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Ethics matters

To further raise the standing of the industry, property professionals must always conduct their services professionally and ethically.

When you are handling property transactions for your clients, always remember to act ethically and never take illegal short cuts. Ultimately, the long arm of the law is bound to catch errant agents.

An example is how CEA’s Disciplinary Committee found two property agents from Propnex Realty guilty of breaching the Code of Ethics and Professional Client Care (CEPCC).

Peh Hiong Liat Albert and Foo Say Jiam Norman were sentenced to a financial penalty of $1,800 and $1,000 respectively and were both suspended for three weeks in a sham Option to Purchase (OTP) case.

In March 2016, a homeowner engaged Peh to help him sell his HDB flat. However, after checking with HDB, Peh’s client found out that his flat, along with most of those in his cluster, would only fulfil the minimum occupancy period in mid-May 2016.

Sometime early April, the client asked Peh about the value of his flat as he did not want to price it below market value. Peh told his client that he was uncertain about the valuation of the unit as there were no recent resale transactions from the cluster.

Peh then suggested that his client approach a friend to pose as an interested buyer to enter into an OTP so as to apply for a valuation report from HDB. However, the owner could not find any friend to do so. Later, Peh suggested for Foo to pose as the buyer and Foo agreed after some hesitation.

Peh proceeded to draw up an OTP in respect of his client’s unit, stating the purchase price as $999,999 and the option fee as $50. Peh did not go through the HDB resale checklist with his client but got the client and his wife to sign the OTP as sellers. Thereafter, Foo submitted the valuation request to HDB.

In mid-April, a valuer inspected Peh’s client’s unit. It then came to HDB’s attention that the purchase price in the OTP appeared exceptionally high while the option fee at $50 was very low.

After conducting further checks, HDB discovered that neither buyer nor seller submitted the resale checklist. HDB also found out that the unit was not eligible for sale until 19 May 2016, and that the buyer was a property agent. HDB then informed Foo that it would not release the valuation report and referred the case to CEA.

CEA’s investigations revealed that Peh had drawn up a sham OTP with the sole purpose of getting a valuation report from HDB. The client and Foo had no intention to enter into any legal transaction.

Peh had breached the CEPCC by inducing Foo to pose as the buyer in a sham OTP in respect of a HDB property so that he could apply for a valuation report for the property.

CEA’s Disciplinary Committee took another two breaches into consideration when sentencing Peh – attempting to induce his client to engage in the unethical conduct of having his friend pose as the buyer in a sham OTP, and getting his clients as sellers on the sham OTP.

Separately, the Disciplinary Committee found Foo guilty of breaching the CEPCC when he posed as a buyer for the sale of a HDB property in the sham OTP, bringing disrepute to the estate agency industry.

Here are some tips on what you should do if your client is keen to sell a HDB flat that has yet to reach the minimum occupation period:

  • Advise your client that he is not allowed to sell his flat in the open market if he has yet to fulfil the minimum occupation period.
  • To get an indication of the market value of the flat by
    • Using HDB’s Map Services to find out the recent transacted prices of similar flat types that have been sold in the vicinity. HDB publishes daily prices of resale transactions as soon as they are registered
    • Referring to historical data by HDB’s resale statistics to have a better gauge of the HDB resale market movement and median resale prices
    • Using free valuation tools that are available online
  • To get the actual valuation report from HDB, advise your clients that only genuine buyers or sellers can submit a request for valuation after the sellers have granted the buyers an OTP.