Being a Real Estate Agent can be a lot of pressure. Clients want things to be done fast. There is a lot of competition in the market. If you don’t make the sale, someone else will. So, Real Estate Agents can sometimes be pressured into closing the deal quickly. However, as a Real Estate Agent, there are certain duties one must adhere to. Aside from knowing the market value and the amenities/tax rate, there are certain legal boxes that need to be ticked before you complete the sale.
So, what are the ABCs to remember when brokering a sale?
While this seems like common sense, you will be surprised at how many people make this mistake. Always, always check whether the “Seller” is the actual owner of the Property. If he/she is not the registered owner of the Property or if he/she does not have a Power of Attorney which specifically empowers them to sell the property, he/she DOES NOT HAVE THE RIGHT to sell the property.
For ease of all, here is a small checklist you can print to help check if the identity of the owner:
- A land search. Is the owner on the land search the same as the seller?
- Ask for a copy of title. Is the name of the seller on the title?
Check the Sale and Purchase Agreement. Is the name of the owner and the seller the same?
A bankruptcy search. This is to check the seller is not a bankrupt. If not, they do not have the power to sell without the permission of the Insolvency Department.
Next, check the details. We would recommend checking the following:
What the actual amount the Seller wants to sell at;
Whether the sale includes fixtures and furniture (if yes, you should do an inventory check);
Whether the property is sold with or without a tenancy (so the new owner is not shocked that someone else will be living in the property); and
2. Better Have A Letter of Appointment
Once you have done the above checks, you have done a very basic cover of your duties. Now, it is time to have an appointment letter in black and white. This is so you know the scope of your duties as well as all other terms and conditions involving the sale and commission. You can include the details you obtained in the second part of the above checklist.
While it is nice to be able to operate on trust and on the word of the seller, we have unfortunately had experience with Real Estate Agents who have been cheated and only paid a much lower amount of commission or nothing at all. This was because there was nothing in black and white and no way to enforce the promise. That is why we advise that it is better to have a letter of appointment.
3. Complete an Option to Purchase
Once you have obtained a buyer and the buyer has indicated they are interested, always get an option to purchase executed. It is important for you to ensure the following:
- Is the buyer acquiring under his/her name or with another person (just to be safe, you may want to take down Buyer’s name and name of nominee);
- The time period for signing the Sales and Purchase Agreement (In the days of the COVID pandemic, it is important to clarify if MCO, EMCO, working/non-working days are counted);
- The period of completion of the Sales and Purchase agreement (usually it is 3 months plus an extension period of one (1) month but can be altered by parties);
- Is there a Force Majeure clause (For pandemic, governmental lockdown, strikes, flood etc.) so that the time periods will be extended accordingly;
- That the Sale is subject to loan;
- Ensure this stipulates the percentage of loan the Buyer needs;
- Time period for approval of loan;
- Clause in the event the loan does not go through then parties may want to
- relook at the sale; and
- Is the property subject to approval (either from governmental body or others);
Once the above is listed, ensure the Buyer and Seller to sign the option and date the same.
Companies also are able to buy and sell properties. If either the seller or buyer is a company, you may want to consider doing the following checks:
- Does the land/property belong to the company?
- Is the company solvent – you can do an insolvency check with the Ministry
- Do a company search on the company – see directors/shareholders
- Do a personal visit of the company’s business address and/or registered address
- And Check the IC of the Director/ Shareholder/ representative
These checks are very important because since 2017, there has been an increase of scam cases whereby individuals pretend to be a representative of the seller company and then “sell” the land without the company’s knowledge.
The market is indeed a dog eat dog world. However, if you do the above checks, you will be better prepared and your client better protected.
If you have any questions on the above or would like advise on a similar matter, please do not hesitate to contact us at email@example.com.