Transaction Monies
Salespersons are not allowed to handle any transaction monies. In a property lease transaction, transaction monies include rental deposits, monthly rentals and stamp duties. In a property sale and purchase transaction, transaction monies include option fee, downpayment, stamp duties, deposits and sales proceeds. Valuation fees and commissions are not transaction monies.
The ban on handling transaction monies applies to estate agency work for the buying and selling of properties situated in Singapore and leasing of HDB properties. It is a serious offence and the salesperson can be prosecuted in Court if he handled transaction monies.
The ban on handling transaction monies applies to estate agency work for the buying and selling of properties situated in Singapore and leasing of HDB properties. It is a serious offence and the salesperson can be prosecuted in Court if he handled transaction monies.
Case Study #1
Consumer posted an online advertisement to look for a flat to rent. Salesperson T contacted him and arranged to view a flat. T did not turn up for the viewing and the viewing was conducted by the flat owner’s salesperson.
Consumer agreed to rent the flat. He signed a Letter of Intent (LOI) prepared by T and paid T a deposit of $1,300 and half the commission of $325 in cash. T issued a receipt to Consumer. A few days later, Consumer signed the tenancy agreement and further paid an advance rental of $1,300 by transferring money to T’s bank account.
After the fund transfer, Consumer checked the CEA Public Register and found that T was not registered with CEA. He contacted flat owner’s registered salesperson who informed that he did not receive the LOI and deposit from T. Consumer realised he was cheated and lodged a police report.
Learning Point:
Consumer agreed to rent the flat. He signed a Letter of Intent (LOI) prepared by T and paid T a deposit of $1,300 and half the commission of $325 in cash. T issued a receipt to Consumer. A few days later, Consumer signed the tenancy agreement and further paid an advance rental of $1,300 by transferring money to T’s bank account.
After the fund transfer, Consumer checked the CEA Public Register and found that T was not registered with CEA. He contacted flat owner’s registered salesperson who informed that he did not receive the LOI and deposit from T. Consumer realised he was cheated and lodged a police report.
Learning Point:
- Ensure that the person you are dealing with is the rightful owner of the flat. Ask for documentary proof of flat ownership e.g. Service & Conservancy charges booklet, loan instalment payment booklet/annual loan statements which bear the flat owner’s name.
- Ensure that the salesperson is a registered salesperson by checking his estate agent card and his identity against the CEA Public Register at www.cea.gov.sg.
- Avoid using cash. Pay the rental deposit and rents directly to the landlord by crossed cheque or other verifiable means.
Case Study #2
Consumer engaged registered Salesperson A to help him find a flat to rent. A brought him to view a HDB flat. Consumer decided to rent the flat and the owner requested him to pay a lump sum of $10,800, equivalent to 12 months’ rent at $900 per month. Consumer paid a deposit of $900 and a tenancy agreement was signed which was to commence in the following month.
A few days later, the owner’s Salesperson B asked Consumer to pass some money to the owner. Consumer then transferred $5,000 to B’s bank account. On the following week, B informed Consumer that the owner had decided not to rent out the flat. Consumer then asked B to refund the monies paid but B informed Consumer that the monies had been returned to A. Consumer was unable to find A and so lodged a report with the Police and CEA.
Learning point:
It is critical that you understand and control the financial aspects of your property transaction. A property transaction goes through certain milestones and there are expected transaction payments at different stages. If you are not familiar with any transaction procedure or transaction monies to be paid, you should ask questions. Your salesperson will be able to explain to you.
A few days later, the owner’s Salesperson B asked Consumer to pass some money to the owner. Consumer then transferred $5,000 to B’s bank account. On the following week, B informed Consumer that the owner had decided not to rent out the flat. Consumer then asked B to refund the monies paid but B informed Consumer that the monies had been returned to A. Consumer was unable to find A and so lodged a report with the Police and CEA.
Learning point:
- It is preferable to pay rentals on a monthly basis rather than on a lump sum basis.
- A request to pay directly into the bank account of a third party should raise a red flag and should be rejected if there is no valid reason for doing so.
- Always remember: Do not hand over transaction monies to salespersons or any third party.
It is critical that you understand and control the financial aspects of your property transaction. A property transaction goes through certain milestones and there are expected transaction payments at different stages. If you are not familiar with any transaction procedure or transaction monies to be paid, you should ask questions. Your salesperson will be able to explain to you.
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