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But sale falls through because… Seller owers $20k in fees

He wanted to buy a condo unit for his daughter before prices went up further.

He thought he had clinched a deal after paying the option fee of more than $6,000.

But he didn’t get the flat - or his money back - because the seller had failed to pay the maintenance fees.

Businessman John Lim, 65, wanted to buy a three-bedroom unit at the Pasir View Park condo in Pasir Panjang.

Property agent Eve Ooi handled the $660,000 transaction for him.

Mr Lim paid a 1 per cent option fee of $6,600 to the seller last August.

An option fee is money paid by a buyer to a seller to ‘book’ the place.

Then Mr Lim’s lawyer told him the sale could not go through.

ARREARS

This was because the owner, Mr Victor Ooi, still owed his management corporation over $20,000 in unpaid maintenance fees.

The managing agent of the condo, when contacted, confirmed this.

Mr Lim then asked the owner to return his option fee. But Mr Ooi had used the money to pay part of his overdue mortgage payments to a bank.

An angry Mr Lim stormed into the agent’s office to demand an explanation.

The agent, who is the sister of the property seller, told The New Paper that she did not know about her brother’s financial woes.

She said she was doing him a favour and was not paid a commission for the sale.

Mr Lim said: ‘When I finally met the agent and her brother, both of them apologised to me.

‘The seller said he had some financial problems and didn’t expect the sale to fall through. But who’s going to pay me back my money?’ The bank, which had first charge on the property, put up the unit for auction and it was sold for over $700,000 last month.

This happened after Mr Ooi failed to make his monthly mortgage payments to the bank for five months.

Mr Lim attended the auction, but didn’t buy the unit as the final price was above his budget.

Mr Ooi, 51, told The New Paper that he is trying to work out an instalment plan to repay Mr Lim’s option fee.

He paid more than $900,000 for the unit in 1992. His outstanding bank loan was about $630,000.

Mr Ooi said he was retrenched from a managerial position a few years ago and could not pay the maintenance fees.

He thought that when he sold the place, he could clear the bank loan and use some of the remaining money to pay the maintenance fee arrears.

But there was a problem. Whatever he would get after paying the bank would have to go into his CPF account. And this is what happened after the auction.

Mr Ooi said he was left with no money to repay Mr Lim, who has since taken legal action against him.

Mr Ooi said that Mr Lim has a right to be angry. But he said: ‘All the proceeds from the sale goes to my CPF, which I can’t withdraw. So, what can I do now?

‘If I were him, I’ll be angry too. But I didn’t plan for this to happen.

‘I’ll try to pay him back somehow.’

GROUNDWORK

Eager home-buyers should do some groundwork before putting down any money, said Mr Eugene Lim, assistant vice-president of real estate company ERA.

‘You can ask your lawyer to find out if the property is ‘clean’, that no one else has a charge on it,’ he said.

More cautious buyers can even talk to the neighbours or the security guards to find out more about the unit.

The property agent should also check on the financial background of the seller, said Mr Daniel Chua, a partner at Land+ DC Realty.

He usually does a bankruptcy search on the seller before he lists a property for sale. If the seller is bankrupt, the option fee will go to the Official Assignee, not the seller.

Added Mr Chua: ‘And if you know the seller has financial problems or you’re handling a negative equity sale, the agent should tell the seller that he’ll hold the option fee in trust, and hand it over to the bank once the option is exercised.’

Management council can block sale

Have you been paying your monthly maintenance fees?

Well, if you run up too big a debt, the management council of your condo can lodge a charge on your property to block its sale until the debt is settled, said lawyer Roy Yeo.

The amount would usually be in the thousands before the MC will do such a thing, said Mr Yeo.

He added: ‘In every condo transaction, the buyer’s lawyer will find out from the managing agent of the property if there’s any outstanding maintenance fees.

‘The agent will then issue a certificate to the lawyer which states the outstanding amount to be paid.’

The seller has to settle this amount before the sale can proceed.

In the event of a mortgagee-sale, the bank which has the first charge has to pay the maintenance fees before the property can be put up for sale.

Source : The New Paper - 27 Feb 2007