Financial penalty and suspension for property agent who provided clients with wrong details on property type and size
CEA’s Disciplinary Committee imposed on a property agent a total financial penalty of $6,000 and a suspension of four months for failing to conduct her business with due diligence and care.
The agent’s clients engaged her services in September 2014 to help them purchase an Executive Maisonette in the western region of Singapore.
The agent saw an online listing for a Model A Maisonette, which had an area of 137 square metres, and arranged for her clients to view the unit. She informed them that it was an Executive Maisonette with a floor area of 148 square meters, and also referred them to the HDB’s website for past resale transaction prices of Executive Maisonettes to do a comparative pricing. When asked by her clients on the difference between the maisonette types during other viewings, the agent claimed there was not much difference and showed them an excerpt from a website to support her claim.
After conducting their own searches on the HDB’s website for past resale transaction prices of Executive Maisonettes in the same area, the buyers increased their offer from $480,000 to $495,000 for the Model A Maisonette unit they were interested in buying.
In October 2014, the agent informed her clients that another interested buyer had made a verbal offer of $515,000 for the unit, and later told them that the asking price for Executive Maisonettes was between $570,000 and $600,000. The agent also told her clients, whose budget was $520,000, that the prices of such units would unlikely decrease as they were scarce in quantity. Eventually, the sellers accepted the buyers’ offer to purchase the unit at $520,000, and an Option to Purchase (OTP) was granted in November 2014.
The buyers then commissioned a valuation report on the unit. The report stated that the unit was a Model A Maisonette with a floor area of 137 square metres, and had a market value of $450,000. Despite receiving the valuation report, the agent did not realise her error on the property type of the unit and did not alert her clients to this.
When her clients contacted her to ask about the difference in unit type and floor area, the agent claimed that the size of the unit in the valuation report was not inclusive of wall thickness. She also claimed that the market value was due to the government wanting buyers to pay more for the downpayment of properties due to a high incidence of default. The buyers thus continued to believe that they were purchasing an Executive Maisonette and that they had offered a fair price for the property. On this basis, they exercised the OTP.
The completion of the sale took place in March 2015. It was only in August 2015 that the buyers realised that the unit they had purchased was in a fact a Model A Maisonette and not an Executive Maisonette.
The agent only learnt about her mistake at this time as well. Throughout the transaction, she did not know the exact difference between both types of maisonette units and did not verify basic information about the unit that her clients were interested in buying. CEA’s investigations revealed that the agent had also failed to obtain a title search for the unit to verify the legal owner of the property and give a copy of the title search to her clients when advising them on their proposed purchase.
Model A Maisonettes are typically smaller in size and lower in market value than an Executive Maisonette. The last resale transaction price for a Model A Maisonette in the same area was only $435,000. Had the buyers known that the unit was a Model A Maisonette, they would have based their offer price on a different set of past resale transaction figures. Instead, they paid a price that was much higher than the unit’s market value, on the belief that it was a fair price for an Executive Maisonette.
The agent was thus charged for breaching the Code of Ethics and Professional Client Care for the following misconduct:
- Failing to acquire and verify the property type and floor area of the unit, in breach of paragraph 1.7.3 of the Professional Service Manual.
- Failing to ensure that comparable properties were used to advise her clients in their purchase of the unit, in breach of paragraph 2.1.5 of the Professional Service Manual.
- Failing to properly advise her clients on the type of property and floor area of the unit.
- Failing to procure a title search for the unit and provide a copy to her clients, in breach of paragraph 1.7.2 of the Professional Service Manual.
On 2 January 2019, CEA’s Disciplinary Committee (DC) found the agent guilty of all four charges and sentenced her to a total fine of $6,000 and a four-month suspension. She filed an appeal to the Appeals Board seeking a dismissal or amendment of charge 1, a dismissal of charge 2, as well as lower sentences for charges 3 and 4. In August 2019, the Appeals Board upheld the convictions and sentences meted by the DC and dismissed the agent’s appeal entirely.
Expert view on the case
By Mr Goh Heng Hoon, member of CEA’s Disciplinary Panel
This case surfaces several issues pertaining to the failure of the property agent in complying with various parts of the Professional Service Manual.
Ascertaining the ownership and current basic information of the property and conveying accurate information to their clients are strict duties that agents must carry out. In this aspect, property agencies can establish relevant Standard Operating Procedures (SOPs) for conducting title searches and confirming of property details that property agents should follow when facilitating property transactions. SOPs will better guide agents who are not familiar with the requirements when transacting certain property types, e.g. HDB flats, and ensure their competency in the process.
Buyers and sellers will look to their property agents for professional advice when making their transaction decisions. Thus, property agents must ensure that any information that they present to their clients is accurate and not misleading. Agents should not rely on unverified information available from any websites, but rather from official sources.
Should any inconsistency of information surface about the property or ownership, property agents should take extra steps to verify the information. An agent should not remain oblivious to mistakes even after receiving contradicting information.
When an agent is in doubt of the interpretation of certain information, the agent should be upfront with the client and advise the client to seek advice from qualified professionals.
Lastly, the list of information sources as suggested in the Professional Service Manual is not exhaustive. The onus is on agents to determine and verify the relevant information that is necessary for their clients’ decision-making, and to advise their clients accordingly.