Resale flat transactions with ‘greater complexity’ should be handled by private lawyers: HDB

SINGAPORE – The Housing Board declined to handle the legal work for a resale flat, and advised the flat’s sellers to engage their own lawyer, as it considered the transaction to be complex.

It could not ensure that all beneficiaries had their interests protected, or that they would be properly advised, said the board on Oct 6 in response to queries from The Straits Times on the recent sale of a three-room flat in Tanjong Pagar Plaza.

On Sept 28, property agent Vera Wong, who brokered the deal, posted on Facebook an e-mail that her client – the unit’s seller – had received from HDB regarding the sale of the flat, which had about 49 years left on its lease.

In the e-mail, HDB said: “We note that the resale price of $625,000 is below the recent resale transacted price of $655,000, HDB is unable to act in the sale.

“In view of the above, please submit the lawyer letter addressed to HDB confirm acting for you in the sale.”

No further explanation was provided to the seller on why HDB could not act in the sale.

Speaking to ST on Sept 30, Wong said she understands that HDB has the right to determine if it will act as a solicitor for the sale, but had not in her 18 years as an agent come across a case of HDB declining to act in the sale because of a $30,000 difference between the sale price, and a recent comparable sale.

“My client was happy with the sale price, but the phrasing of HDB’s e-mail could affect our work and how we advise our clients – in another situation it could have caused the client to think that they had been ill-advised on the sale price as the asking price was too low,” said Wong.

She and her client did not appeal to HDB as the unit’s buyer had needed the unit urgently. They hence engaged a private lawyer to facilitate the sale after her client was given a week to submit a lawyer’s letter to the HDB.

In its response to ST, HDB said that the sale Wong had brokered involved a flat that was being sold by the executors of an estate with multiple beneficiaries.

The board said: “One of the executors is also among the beneficiaries. As the interests of the beneficiaries may differ, and considering that the asking price is lower than a recent comparable resale transaction, HDB assessed that it was not in a position to ensure that the transaction is conducted properly and that any potential conflict of interest is addressed.”

It advised the sellers to engage a private lawyer, “who would be better positioned to ensure that all beneficiaries are properly advised and that their interests are protected, thereby minimising the risk of disputes arising from the transaction”.

HDB also acknowledged that its response to the flat’s sellers “could have explained the basis for our decision more clearly”, and that it has since reached out to the sellers to clarify and provide a fuller explanation.

Wong’s Facebook post, which had sparked discussion online on whether the HDB had taken issue with a resale price that was lower than recent transactions, has been taken down as at Oct 5.

In resale transactions, solicitors are required to carry out the conveyancing for the legal transfer of ownership of the flat from the seller to the buyer, and sellers generally can appoint either the HDB or a private lawyer to handle the legal work for the sale.

Such work includes preparing the necessary legal documents, verifying that the property title is in order, and ensuring that the seller receives the sale proceeds upon completion.

HDB said it considers various factors, including the complexity of the transaction, when assessing requests to act for flat sellers.

“For ordinary resale transactions where flat owners are selling their flat in their own right, HDB will generally act for the sellers, regardless of the agreed resale price,” said the board.

“However, a case-by-case approach will be taken if a transaction involves greater complexity and where HDB may not be in a position to ensure that the transaction is conducted in the best interests of all parties,” it added.

Such complex cases, HDB said, could include sales that arise from a divorce court order and HDB is unable to ensure compliance with its terms or due to a potential disagreement between the parties.

It said cases where a seller lacks the mental capacity to sell the flat, or where conditions in a will affect the sale of the flat, can also be considered complex.

Ng Keng Gene is a correspondent at The Straits Times, reporting on issues relating to land use, urban planning and heritage.