Greater transparency at auctions is needed to protect buyers of properties where no titles have been issued. This is because the auctioning of properties without titles (for example flats and apartments) is not regulated by any statutory provisions. Buyers are bound by the contract called the Proclamation of Sale. (PoS).
We have received complaints from those who have bought flats at property auctions. Our latest complaints were from those auctioned by Standard Chartered Bank in December 2006.
The buyers are crying foul because they were misled into buying the properties by the bank’s auctioneer.
According to one buyer, Valayutham Subramaniam, he was assured by the auctioneer that the unpaid balance on services charges, assessment rates, utility bills and other outgoings would be settled by the bank and that he would also get vacant possession of the flat.
When he successfully bid for the property he was asked to sign 7 copies of the same page but was not given any document.
When he got his copy of the PoS about three weeks later, he discovered that the contract did not say that the bank will bear the arrears.
This time the auctioneer told him that the bank would settle arrears of up to RM10, 000.00 only. The balance is to be paid by the purchaser. He discovered that the arrears he had to pay were over RM6, 000.00
Worse still, the people in the flat he bought refused to move out. He now has to pay rental on his house as well as monthly instalments on his housing loan.
Where the buyers have been misled by the bank’s auctioneer, the verbal assurance given should precede that of the PoS, which buyers only receive much later. Those who wish to rescind the contract because they were misled about the arrears should have their deposit refunded with interest.
As much as the banks want to unload the properties and the auctioneers to earn their commission it should not be done at the expense of the consumer
To protect buyers we recommend that for each individual property to be auctioned, the following information should be included in the advertisement:-
- Whether the arrears owed on the auctioned property will be settled by the bank or the purchaser.
- Where part or all the arrears are to be paid by the buyer than the outstanding amount should be made known.
- Whether there is vacant possession of the property.
Only when the information is included as part of the advertisement, can consumers make informed decision as whether to bid for the property and if so, how much.
We urge consumers to boycott auctions until the above information is made available for each property auctioned.