SINGAPORE - Property agency Square Yards Singapore has been penalised by the Council for Estate Agencies (CEA) for breaching practice guidelines in marketing foreign properties to an investor.
The CEA Disciplinary Committee has imposed a fine of S$7,500 on the firm for one charge of failing to provide a written advisory message to an investor to draw attention to the risks involved in buying properties abroad.
CEA also said that Square Yards is not to market or transact in any foreign property for six months with effect from March 1, a condition imposed on the firm's licence, according to its press release on Thursday (Jan 19).
The investor had bought a property at the Transhudson Project in North Dakota in the United States at US$74,950 through Square Yards after attending a seminar conducted by the firm and US developer North Dakota Developments here in August 2014.
He had made a partial payment of US$33,982.50 - which comprised the booking fee, closing fee and balance of the first stage payment - to the US developer in mid-September 2014.
It was found that Square Yards' key executive officer Wai Yin Peng Shermaine and her property agents did not provide the investor with a written advisory stating that he must conduct due diligence.
CEA said they also did not highlight the risks that are involved for foreign property buyers and that the transaction is subject to foreign laws and any change in policies and rules in the US.
Square Yards had received a commission of about US$3,900 from the transaction.
Investigations revealed that the firm had facilitated the sale of two other units - one investor bought a unit at Transhudson Project, while another purchased a property at the Montana Project.
CEA noted that Square Yards would have received a commission of US$14,160 for the three units sold.
The three investors paid a total of US$112,279.50 to North Dakota Development, which was charged for alleged fraudulent activities in May 2015.
All three investors have not recovered the sums they paid to the developer.
CEA said the committee took into consideration the other two charges in sentencing Square Yards.
The US Securities and Exchange Commission had charged North Dakota Development for allegedly fraudulently raising over US$62 million from investors worldwide through the sale of interests in the development of housing projects based in the US, including Transhudson and Montana Projects.
CEA noted: "Buying a foreign property is a big investment. Given the complexities and risks involved, consumers should find out and understand pertinent information such as the foreign country's rules and restrictions on property purchases and ownership, whether the property has obtained approvals from the authorities, taxes payable, pricing and terms and conditions of the purchase, the foreign property market condition, currency exchange risks, etc."
It added that consumers should exercise due diligence before entering into any agreement to buy foreign properties. "They should not rely solely on the advice from representatives of the foreign developer," CEA said.