

An investor had purchased a property in North Dakota, United States at US$74,950 through Square Yards Singapore Pte Ltd. He made partial payment of US$33,982.50 to the US developer in 2014 but was unable to recover the sum after the developer was charged for alleged fraudulent activities.

CEA’s Disciplinary Committee sentenced Square Yards to a financial penalty of S$7,500 for one charge of failing to provide a written advisory message to an investor to draw his attention to the risks involved in purchasing foreign properties.

The Committee also imposed a condition to Square Yards’ licence that it is not to market or transact in any foreign property for six months with effect from 1 March 2017.

What Square Yards should have done:

Provide a written advisory message to their clients on the following:

  • They must conduct due diligence;
  • That risks are involved for foreign property purchases; and
  • That the transaction is subject to foreign laws and to any changes in policies and rules in the country where the property is located.

Case Study 2

SQFT Global Properties Singapore Pte Ltd marketed Albany Heights Villas, a property in Auckland, New Zealand.

Paleenia Wong Mui Wah, who was a property agent with SQFT then, misrepresented to an investor that the NZ$65,000 to be paid by the investor to purchase a unit in Albany Heights Villas would be kept safe in a law practice’s trust account for the construction of Albany Heights Villas, and that the developer, Albany Heights Villa Ltd, would not be able to use the money in the trust account for other purposes.

The representation turned out to be false as the developer took money from the trust account without any construction having started on Albany Heights Villas. The investor has not been able to recover the money. Wong had thereby failed to act reasonably towards the investor in the sale and marketing of Albany Heights Villas.

CEA’s Disciplinary Committee sentenced SQFT Global Properties Singapore Pte Ltd to a financial penalty of S$10,000 for one count of failing to supervise Wong regarding the conduct of her estate agency work for the sale and marketing of Albany Heights Villas, a property in Auckland, New Zealand. The Disciplinary Committee also sentenced Wong to a financial penalty of S$6,000.

What SQFT and Wong should have done:

  • SQFT and Wong should have conducted proper due diligence checks on the ANZ account which would uncover the true nature of the ANZ account that there was no restriction on the withdrawal of funds from the account by Albany Heights Villa Ltd.
  • SQFT should have supervised Wong to ensure that she conducted her estate agency work in a professional and reasonable manner.