Singapore’s Council for Estate Agencies (CEA) has fined and banned to a Singapore real estate firm for failing to draw investors’ attention to the risks involved when purchasing a Bangkok property.
HSR International Realtors was fined S$ 12,500 (THB 300,000) and prohibited the firm from transacting or marketing foreign properties for a six-month period starting yesterday.
Two investors each paid deposits to purchase units at the Manhattan Park Peninsular project during 2014 through a Singapore property exhibition (advertising for which is pictured) held by the agency.
The low-rise Bangkok property development was planned near Central Plaza Bang Na but the developer, Euro-Thai Property Holding, subsequently abandoned the development.
The CEA noted that before the execution of the Sale and Purchase agreements, HSR’s property agents did not provide both investors with a written advisory message stating that they must conduct due diligence, drawing their attention that risks are involved for foreign property consumers and that their transactions were subject to foreign laws and to any change in policies and rules in Thailand.
The agency was required to provide such written advisory as per the CEA’s practice guidelines.
In addition, HSR’s property agents did not explain to the first investor, prior to the execution of the Sale and Purchase Agreement, whether any dispute resolution mechanism would apply in the event of a dispute in relation to the purchase of the unit, and if so, what the dispute resolution mechanism was.
HSR also did not explain to the investor which jurisdiction such dispute would be resolved under.
HSR was required to do so as stated in CEA’s practice guidelines however, HSR did not explain to the investors that the Sale and Purchase Agreement did not contain a dispute resolution mechanism or a jurisdiction for the resolution of disputes.
When the development ceased both investors were offered units in other developments instead. One investor rejected the offer while the other paid an additional amount to secure a new unit.
The investor who rejected the offer was told the company had no money and would have to wait up to four years for a refund of the deposit.
From the information provide by the CEA, it would appear the Bangkok property was being sold overseas without an Environmental Impact Assessment.
Why? Because the developer was reported to have abandoned the Manhattan Park development because Thai authorities had only allowed the construction of an apartment with 75 units instead of planned 195 units.
As reported many times, it is vital the property buyers do their own due diligence prior to signing agreements and parting with money.
Based on the statement from the CEA it is very likely some warning signs would have been raised by any professional property law firm with experience dealing with Thailand real estate.