Tuesday, December 1, 2009

10. Insolvent Person

1. Consent From The Official Assignee to sell the flat. This is valid for only 1 month. The share of the insolvent's sale proceeds will be remitted to the OA. If the OA deducts all monies owed, the Insolvent Person has nothing. Well, he has monies returned to his CPF and to pay his housing loan.

The first Option To Purchase (OTP) had expired. "Give me back the $1,000 and when the Caveat is lifted, let me know." "The Seller just needs one more week to get the caveat lifted as the OA had already given his consent to sell," I said but the Seller was not interested. So the 2nd OTP lapsed. The Buyer sms back that he had proceeded too far and would not return the money. The Seller had not accepted the bank loan and therefore did not have to pay penalties of 1.5% for non performance.

2. Lifting of the Caveat. The Caveat was lifted by the Banker of the first prospective Buyer. As to why, I don't know. In the letter, the Seller had threatened the Bank that it will be liable for his losses if he fails to sell the property due to this action of the Caveat. That is what the Seller believed and told me. I thought it could be the false address of the Caveatees. Revelation of this false address in public would embarrass the bank. Whatever the reason, there was now green light to proceed.

3. Ethnic Integration Policy (EIP). I was holding my breath that the EIP still permits the Buyer to be qualified to buy this insolvent person's HDB apartment. The Singapore Government's EIP aims to get racial integration. In the past, there were racial enclaves and this would not be good for racial harmony when racial tensions flare up. Sticks and knives had been used in racial riots to kill people. "There seems to be a season," the Seller said to me one day. "When Agent 1 was marketing my apartment, I saw all Chinese prospects. Now, Khin Khin's prospects are mainly Indians and non-Chinese." He did not know that there is a EIP. Fortunately, the EIP's approval for this particular non-Chinese buyer was still given despite the expiry of Khin Khin's first OTP for him. The second OTP was in progress as the Buyer took some time, for reasons unknown.

3. Exercising The Option. The 2nd OTP was signed at the void deck of the apartment. The Seller took his 13 days to exercise the Option. He was busy. There were new bank terms. At the same time, the Consent from the OA was about to expire in 7 days' time.

HDB property prices continued to escalate. "I want to give the Buyer the $1,000 and ask him to get lost," the Seller said to me as he found that the Seller seemed to be hesitant.

"The Seller has 14 days and he can exercise the Option on the 14th day. Legally, you can't do anything. You gain $1,000 if he does not sign the OTP." No Buyer will be so foolish as to give up this sale as prices have had shot up. The Seller is not indebted to loan sharks but he knew he would get a much better price. I contacted the Seller's Agent to expedite. "Not much I can do," the agent said.

4. Resale Checklist for Housing Agent engaged by Sellers. Before granting the OTP to prospective buyers, the agent must inform the Seller about: Eligibility to Sell, Financial Planning/Next Housing Step, Understanding HDB's Standard OTP, Payment of Resale Levy/Upgrading Cost (if applicable) and Giving accurate information. I had to go through this checklist with the Seller. He could not be bothered.

5. Exercising of The Option. I took a subway to meet all parties to be the Seller's witness in the exercise the OTP one cool evening in November. There was no great joy for the Seller.

6. Difficulty in contacting the Seller. "I was in the court," the Seller said to me when I complained that he could not be contacted the whole day. "I had to pay the HDB $8,000 in car park fines." However he did message the Buyer's Agent that he would be attending the meeting to exercise the Option. He did not bother to keep me updated. Fortunately, the Seller's agent informed me.

7. Empty promises. We left the meeting place in a taxi as I did not drive. I wanted to spend some time getting to know the Seller and hoping that he would be kind enough to return the monies loaned to him by Khin Khin. The Seller said he would return the money once he cashed the $4,000 deposit from the Seller. He had to alight from the taxi to meet his friend to get some money to pay the taxi fare. "I will stay in the taxi," I said as he waited for me to get out. "Just to give the taxi driver some comfort that we would not be absconding." The taxi driver with greyish white beard, in his 60s was relieved. I thought the Seller had got a job and should have some cash. The next day, I phoned the Buyer. His phone was switched off. Some days later, I met him in Peninsula Plaza by accident. "I have to pay HDB $8,000". HDB would jail him if he did not pay up. So he had no money for Khin Khin.

Handling an insolvent person's case is very stressful. The horse race is on as the Option is exercised. The first appointment from the HDB is 3 months later. Meanwhile HDB will send somebody to check if there is any illegal renovation of the HDB flat. It will be very difficult to get back the loan for Khin Khin. Now the Seller does not need to grovel for financial help. He can now enjoy not returning the loan to Khin Khin, out of spite. After all, he is a bankrupt.

In this case, the HDB had been very kind to permit this insolvent person to finally sell the apartment by not forced sale at 90% of the valuation price in a rising market. The Seller has found a job and was now paying off his mandatory debts. As for Khin Khin's loan, that was low priority for him.

This is the real world. "Neither a borrower nor a lender be" - if only Khin Khin had read Shakespeare or something equivalent in Burmese.