ADVISORY: Cancelling SPA by Seller - the issues

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QUANDARY: Issues can arise that might have been easily resolved if the Seller had engaged his own lawyer

Raj Pillai@KL: The Purchaser and I, the Vendor, had signed the Sale & Purchase Agreement (SPA) in the presence of the Purchaser‘s lawyer. The agreed Completion period is three months (2+1 months). With mutual
agreement, a further extension of five additional months were granted incurring the eight per cent penalty interest.

The total of eight months to complete has since expired. I need to clarify my legal standing as to the cancellation of the SPA as follows:

Q1. Since I have not engaged my own lawyer in the initial process, can I authorise the Purchaser‘s lawyer, in writing or via email to cancel the said SPA? Or is it a must that I employ my own lawyer?

Q2. I had indeed sent an email once to the Purchaser‘s lawyer to cancel the SPA and she replied saying that the Purchaser is not agreeable to the cancellation. Has the Purchaser the right to over-rule my instruction? What are the circumstances in which he can do that?

Q3. The five months extension was granted with an understanding that the Purchaser pays an amount towards the full settlement of my Housing Loan. Is this amount also forfeitable, apart from the initial Deposit, on cancelling the SPA?

Q4. Currently, the Consent from the Land Authority applied for by the Purchaser‘s lawyer has specific conditions pertaining to the sale of the Property to this particular Purchaser. Can I look for another Buyer while this process of cancellation is being done? Or has this Consent to be returned to the Land Authority for cancellation and a fresh Consent to be applied for by the new Buyer‘s lawyer and that too only after the original Consent is cancelled?

Answers:

Question No: 1

Since I have not engaged my own lawyer in the initial process, can I authorise the Purchaser‘s lawyer, in writing or via email to cancel the said SPA? Or is it a must that I employ my own lawyer?

RED: The Purchaser’s lawyer is a professional. He is bound by the Rules of his professions that he is to serve only his Client. The Purchaser’s Lawyer’s Client is the Purchaser. The Purchaser’s Lawyer for the reasons stated above cannot accept your instructions. If you want to cancel the SPA, you will have to speak to the Purchaser and get him to agree with you. If the Purchaser agrees with you, he will then instruct his Lawyer to cancel the SPA and to write to notify you accordingly.

If the Purchaser insists on not fulfilling the terms and conditions of the SPA (assuming it provides for compensation on breach or expiry of the Completion Period of the SPA), you will need to employ your own Lawyer to get advice on how to enforce your rights to be paid compensation from the Purchaser for his failure to honour his obligations to you as provided in the SPA.

Question No: 2
I had indeed sent an email once to the Purchaser‘s lawyer to cancel the SPA and she replied saying that the Purchaser is not agreeable to the cancellation. Has the Purchaser the right to over-rule my instruction?

What are the circumstances in which he can do that?

RED: As per answer to Question No. 1, the Purchaser’s Lawyer’s Client is the Purchaser. The Purchaser’s Lawyer is not obligated to act on your Instructions. If you want to proceed to cancel the SPA and enforce your rights, you will need to employ your own Lawyer who will have to act to protect your rights.

Question No: 3
The five months extension was granted on an understanding that the Purchaser pays an amount towards the full settlement of my Housing Loan. Is this amount also forfeitable, apart from the initial Deposit, on cancelling the SPA?

RED: Was the extension put in writing and states that the extension was conditional upon the Purchaser paying an amount towards the full settlement of your Housing Loan? Has this amount been paid by the Purchaser?

If the conditional extension was only verbal, both your lawyer and the Purchaser’s lawyer would have to negotiate how best to settle the matter. Whether or not the amount to be forked out by the Purchaser towards the settlement of your Housing Loan is forfeitable depends again on how the extension agreement was worded, assuming it is in writing.

Question No: 4
Currently, the Consent from the Land Authority applied for by the Purchaser‘s lawyer has specific conditions pertaining to the sale of the Property to this particular Purchaser. Can I look for another Buyer while this process of cancellation is being done? Or has this Consent to be returned to the Land Authority for cancellation and a fresh Consent to be applied for by the new Buyer‘s lawyer and that too only after the original Consent is cancelled?

RED: Your lawyer would have to resolve this issue. Strictly speaking, since the Completion date has lapsed, your house should be free to be sold to another buyer, pending the resolution of the state consent issue. However, it is better to err on the cautious side and resolve the cancellation of the SPA with the buyer first before looking for another buyer.

Jointly answered by Dr Ernest Cheong, Chartered Surveyor, Registered Valuer, Auctioneer, Arbitrator and Principal of Ernest Cheong PTL Chartered Surveyors and NST RED Editor.

Erratum: In our article on Aug 17th, “What are your fees, Mr Lawyer?”, the author is the National House Buyers Association
(HBA) and not as published. The error is regretted.

 


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