Sweat drops beaded on his tanned forehead on this warm and humid night of Thursday, Oct 15, 2009. He had messaged to meet me at Central 99 opposite the Fire Station and I was now with him at 9 pm.
An old friend who is a novice realtor called Jenny had stressed him out and he would not want her to handle the HDB (Housing & Development Board) apartment sale anymore. He was Jenny's contact and Jenny should be the one handling his case. Jenny had lent him over $1,000 interest free to handle his case, despite my advice not to accept cases that used the realtor to borrow money. Such credit risky cases are invariably stressful and monies lent are usually not returned.
Town Council Legal Action
"You are fortunate that Jenny had found you a prospective buyer," I reminded him before he cursed my friend. In a rising property market, there were many interested buyers, but he was a bankrupt and prospective buyers and agents pounced on him like sharks attracted to a bloodied patch of sea. His first realtor (Agent 1) took 3 months and there a sale. That agent had a buyer who offered him $40,000 below valuation and he had been desperate enough to accept the offer and signed an option to purchase (OTP). However, the "buyer" at first gave him $100 as option fee instead of the usual $1,000 and that was later increased to $400. When a Seller showed he is in dire straits, the predators are many. I felt very sad for this professional engineer used to earn $10,000 a month was now down and out. Once an engineering project is over, the engineer is retrenched unless he gets another project for the boss.
I had agreed to meet him to see whether I could help. Jenny had written him off and cut losses. I knew in advance that he would want some loans and if I could be of help to a stranger in distress, I would do so. Such loans are considered gifts as there is no need to stress myself about payback. If I can't help him, I will tell him accordingly.
He was behind in his payment of Town Council conservancy fees for the last few months.
"The Town Council fees are $60.00 per month," I said. "How come you owe the Town Council over $3,000 just for non-payment of less than 12 months?" I asked the down-and-out man (DM).
"The Town Council charged me for their lawyer's fees to claim money from me," the man said. Without settling the amount, HDB would not permit the sale of his HDB apartment to proceed. He was supposed to pay the Town Council $100 per month. But he had more need of the $100 Jenny had given to him 3 weeks ago after assuring Jenny that he would pay the instalment himself as Jenny wanted to do it herself. He had abused the trust. Jenny had also paid for him $200 to save him from being jailed for not paying a NEA (National Environmental Agency) fine too. Being jailed for 1-2 weeks would jeopardise the sales process.
"My friends said I was stupid not to run away when the NEA officer caught me smoking in a non-smoking area," he said. He could easily outrun the NEA officer anytime. He had also lost his Identity Card and needed $300 to get a replacement. Without the card, it would be difficult to proceed with the sale. "I have a photocopy of my IC," he said. But that would not be acceptable. So, another $300 was loaned to him.
Jenny and I wondered what other fines or obstacles would surface again.
Utility Company Legal Action
He also owed Singapore Power some money and was now living without water and electricity in his HDB apartment. This could be paid out of the sales proceeds of his apartment by the Official Assignee (OA) if there is any balance left after the HDB and the Central Provident Fund (CPF) took their respective first and second claim of the monies. So, the $600 owed would not need to be paid for the sales to proceed.
Loan Sharks
In such cases where a person needs money desperately, loan sharks may have provided the Seller some loans at 20% per month. In a developed country like Singapore, loan sharks still flourish and thrive. They make their presence felt by spraying paint onto the door and scrawling "Owe $, Pay $". Sometimes, they padlocked the main gate of the door. The Seller said he did not have loans from loan sharks. This is one good reason not to handle such cases. How do I know whether had had loan sharks or not? Can I accept his word? For the last 3 months, Agent 1 had rented out his HDB apartment. If there were loan sharks hovering around, the tenants in his HDB apartment would be pestered. There were no such incidents.
Offical Assignee
A bankrupt is financially controlled by the Official Assignee (OA) in many ways. One of them is that he must have a letter of approval to sell the HDB flat from the OA. Without this letter, the HDB would not commence any sales action. To do that, he needed to show the OA that he had an OTP (Option To Purchase). Jenny got him an OTP and therefore he could do that. But what about the option money of $1,000? Should this money go to the OA? He needed the money to settle his Town Council (TC) fees which totalled to $3,000 to be paid in full. Would the HDB permit him to pay the TC from the sales proceeds? Would the TC agree? The TC definitely had not been part of the bankruptcy claim unlike the Utility Company. Therefore, the TC wants its ounce of flesh before he can proceed with the sale. That means he would have to find case to pay up the TC first. Who would want to help him?
A Caveat Was Lodged
When I thought that the TC was his main problem, I discovered that a caveat had been lodged by Agent 1's buyers and a Singapore Bank. Did he not return the option money of $400 to the buyers to cancel the sale? He said he had but the cancellation letter was with Agent 1. Why would the bank lodge such a caveat? "For opportunity lost," he said. Apparently, Agent 1's buyers had taken out a bank loan and therefore had to pay bank fees even though the loan was not taken up. This was "opportunity lost" and the Bank was the Caveator. The first buyers were the Caveatee.
One of the numerous rules of the HDB sales procedure is that the prospective buyer must have the home loan pre-approved before HDB commences sales action. So all buyers must incur bank charges to secure a loan once they pay an option money of $1,000 to secure the property for 14 days. If they don't exercise the option after 14 days, the Seller keeps the $1,000 payment. If they exercise the option, they pay $4,000. Before they exercise the Option to Purchase, they must show documentary proof to the HDB that they have secured a loan. If the sales process cannot be completed, the Buyer has to pay the bank 1.5% of the approved loan. If the loan is e.g. $300,000, the Buyer has to pay $4,500. Good money for the bank, thanks to this HDB policy. This practice is not mandatory in private property purchase and that should be the way as you can see from this example of what happens in the later part of my story.
Back to what was the Seller doing. He went to the address stated in the caveat. It was a non-existent address. So, what to do now? The lawyers of the Bank had apparently asked him to seek out the first Buyers. But he could not find them!
Agent 1 It would appear to the Seller that the caveat was lodged by Agent 1 to get money from him. I asked him how much Agent 1 wanted to remove the caveat. With a caveat, the sales cannot be completed although HDB can commence sales action. So how much Agent 1 wanted? Cash of 2% of the sales price in order to provide him the letter of cancellation. This was a lot of money even for a man in the street. And for a bankrupt, it was impossible. "I offer him 10% after completion of sales," the Seller told me. "Why should Agent 1 trust you?"
So now, there is this final obstacle. As you can see, it is extremely time consuming and stressful for Jenny to handle him. Many times he would not return the phone calls. Bankrupts and people owing money avoid returning phone calls and this is a common behaviour. One evening, Jenny and her husband had to scooter to Lor 7 in Geylang to locate him after he did not return phone calls regarding offers by prospective buyers. Later he told me he had no charger. Excuses? I don't know. Jenny's husband bought him a new phone and phone card and he was contactable.
Main gate of the door padlocked.
During the first week of marketing, Jenny discovered that a padlock was put onto his main door gate. Therefore she could not show the unit to prospective buyers. She phoned him and he said that his estranged wife had done it. He spoke to his wife who did not commit such actions again. It was really stressful for Jenny.
Forced sale by the HDB
Presently, the caveat problem had to be resolved and he had 9 days left. "Why don't you just let the HDB sell it?" I asked him as he had threatened to let the HDB do it if my agent was incompetent and could not find a buyer. We didn't have nice words from him despite helping him with loans. He even had no IC and $300 was loaned to him to get an IC letter. Without the IC letter, it would be difficult to sell.
Now the deadline to sell or be taken over by the HDB loomed close. He had already squandered 3 months with Agent 1 with no sales. Now the HDB would just sell his apartment at 90% of the valuation if he had no Option to Purchase. HDB does not open it to the market and do the selling. He now has a buyer at valuation. Therefore, he would lose a substantial amount of 10% which could be $40,000 since his valuation was $40,000. This was not a small sum to sniff at.
So many problems. Only a fool would handle this case. "The race horse is running," he said to me at 99 Central where he sipped a cup of Chinese tea while I drank 7 Up. "Jenny had whipped the horse hard and caused it to race wildly. Don't kill the horse while it is racing."
I was surprised that he used this analogy? I was a racehorse vet at the Singapore Turf Club for 8 years and knew what the effects of whipping would do to a horse. Jenny had given him the carrot and now the stick. He was stumbling. He would fall. Should I just abandon him and cut losses?
For humanitarian reasons, I put $300 into the ATM to clear his TC overdue instalments the next day. I don't expect any return of the money as I deem this case high risk.
"No, I will not give you the $300 to do it," I said to him at 99 Central as he asked me for a loan of $400 to help him out. $100 to survive the next few days and $300 to pay the TC as he would be imprisoned by the judge for default of payment to the TC. If the racehorse is boxed inside the racing stall, nothing could be done. He had only 9 days to go.
Friday, Oct 22, 2009
What is actually the main problem affecting the closing of this case? Jenny was so stressed out about losing her money that she could not focus on the main problem. Therefore I had to help. "The horse is still running," I said to Jenny. "It is not dead. You had punted by lending the Seller money and if the horse loses the race, you have no chance of getting your money back." I did not want to rub salt into the wound by saying "I told you so."
The Letter of Cancellation Of Sale.
The Caveat, not the unavailability of the Letter of Cancellation is the main problem. But the Seller seemed to have veered to the wrong track by looking for Agent 1 or the first Buyers. I could not contact him by handphone for 2 days. As to why he could not answer his handphone or respond to my text message promptly, I have no clue. Could he be incarcerated? I did not invade his privacy when he phoned me 2 days later to say he had sent a letter to the lawyer to remove the caveat. "Which lawyer?" I asked him. He said it was the HDB lawyer or something vague. He still could not locate the first Buyers nor get Agent 1 to give him the "letter of cancellation" of the first sale after returning $400 Option Money to the first Buyer. He said the letter was with Agent 1 and he did not have a copy. I gave him the benefit of the doubt. But there was something amiss. Something I could not lay my finger on.
Proactive
Time was running out for him as he had less than 7 days to get a clean title to his property. I asked him to fax to me what documents he had written to the lawyer in order to help him. Writing a letter and waiting for the lawyer to reply would not give him time. He was running out of time now.
Agent 1's legal department
I phoned Agent 1's firm 3 times. Every time, the person who answered would say that the firm's lawyers would call me back. They never bothered to. So I had to persevere and finally met the Head of the Legal Department. The lawyer who handled complaints was on sick leave today, Oct 23, 2009.
"Your Seller need to get a lawyer to lift the caveat," the Head, a lawyer, pointed out the relevant paragraph in the copy of the Caveat. He was kind enough to show me the "Grounds of Claim" in the Caveat stated that the Singapore bank had given a letter of offer to the first Buyer who had accepted the Letter of Offer. Therefore, the Bank had claim to this property.
"How can a bankrupt afford a lawyer?" I asked him. "Are there services of lawyers who help such bankrupts?" The Head did not know.
The Bank's lawyers
"I am only doing out of goodwill to meet you," the young lawyer repeated a few times while she read the copy of the caveat and referred to her file. "I act for the bank. Are you sure you are not the Seller?" The Seller had 3 names like what all Chinese. "Are you a Myanmar national?"
"No," I said. "I am trying to help this person." Why would anybody want to waste time to help a stranger? A stranger in need of help. The young lawyer probably could not understand. I must be the Seller in disguise. To make matters worst, I did not have any Toa Payoh Vets namecard in my wallet.
"I will try my best," the young lawyer repeated herself a few times and I wished she would not do that. But I was given free consultation and beggars could not be choosers. "I have written to the Bank immediately on receipt of the Seller's letter. Please remember that I act for the Bank." Her reminders that she does not act for me had been repeated ad nauseum politely.
"I will phone the Seller when I have some news," she said as she referred to her file. "Why did he wait so long?" she asked when I said that the Option to Purchase would expire around 3 days.
"Please phone me," I said. "The Seller sometimes don't answer his phone." The lawyer was puzzled as to why. I don't know why too and could not give an explanation. There was something fishy in this case. Did the first Buyer really give a Letter of Cancellation on return of the $400? I did not contact Agent 1, so I do not know. Time was really running out and the claws of the HDB would just grab the HDB and sell it off at 90% of the purchase price. This seems to be inevitable.
Sales can proceed but completion cannot be achieved.
"There are cases where the sales proceed for the time being," she told me. It is true that the HDB may permit sales to proceed if both parties agree.
"Not in this case," I said. "The 2nd Buyer will not exercise the OTP since he would have to pay another $4,000. If things don't work out, he loses $5,000."
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