Lesson for all real estate salesperson, when selling property, need to make sure all titles are in place.. High Court allows termination of property transaction by Liu Kwee Tang after talks on sale of premises fall through Source: Lianhe Zaobao Date: 30 Oct 2014 Author: Poh Lay Hoon This article was first published on 27 October 2014 in the Singapore Mandarin broadsheet, Lianhe Zaobao. SLW commissioned a translation to give the legal community a view of legal reports from different Singapore news outlets. A businessman wanted to buy for $2.5 million the premises of Singapore Liu Kwee Tang and another unit it was renting out but discovered that the premises did not have a strata lot while the rental unit had two strata lots. He then requested Liu Kwee Tang to rectify the two Options to Purchase. Liu Kwee Tang also discovered in the process of the transaction that the space where it had been located for 27 years did not have a strata lot. However, as the Option to Purchase had stipulated that the property is to be sold in its present state, the buyer had to accept the arrangement without rectification, leading to an impasse between buyer and seller. With the transaction not concluded after more than a year, the buyer had also refused to withdraw the caveat. Liu Kwee Tang thus applied to the High Court to terminate the agreement and succeeded in its attempt. High Court Judicial Commissioner George Wei Sze Shun found the transaction invalid on 15 August, requiring Liu Kwee Tang to return the deposit of 3% ($75,000) to the buyer and the buyer to withdraw the caveat. The buyer has not lodged an appeal. Liu Kwee Tang owns the top two storeys of a six-storey commercial building at Hong Kong Street, with 48 years remaining on a 99-year lease. In 1984, Liu Kwee Tang had bought the two storeys from the buildings owner Ang Keong Lan for $250,000 in 1984. The fifth storey has an area of 183 square metres (comprising Unit 33D, which has 114 square metres, and Unit 33E which has 70 square metres). The sixth storey, a roof terrace converted into office space, has an area of 217 square metres. The late Ang Keong Lan was the founder of Joo Seng Group and a noted philanthropist. He had been the chairman of the Pei Hwa Foundation. The plaintiffs were the Liu Kwee Tang trustees, represented by lawyer Jeffrey Bey Eng Siew. The defendant was Goh Chong Liang. Lianhe Zaobao attempted to contact Goh through his lawyer Liaw Jin Poh but was unsuccessful. Based on the plaintiffs opening statement, Ang had applied for six strata lots for the building, located at 33 Hong Kong Street. The first to the fourth storeys each had one strata lot, with the fifth storey having two, that is, 33D and 33E. In 1983, Ang received approval from URA for the sixth storey roof terrace to be converted into office space. He kept the fifth and sixth storeys for his own use. In April 1984, Liu Kwee Tang purchased the fifth and sixth storeys from him and mistakenly assumed that the roof terrace was 33E. It used the sixth storey for its own premises and rented out the fifth storey (which it thought was 33D) for income. In 2011, through an AGM, Liu Kwee Tang agreed to sell the two storeys for $2.5 million. The fifth storey would be sold with existing tenancy while the sixth storey would be sold with vacant possession. It then advertised for buyers. The defendant wanted to buy the units and requested that the Option to Purchase be split into two, such that 33D and 33E would be registered under two different names. In May the same year, the defendant executed the Option to Purchase. Both the plaintiff and defendant later found out that Unit 33E did not refer to the sixth floor. In September 2011, the defendant requested Liu Kwee Tang to rectify the Options to Purchase. He suggested that the Option for the fifth storey should be for both 33D and 33E and there should be a new Option for the sixth storey, or that the Option for 33D should be rectified to include 33E and the Option for 33E should be rectified to describe the property as the sixth storey. Lawyers letters were exchanged between the plaintiff and defendant but the transaction dragged on. In December 2011, the defendant wanted to complete the transaction for the fifth storey (33D and 33E) for $1.25 million but this arrangement was rejected by the plaintiff. On July 2012, the plaintiff gave the defendant 21 days to complete the transaction, barring which the transaction would be terminated. In the defendants opening statement, the defendant said that both sides had mistakenly assumed that 33D was the fifth storey and 33E was the sixth storey. At the beginning, both sides had agreed that the selling price for each unit would be $1.25 million. After both sides discovered that both 33D and 33E were on the fifth storey, the Options for both 33D and 33E no longer accurately embodied the actual agreements the plaintiffs had with the defendant. Thus, the defendant is entitled to seek a rectification. Association will lose around $100,000 Liu Kwee Tang is a clan association for those with the surnames Weng, Hong, Jiang, Fang, Gong and Wang. The association’s premises are on the sixth floor of a building without lifts, and this has made it inconvenient for the elderly members and council members to get to. The association thus decided to sell the premises and buy a two-storey shophouse as a replacement. Liu Kwee Tang chairman Ang Chee Guan, 65, said that the association had no choice but to go to court. The fifth storey unit was originally rented to a martial arts school. Because of the transaction, it had not renewed its lease and the place has remained vacant for more than a year. Therefore, even if the association wins the case, the association would need to pay tens of thousands in legal fees and deal with the loss of rental income amounting to $60,000 to $70,000, thereby facing a combined loss of around $100,000. Liu Kwee Tang currently has more than 370 members with those over the age of 55 comprising around 70%. Among the more than 30 council members, two-thirds are aged between 60 and 80 years of age. Ang said that before the case began, the council had identified several freehold shophouses in the Geylang area that could potentially be used for its premises, with selling prices of around $2 million. It wanted a two-storey shophouse so it could rent out one level for rental income to support the expenditures of the association. As for its future plans, he said that the association will see if its financial situation allows it to buy new premises. Property prices have gone up and the units we identified three years ago are selling for around $4 million now. Even if we sell our existing premises, we may not be able to afford them. We are now seeking the agreement of the other four owners of the building to install a lift. With regard to why Liu Kwee Tang had refused to rectify the Options to Purchase at the beginning, he explained that at the time, they had considered that they would need to hire an architect and a surveyor to do an assessment, apply to the authorities, and call for an EGM to get the approval of members; all these would have taken many months. We had wanted to sell the premises as soon as possible and use the proceeds to buy a Geylang shophouse. This was why we wanted the other party to execute the Option to Purchase based on the original conditions. Extracted from Singapore Law Watch: singaporelawwatch.sg/slw/index.php/headlines/51314-high-court-allows-termination-of-property-transaction-by-liu-kwee-tang-after-talks-on-sale-of-premises-fall-through?utm_source=web%20subscription&utm_medium=web
Posted on: Mon, 03 Nov 2014 02:03:26 +0000
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