C3 – UNDERSTANDING THE PROFESSIONAL SERVICE MANUAL Core Cat 3 Level 1 CONTINUING PROFESSIONAL DEVELOPMENT CPD • Required for all practicing SPs • CPD cycle – 1 Oct to 30 Sept each year – – – 6 CPD hours 50% Core hours – applicable laws, policies 50% Non-core – selling skills, etc Increased over time • Auto-suspension if not met – Address shortfall plus current year for reinstatement – Registration cancelled if not met for 2 years 3 of 106 New Core CPD Framework • Wef 2014 - for cycle beginning 1 Oct 2013 • 3 Categories introduced – C1 – courses focusing on enhancing professional ethics and knowledge of EAA – C2 – keep abreast of latest laws and regulations relating to estate agency practice and property transactions – C3 – raising professional standards, best practices and deepen knowledge of CEA’s practice guidelines • To complete at least one from each category over 3 consecutive years 4 of 106 Disclaimer! (or is it?) The following training session should taken in the right light. Whilst the trainer, is also a Salesperson, any opinions, teachings, or examples are expressed as a Trainer in the spirit of “best practices”. All Salespersons are encouraged to adopt a mindset of “best practices”. So…don’t shoot the messenger! 5 of 106 Preamble “This Professional Service Manual (PSM) is issued by the Council for Estate Agencies as Practice Guidelines to estate agents (EAs) and salespersons (SPs) regulated under the Estate Agents Act (Cap. 95A) for their conduct of estate agency work in property transactions involving residential, commercial and industrial properties. The PSM seeks to set clear standards and guidelines to ensure salespersons render their services competently, professionally and ethically, thus promoting open, fair and honest property transactions. It also highlights the responsibilities and duties that salespersons must pay attention to when carrying out estate agency work in both the sale and leasing of property transactions.” (PSM – CEA 27 April 2013) 6 of 106 Summary • The PSM shall be read with reference to the Estate Agents Act (EAA) and relevant Practice Guidelines (PG) and Practice Circulars (PC) a) b) c) d) e) f) EA (Est. Agency. Work) Regulations EA (Licensing & Registration) Regulations EA (Dispute Resolution Schemes) Regulations PG on Use of Pres. EA Agreement (Form 1-8) PG on Ethical Advertising PG on Options to Purchase (OTP) and Sales & Purchase (S&P) g) Any other PGs and PCs issued by CEA . 7 of 106 Summary • PSM elaborates duties & obligations as specified in the Code of Ethics & Professional Client Care (CEPCC) • The EAA and any subsidiary legislation will continue to have full effect – PSM will supersede any PGs if any inconsistencies exists • EAs & SPs to comply with PSM wef 1 Jan 2014 – May be referred to in any investigations on alleged professional misconduct, negligence & Disciplinary Prceedings 8 of 106 Scope of Coverage 1. 2. 3. 4. Establishing a Client-Agent Relationship Providing Professional Advice to Clients Marketing and Advertising of Property Communicating of All Offers and Expressions of Interest 5. Completing the Property Transaction 9 of 106 CODE OF ETHICS & PROFESSIONAL CLIENT CARE (CEPCC) - RECAP 10 of 106 CODE OF ETHICS AND PROFESSIONAL CLIENT CARE 1. Knowledge of and compliance with relevant laws, practice circulars and guidelines, and essential facts Including not undertake HDB work unless fully conversant in rules and procedures. 2. Due diligence and compliance with law and statutory requirements Make sure no laws are infringed 11 of 106 CASE STUDY Failure to Comply with HDB Regulations 12 of 106 Facts of Case • SP represent seller in HDB transaction, buyer and father (complainant) purchased the property, issued $1,000 option money • Several days later, option exercise fee issued by cheque prepared using cheque machine, amount $40,000.07 instead of $4,000 • SP wrote name of seller on cheque and passed cheque to seller • Mistake discovered, buyer attempted to recover $36,000.07 • Seller returned $9,000, declared bankruptcy • S&P failed to complete 13 of 106 Charge & Outcome • Charge – SP was charged for failing to comply with HDB regulations under CEPCC “knowledge of and compliance of relevant laws” when he facilitated the option exercise fee • Outcome – SP pleaded guilty – DC considered SP failed in his duty to check the cheque to comply with HDB regulations – SP was fined $3,000 and suspended 4 months. Fixed cost of $1,000 also awarded to prosecution 14 of 106 CODE OF ETHICS AND PROFESSIONAL CLIENT CARE 3. General duty to clients and public Act to instructions of client Not mislead, misinform client Not withhold relevant information Not act against interests of client; e.g. “No co-broke” Act honestly, ethically 4. Prohibition against bringing discredit or disrepute to real estate industry Avoid fraudulent, dishonest acts Not engage in touting Not use harassment, threatening tactics Not solicit any reward from anyone who did not engage their services 15 of 106 CASE STUDY 1 Misleading Potential Tenants Regarding Ownership of Rental Property 16 of 106 Facts of Case • Seller is selling her flat. SP represented buyer. • Seller needed to rent another before moving into a new flat • SP leased out a flat which she claims to belong to her cousin, which in fact is owned by SP and her exhusband – Ownership proof was supplied but was altered to reflect one name only – her ex’s – Parties agreed that SP is not representing seller, nor acting as an SP • Seller proceeded to lease the flat 17 of 106 Finding & Outcome • Charge – SP was charged with bring discredit or disrepute by being fraudulent, dishonest, deceitful, or misleading in providing falsified documents • Outcome – SP was found guilty and suspended for 3 months. Fixed costs of $1,000 also awarded. 18 of 106 CASE STUDY 2 Misleading Co-broke about Sellers’ Commission 19 of 106 Facts of Case • Seller (complainant) engaged SP to sell her property on exclusive basis with commission agreed at 1.5% • SP agreed with buyer’s agent for half the commission paid by seller. SP informed buyer’s agent the commission was 1% • Buyer’s agent insisted that on commission to be included in OTP, which SP added as 1% • SP then altered her copy to reflect 1.5% in order to collect from seller 20 of 106 Charge & Outcome • Charge – SP was charged for disreputable conduct against the industry • Outcome – SP pleaded guilty – SP was fined $5,000, suspended 5 months. Fixed cost of $1,000 was also awarded to prosecution 21 of 106 CODE OF ETHICS AND PROFESSIONAL CLIENT CARE 5. Duty to clients in relation to signing of documents Give sufficient time to read, Explain terms, meanings, consequences Seek advice from professionals – bankers, lawyers Give copy as soon as possible 6. Obligations in respect of agreements Record exact agreement – commissions, asking price etc No signing of blank forms 22 of 106 CODE OF ETHICS AND PROFESSIONAL CLIENT CARE 7. Obligation in conveying offers and counter offers All offers, counter offers, proposals, expression of interest 8. Interpretation or translation if necessary Translated if necessary – by lawyers if possible, individuals above 21 years-old 23 of 106 CODE OF ETHICS AND PROFESSIONAL CLIENT CARE 9. Duties in respect of advertisements Name, contact number of SP License number of estate agent & registration number of SP Information, description of property must be accurate Claims of expertise, success rate to be avoided unless substantiated by verifiable documents Advertise according to clients’ instructions Consent needed to advertise, in writing – EAA forms, email Remove all ads no longer valid 24 of 106 CASE STUDY 1 Advertising Property Without Owner’s Consent 25 of 106 Facts of Case • Owner of HDB Flat engaged an estate agent on exclusive basis • Estate agent advertised in Straits Times • SP saw add and posted in Property Guru. • Owner saw ad mad felt aggrieved 26 of 106 Finding & Outcome • Charge – Failing to comply with applicable laws • Outcome – Was found guilty – Fined $3,000 plus fixed cost of $1,000 27 of 106 CODE OF ETHICS AND PROFESSIONAL CLIENT CARE 10. Duty to avoid conflict of interests Not accept or act for clients if interests of SP/EA are in conflict of clients • SP/EA to withdraw/decline to act if clients request to exclude info on grounds of confidentiality Declare in writing any conflicts that may or as they arise at soonest possible time • • E.g. buyers’ SP is from same company, other SP is related, buyer is related Clients decide if to continue with conflict EA/SP should not acquire directly or indirectly property or interest in property of client without expressed consent of client Not accept any fee reward, reward, referral fees without consent. Fact & quantum declared in writing Not engage in any activity, business, work that will compromise discharge of their obligations – e.g. also insurance agent 28 of 106 CASE STUDY 1 Failure to Convey Expression of Interest, Declare a Potential Conflict of Interest and Misrepresentation 29 of 106 Facts of Case • Seller (complainant) engage SP(A) to sell their property with 1% commission • Introduced a buyer whose property was sold recently by his partner SP(B). Selling price was above Seller’s asking price • SP(A) received half share of commission from SP(B) being partners • As selling price was above asking, SP(A) proceeded to ask for 2% by indicating that buyer was represented by “Ms. A” who is non-existent • Sellers reluctantly agreed to increase commission to 1.25% • In the meantime, another higher offer alleged to have been received for which SP(A) disputed the amount 30 of 106 Charges • Charge 1 – Failing to protect clients interest and failing to inform of higher offer • Charge 2 – Failure to convey expression of interest in respect to alleged offer • Charge 3 – Failing to declare conflict of interest in receiving half of commission received from sale of buyers’ property • Charge 4 – Misrepresenting to his clients that “Ms. A” represented the buyers to solicit more commission (Para 6 CEPCC, duty to act with honesty, fidelity & integrity 31 of 106 Outcomes • Findings – Charge 1 not proven that higher offer was made. However, evidence show there was an expression of interest. However, SP was guilty of remaining charges • Charge 2 – financial penalty $7,000, 7 months suspension • Charge 3 – financial penalty $6,000, 6 months suspension • Charge 4 – financial penalty $2,000, 3 months suspension • Suspension to run concurrently – Total $15,000 financial penalty, 7 months suspension plus $1,000 fixed cost awarded 32 of 106 CASE STUDY 2 Failing to Declare a Potential Conflict of Interest and Failing to Protect Clients’ Interest 33 of 106 Facts of Case • SP engaged by sellers to sell flat on exclusive basis. SP assisted by his downline. • Advertised unit as Blk 260D instead of Blk 260B & “buyer only basis” • Buyers first represented by agent (complainant). Buyers made arrangement to view on their own • Downline’s services offered to buyers who engaged him at 1% commission when sale was agreed • SP did not disclose that he was receiving 6% as overrides of downline’s commission from buyer 34 of 106 Findings & Outcomes • Charge 1 – Failing to declare overriding fees (COI) • Financial penalty $4,000, 6 months suspension • Charge 2 – Failing to protect clients’ interest in advertising in “buyer only basis” • Financial penalty $4,000, 6 months suspension • Charge 3 – Failing to observe duties in respect to advertisements in marketing wrong block number • Financial penalty $2,000, 3 months suspension • Total $10,000 fine, 6 months suspension (concurrently) plus fixed cost of $1,000 35 of 106 CODE OF ETHICS AND PROFESSIONAL CLIENT CARE 11.Recommending professional advice where appropriate Recommend appropriate professional advise unless trained – bankers, lawyers 12.Safeguarding confidential information Personal information or information relating to client cannot be shared • Consent required from relevant parties; e.g. Both buyer and seller must consent for ads to promote “record COV” 36 of 106 CODE OF ETHICS AND PROFESSIONAL CLIENT CARE 13. ??? 37 of 106 1. ESTABLISHING A CLIENT-AGENT RELATIONSHIP 38 of 106 Scope 1. Introduction 2. Duty to Client 3. Declaring COI upfront 4. SPs transacting property for themselves 5. Disallowing SPs to be Powers of Attorney (POA) 6. Confirming identity of Clients 7. Confirming owner of property and property details 8. Agency Agreements 9. Vulnerable Clients 10. Offering Gifts and Vouchers 39 of 106 1.1 Introduction • Clients should be informed of proposed terms service to make informed decision on whether to engage the EAs & SPs – To meet client as soon as possible to: • Discuss terms of engagement including fees, and services to be rendered • Render advice and take appropriate instructions as may be given 40 of 106 1.1 Introduction • No change of EA or SP allowed once engaged unless there is a valid termination or initiated or requested by client – Examples: 1. Engaged SP “A”. Just before transaction is closed with signing of OTP or S&P, “A” informs client that SP “B” is taking over. Not allowed. 2. SP “A” engaged by client, facilitated the entire transaction process. At HDB’s appointment, SP “B” appears and states he is taking over. Not allowed 41 of 106 1.2 Duty to Client • EAs & SPs to do the following: a) b) c) d) e) f) g) h) i) j) Act in the best interest of the client; Act in accordance with the lawful instructions of the client; Act only within the scope of the authority given by the client; Advise the client to seek independent professional advice on matters outside the expertise of the estate agent or salesperson; Maintain the confidentiality of information respecting the client; Disclose to the client all material information in respect of the real estate services and the property to which the services relate; Communicate all offers or expressions of interest to the client in a timely, objective, and unbiased manner; Make reasonable efforts to discover relevant facts in respect of any real estate that the client is considering acquiring or disposing (of); Take reasonable steps to avoid any conflict of interest or potential conflict of interest; and Promptly and fully disclose to the client any conflict or potential conflict of interest that does arise. 42 of 106 1.3 Declare COI Upfront • CEPCC specifies that EAs & SPs have a duty to avoid COI. Potential COI exists when: – SPs representing their respective clients in a transaction are related • By blood or marriage, present or past: e.g. Spouse or ex-spouse, parent or parent-in-law, sibling or sibling-inlaw or child • By employment or business association: e.g. director, or partner, or shareholder, or employee of the other party. 43 of 106 Other COI Examples • Relationships SPs may have with other persons or organisations which may impact the transactions – Example: Sellers’ SP recommends a banker to the buyer for which the SP is getting a referral fee. Must inform seller. • SPs from the same agency may represent the other party. Must disclose. – Particularly if SP of other party is upline or downline – Or if EA has a policy to pool commissions and share amongst the SPs • To avoid undisclosed direct or indirect COI. E.g. SPs chose to deal with a tenant paying commission to maximise their earnings, instead of accepting another tenant who may not pay a commission but prepared to pay a higher rental. 44 of 106 1.3 Declare COI Upfront • SPs have a duty to avoid COI. If potential COI is unavoidable, SP to disclose to clients and obtain clients’ acceptance in writing before proceeding to act via: – E-mail, EA forms, or other verifiable forms of communication such as SMS or other text message. 45 of 106 1.3.6 COI – Dual Rep • SPs should not collect commissions from more than one party in the same transaction. (Reg. 5 of EAA (Estate Agency Work)) – SP may render basic assistance to explain process to the party who is not the principal; e.g. a direct buyer – Not allowed to do estate agency work including negotiate price on behalf of third party. – If collecting commissions from principal, SP is not allowed to collect a co-broke commission from the other party’s SP. 46 of 106 1.4 SPs Transacting Property for Themselves • SPs who parties to a transaction; i.e. as a buyer or seller, must disclose that he is an interested party as soon as possible – Must not accept any appointment to act on behalf the other party. A clear conflict of interest – Example: • SP is a buyer of a HDB flat. He cannot represent the seller in the transaction. 47 of 106 1.5 Disallow SPs to be an Attorney to POA • Normal to appoint any person who is a family member or close trusted family friend as POA – SP is permitted to be POA if appointed by buyer or seller & he is not facilitating in the transaction. He is also not allowed to handle or instruct distribution of proceeds other than to pay the other party in accordance with contract or his principal. • COI exists if SP is engaged by client as an agent to facilitate the transaction and at the same time appoints him as an attorney in a POA – Permitted SP is an attorney, but not facilitating in the transaction 48 of 106 1.6 Confirm Identity of Client • SPs to take reasonable effort to confirm identity of clients a) Record full name of client, or authorised signatory (via company resolution) if client is a company b) Verify identity by checking NRIC, passport, or drivers licence c) Verify age – 21 years and above • Between 18 years to 21 years old – cannot contract in sales and purchases, mortgage, assignment, or settlement of any land or for any leases more than 3 years (Civil Law Act; Cap 43). 49 of 106 1.6 Confirm Identity of Client d) Check immigration passes and/or work permits of tenant, keep copies e) Cross-check passes and particulars with passport, check photos with actual person, and keep copies • • Verify validity of passes with ICA website & print acknowledgement slip, or Verify work permits with MOM website & print acknowledgement slip. 50 of 106 Immigration Act (Cap. 133) • SPs to exercise due diligence to check status of prospective tenants to ensure they are legal residents in Singapore as specified by the Act before recommending the tenant to the landlord • Offence if SPs fail to carry out due diligence checks – If convicted – mandatory jail sentence of between 6 to 24 months – And fine not exceeding $6,000 51 of 106 1.6 Confirm Identity of Client • Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (Cap 65) (CDSA) – Criminalises laundering of proceeds from drug trafficking and other serious offences (>360) – Allows for confiscation of such proceeds – Mandatory to lodge a Suspicious Transaction Report (STR) if there is suspicion that the property transaction may be connected to criminal activity (Section 39 (1), CDSA) • Example: Buyer wants to maintain anonymity and pays for the purchase with cash. 52 of 106 1.7 Confirm Owners & Property Details • SPs must confirm that the clients are owners of the property and/or verify they are authorised to act for the owner/landlord – For HDB • Owners/Landlords to print flat details via “MyHDBPage” on HDB website. – For Private Property • SPs can procure Title information via SLA’s INLIS – Give copy to client 53 of 106 1.7 Confirm Owners & Property Details • SPs to acquire & verify basic information on the property. Information on: Suggested Sources Tenure S'pore Land Registry (SLA) Floor Area Land Titles Registry (SLA); HDB Service & Conservancy Charge HDB Infoweb, Town Council, Mgt. Corp. Strata Title (MCST) Upgrading works & upgrading costs of private and public housing HDB Infoweb/MCST Approved Use of property URA website 54 of 106 1.8 Agency Agreements • EAs & SPs encouraged to use prescribed agency agreements – PG on Use of Prescribed Estate Agency Agreements Form 1-8 • EA/SPs to give clients sufficient time to read, understand meaning and understand consequences of provisions • SPs should also explain clauses in agreement and give client the opportunity to negotiate terms of engagement 55 of 106 1.8 Agency Agreements a) Commission Clause – subject to negotiation and agreed by client b) Exclusive/Non-exclusive Agreements – SPs to explain differences i. SP to ensure clients understand contents of exclusive agreement before signing • ii. In relation, SPs shall not solicit property listings, or buyers/tenants who are subject to exclusive agreements For exclusive agreements SPs to provide marketing plan • Type of ads & number, approach, strategies, and plan for regular updates and feedback iii. For non-exclusive agreements, clients must be informed of terms & conditions, fees and services to be offered. • If agreement has not been signed, client’s consent in writing must be obtained in advance before advertising 56 of 106 1.8 Agency Agreements c) Validity for exclusive agreements – max 3 months. Can be renewed on expiry d) Expected selling price or rent – advise client on market price/rent and obtain clients’ instruction of expected price/rent e) Disclosure requirements – declare & disclose any conflict or potential conflict of interest at all times f) Co-broking clause – advise that marketing property on “no co-broke”, “already co-broke” basis or similar is contrary to sellers’/landlords’ interests g) Additional terms (which should not be in conflict with prescribed agency agreement) – to explain terms clearly; e.g. reimbursement of fees for valuation reports, or other fees 57 of 106 Co-broking • Common practice • Sharing of commission strictly an agreement between SPs and should be mutually agreed upon • If buyers and sellers agree to pay their respective agents a commission, no further co-broking is allowed • CEA does not prescribe commission rates – open to negotiation and market driven • SPs who are in the same team as sellers/landlords cannot represent buyer/tenant in same transaction. Deemed to be in same team if: i. Upline/downline relationship – overriding issues ii. Related by blood or marriage (current or past) iii. Advertise/market the property together iv. Within the same division, group, or team within the Agency 58 of 106 Co-broking • If SP who is in the same team as sellers’/landlords’ SP, he should give to the enquirer the sellers’/landlords’ salesperson’s details (name, phone number) • CEPCC specifies that EAs & SPs must not solicit for any reward, commission, fee from any person who did not engage their services 59 of 106 1.9 Vulnerable Clients • Vulnerable clients require greater attention and consideration due to: – “physical, mental, or emotional impairment or who for any reason are unable to make rational decisions on the property transaction” – Also illiterate, under financial distress, persons with no means of sustenance or family support • Higher duty of care and due diligence expected when dealing with such clients • If such clients make decisions with legal connotations, advise them to discuss with their legal advisers. – Discuss with their legal advisers if necessary 60 of 106 1.10 Offering Gifts & Cash Vouchers • EAs & SPs must not induce clients to engage them by offering cash or kind – Should also not agree id the person initiates such requests – Inducement considered unethical practice which brings disrepute and discredit to industry. • Lowering of commissions is allowed – commissions are subject to negotiation 61 of 106 2. PROVIDING PROFESSIONAL ADVICE TO CLIENTS 62 of 106 2.1 Advising on Price or Rent • Any advice must be justifiable – Draw from verifiable sources • Caveats lodged, HDB resale transaction • Similar properties, locality if possible • Recommend professional advice – Lawyers, bank loans, tax advisers, appraisers, valuers – A&A matters (URA, SCDF, BCA), Master Plan zoning, plot ratio, storey height (URA) • Bank Indicatives are not market valuations – Advice clients to engage licensed valuer – For HDB, use HDB’s panel of valuers 63 of 106 2.1 Advising on Price or Rent • Advice of prices and rents – ensure that; – Data on prices and rents are current and accurate – Properties used to compare are similar/comparable to subject property – Range and amount of data is reasonably comprehensive, and client is no misled on the value of his property 64 of 106 2.2 Advise on Procedures • For Building under construction (BUC) SPs must be familiar with rules & procedures – Standard OTP, S&P, and other relevant documents and information developers have to provide to buyers • For completed properties – Explain Law Society’s Conditions of Sale (1999 or 2012) – Information can be found on the Law Socity’s website www.lawsociety.org.sg/forMembers/RescourceCentre /ConditionsofSale2012.aspx – Refer client to legal adviser if in doubt 65 of 106 2.2 Advise on Procedures • Must be familiar with Residential Property Act – Restrictions of foreign ownership • Definition of foreigner • Types of restricted properties • Advise non-Singapore citizen (SC) to obtain approvals before purchase of strata landed in non-condominium developments – Need for approval before entering into OTP or S&P (Land Dealings (Approval) Unit) – More info on SLA website, www.sla.gov.sg • Purchasers have to withhold tax when making payments in the purchase of residential property from non-resident trader (www.iras.gov.sg) – Consult tax agents/consultants 66 of 106 2.2 Advise on Procedures (HDB) • Must be familiar with HDB prevailing policies & procedures • Represent Seller – Complete checklist online, observe 7-day cooling off before issue of OTP – Complete sales proceeds and financial plan (if buying another HDB flat) • Represent Buyer – Qualify buyers, complete checklist online before exercising OTP – Explain new procedures to obtain HDB valuation – Ensure buyers obtain necessary financing (HLE, or Bank approvals) before committing to the purchase 67 of 106 2.2 Advise on Procedures (HDB) • Advise clients to approach Branch offices to seek financial counseling when having difficulties in paying mortgage instalments • When assisting owners in subletting of flats • Check eligibility to sublet • Check non-citizen (NC) quota, advise tenants on their eligibility, check legality of stay • Explain HDB sublet terms/policies/conditions/procedures • Ensure owners obtain approval before granting tenancy agreement (TA), or register tenancy within 7 days of commencement for room rentals • Explain clauses in TA to owner and tenant • Advise tenants to stamp TA 68 of 106 2.3 Advise on Financing/Payment of Fees • SPs to advise client on rules governing financing & fees payable such as: – For financing; • Loan-to-value, total debt servicing ratios (TDSR) – If CPF is used, inform clients of relevant rules such as: • CPF Withdrawal Limits & Minimum Sum Schemes – Fees in Property Transactions such as; • Option/Option exercise fees • buyers stamp duty, additional buyers stamp duty, sellers stamp duty • Legal & associated fees • Commissions • HDB Admin fees • Valuation fees 69 of 106 2.3 Advise on Financing/Payment of Fees • SPs to advise clients to seek appropriate advise from finance brokers/institutions before committing to purchase • Indicatives provided by banks are not valuations and should not be communicated to clients as valuations • Any recommendations of financial institutions, legal firms, service providers made to clients must be accompanied by disclosures on relationship, connection, or association – Any referral fees/commission must be declared and consent from client obtained in writing including quantum to be received 70 of 106 2.4 Signing of OTP and S&P • SPs must: – Be familiar with and explain terms of OTP and S&P including financial and legal implications – Do due diligence checks for their respective clients • Ownership details • Payment of option money/deposits – If by cheque, ensure accuracy of details – name of payee, date, amount and signature • Only indicate agreed price on OTP – Deduced amount; e.g. “market valuation” or “market valuation plus Cash over valuation” or similar terms are not accepted – Must not backdate/postdate OTP or S&P 71 of 106 3. MARKETING AND ADVERTISING OF PROPERTY 72 of 106 3.1 Agree on Strategy • Under CEPCC, EAs & SPs must; – Obtain consent in writing before advertising – Advertise according to clients’ instructions – Obtain clients’ consent & feedback on strategy • Marketing strategy should comprise a) Reasonable range of recent transacted prices/rentals in the vicinity b) Reasonable range of current asking prices in the vicinity • • Include overview of current market to manage clients expectations SPs to keep proper records of advertisements – Copies of ads, receipts/invoices 73 of 106 3.2 Information about Property • For private properties SPs to make reasonable effort to gather information such as: – Facilities, maintenance fees, sinking funds, surrounding environment • Ensure information is not false or misleading – Verify information from developers, reliable sources & Gov’t authorities • For foreign properties, ensure information by foreign developer is accurate before marketing – SPs to get approval from their EAs before marketing if EA is not appointed as agent for the property – Ensure such properties have obtained relevant building plan approvals from their respective authorities 74 of 106 Marketing Foreign Properties • PG 1/2014 – PG for EAs and SPs Marketing Foreign Properties issued by CEA on 14 March for EAs and SPs to adopt professional practices; in particular (clauses 6-9); a) SPs to inform their EAs if they intend to represent a developer of the foreign property to enable the EAs to perform due diligence checks (Annex A – PG 1/2014) b) In representing the buyer, the SP will seek the approval of his EA as he subjects his EA to risk and liabilities c) EAs to ensure they possess the necessary professional insurance for themselves and their SPs. 75 of 106 Marketing Foreign Properties d) EAs to conduct preparatory activities when marketing overseas projects; i. Selection and Training • Need to be conversant. Training to include details and facts, processes, guidelines, payment schemes and law ii. Enter into Agreement with developer/foreign estate agent iii. Enter into agreement between estate agents if more than one has been engaged iv. Buyers’ SPs who co-broke may not be able to conduct the same of due diligence. However, still required to ascertain details and specifications of property and give appropriate advice. 76 of 106 3.2 Information about Property • When marketing the property, to accurately convey; a) Property valuation & reasonable range of recent transactions b) Approved current/future developments (if made known by authorities) in vicinity c) Transport facilities, nearby amenities such as schools, MRT, malls d) Approved use of property; residential, commercial/office, or industrial • Statements of expected capital gains or rental yields must be substantiated • Include disclaimer that past performance is not indicative of future performance 77 of 106 3.2 Information about Property • When marketing the property, to accurately convey; – Surroundings in advertising & promotional materials • Use of artist impressions, where open green pastures replace actual buildings around the development is considered misleading and a misrepresentation • SPs must not make promises/guarantees they are not able to fulfill 78 of 106 3.3 Advertising the Property • EAs & SPs to comply with CEPCC and also PG on Ethical Advertising a) Obtain consent from vendor to advertise in writing before advertising • Include name, registration number of SP. All SPs if more than one • Inform vendor if listed SPs are representing him b) Ensure accuracy in description. Must not be false/misleading • c) Explain TOP dates are estimates Ensure any offers, proposals, statements, representations, claims or information are not inaccurate, false or misleading Include SPs name, registration number, contact number (as stated in CEA Register) along with EAs name & licence number d) • For CATS (4-liner) – only an identifiable name and contact of SP registered with CEA is needed 79 of 106 3.3 Advertising the Property • Any phrases that is against the owners’ best interest is not allowed – • SPs to verify information provided by vendor is accurate before advertising – – • Such as “no co-broke”, “already co-broke”, “buyer pay 1% commission” not allowed Tenure, floor area, and other description Via title search, documents provided by owners When marketing a property, SPs must not recommend that interested purchasers engage of another SP or recommend himself 80 of 106 3.3 Advertising the Property • • Ensure no discriminatory or stereotypical phrases against any particular race, religion, or group in society Advertisements to be removed when; – – – Property no longer available for sale/lease Appointment is terminated OTP has been exercised or S&P has been signed • • If OTP is granted but not yet exercised, SP to explain to interested parties that property is not available EAs must state registered names of their SPs accurately in all their advertising materials – – EAs to show their SPs the advertisements so SPs can respond to consumers Breach of para 5 of CEPCC; failure to conduct business & work with due diligence & care 81 of 106 3.4 Online Marketing • All regulations & policies regarding advertising also apply • SPs to ensure compliance with Anti-spam Act – Use of “<ADV>” for advertisements – Provision of “unsubscribe” or opt-out facility, removal from email mailing list within 10 business days of request to unsubscribe 82 of 106 3.5 Advertisement Signboards • SPs to obtain written consent from clients before display of signs or banners at the property • Displays to comply with applicable regulations, guidelines, procedures or policies – Building and Construction Authority (BCA) (Outdoor Advertising) – LTA approval required for signs put up on public roads 83 of 106 3.6 Property Viewings • For show flats; – Per developers’ instructions on mode of sale – Mode shall not cause inconvenience to public, traffic congestion, or bring about bad publicity – Ensure system for managing potential buyers is fair and transparent • Obtain clients’ consent prior to conducting viewing – Details of property viewing; date, time, persons who viewed to be informed – Comply with rules, by-laws laid down by property’s management office 84 of 106 3.6 Property Viewings • SPs should be prepared for viewings – Be punctual, project professional image, professional conduct – Display agent card at all times – Keep proper records of who viewed property • For clients info and proof of effective cause • For sub-sale where buyer sells after OTP exercised but before legal completion – Legal owner to consent to viewing 85 of 106 3.6 Property Viewings • Where Keys are given to SPs to arrange viewings; a) SP to issue written acknowledgement on receipt and number of keys to client i. Not to duplicate keys without consent ii. Verify recipient’s identity when returning keys, if not client iii. Obtain written acknowledgement from client/recipient b) Not use keys for any purpose other than viewing to prospective buyers/tenants c) Return all keys as soon as possible i. ii. Upon sale or lease of property Upon expiration/termination of agency appointment 86 of 106 3.7 Use of Cheques • Collecting cheques for any purpose other than to obtain OTP or S&P is not allowed (re: Project sales) – Developers to initiate & consent such collection in writing direct to the EA – Cheques to be crossed and issued to developer, or the project account • An authorisation letter must be issued capturing names and NRIC of prospective buyers and SP, including registration number. 87 of 106 Authorisation Letter • Letter should clearly state terms to safeguard the prospective buyer. Such terms include: a) Name of project; approved/pending approval; specific unit numbers • b) No cheques can be collected if no unit numbers Conditions EA/SP can handover cheque to developer • Maximum amount for cheque, validity period of cheques, buyers’ prior knowledge & approval c) d) • Procedure to return cheque if buyer rejects purchase Changes such as addition/deletion of names, change in units, change in payment schemes not allowed e) All purchasers are at least 21 years and eligible to purchase f) Non-Singapore citizen purchasers subject to LDAU approval if necessary Copy of letter to be given to client immediately 88 of 106 3.7 Use of Cheques • EAs to maintain register, and proper written procedure for preparation, issue, safekeeping, and return of cheques. Register should record information found in the authorisation letter including; • Cheque number, received date, SP who received cheque • Authorisation letters and cheques to be kept by EAs, not SPs • For completed properties SPs should not • Collect cheques as symbol of sincerity • Use cheques to solicit for higher offers from other buyers 89 of 106 3.8 Statements to Other Parties & Material Facts • EAs & SPs to safeguard clients confidential information • Before marketing property, SP to discuss with sellers to ascertain material facts for buyers in their buying decision 90 of 106 Material Facts • Following considered material facts and important information to be disclosed to buyers or tenants a) Approved use b) Land Area/Strata Floor Area • • • From Cert. of Title or Certified Plans done by surveyor From developer or OTP/S&P signed with developer For strata titled properties – – – Strata Certified Plan when approved by Chief Surveyor, would contain floor area, void (if any)and total area of each storey If not approved yet, schedule of strata units, or form provided by developers OTP and/or S&P agreement 91 of 106 Material Facts • Following considered material facts and important information to be disclosed to buyers or tenants c) Tenure – for leasehold, include start date of lease d) Other information; i. ii. iii. iv. Loan shark harassment Bankruptcy issues Recent death from unnatural causes Any defects that affects the property value or suitability of use as dwelling; e.g. pests, spalling concrete, water leakage, hazards such as environmental hazards or natural disasters v. Unauthorised additions, structures, alterations, renovations vi. Any caveats lodged vii. MOP for HDB resale flats 92 of 106 3.8 Statements to Other Parties & Material Facts • For sale of undivided interest or unregistered land, SP should advise client to seek legal advise – Example 1: • SP represent buyer. Land has 2 houses (#5 & #7). Revealed that buyer will purchase half share of the land and house #5. SP to advise buyer to seek legal advise before issuing option fee – Example 2: • SP represent vendor of unregistered land. Buyer (unrepresented) must be informed as such and be advised to seek legal advice before making purchase 93 of 106 3.8 Statements to Other Parties & Material Facts • In divorce cases: – Where court order is issued for sale, written consent from either owner to conduct sale; or from the party granted by the courts – No court order, then consent from all owners to be obtained • In HDB cases, where spouse is not co-owner/occupier of flat, spouse needs to endorse on Resale Application form – Also sign “Spouse Consent to Resale” in presence of HDB Customer Service Manager – Form to be signed in presence of Notary Public if not in Singapore or residing overseas 94 of 106 3.9 Marketing Property for En Bloc Sale • SPs to note – Shall not harass owners to consent to en bloc sales – SPs should not withhold information which should be shared under Land Titles Act; e.g. percentage of owners who have already signed the Collective Sales Agreement 95 of 106 4. COMMUNICATING OF ALL OFFERS AND EXPRESSIONS OF INTEREST 96 of 106 4.1 Communication with Clients • CEPCC requires EAs & SPs to render professional and conscientious service to clients, including communicating with them • SPs should be clear when passing information that is factual or based on opinion 97 of 106 4.2 Conveying Offers & Expressions of Interest • EAs & SPs to convey every offer, proposal, or expression of interest truthfully, accurately, and objectively and as soon as possible and not withhold or sieve out any offers or expression of interest • SPs to record all offers, verbal or written including: • • • • Date & time of offer/expressions of interest Name & contact details of person making offer Amount offered or indicated If appropriate, client to sign Letter of offer • SPs to retain copies of all offers (whether resulted in transaction or not) for a period of 1 year. 98 of 106 4.2 Conveying Offers & Expressions of Interest • SPs to advise client on offers, and maintain confidentiality of offers and discussions with client • If potential buyer/tenant expresses interest but does not give an offer, SP should seek clients instructions to wait for offer or to consider offers by other potential buyers/tenants • If multiple offers are received, SP to seek clients instructions to close with highest offer, or to ask other interested parties to raise their offers. 99 of 106 5. COMPLETING THE PROPERTY TRANSACTION 100 of 106 5.1 Follow-up Actions after Agreement is Reached • Once agreement is reached, SP to ensure Prescribed Estate Agency Agreement is signed if not signed earlier • SP to explain to buyer on fees payable such as; • Option fee, option exercise fee, and completion payment/progressive payments • SP to advise clients to seek advice of relevant professionals where appropriate 101 of 106 5.1 Follow-up Actions after Agreement is Reached • SPs are to explain the clauses of the OTP/S&P or TA, and highlight that these are legal documents. Also include payments and dates due where relevant. • SPs to make copies of signed documents for all signatories as soon as possible after signing. Documents to be dated same day as they were signed. 102 of 106 5.2 Handling of Transaction Money • EAA (Cap. 95A) prohibits EAs and SPs from holding or handling transaction money on behalf of any party in relation to sale and purchase of any property situated in Singapore or lease of HDB property. 103 of 106 5.3 No Money Lending or Advances by EAs & SPs • No lending or advancing money to clients except in the payment of stamp duty for rental transactions before reimbursement by client • EAs & SPs prohibited from introducing, referring, or recommending moneylenders to clients • Also not accept client referral from moneylenders, their employees, their agents or their representatives. 104 of 106 5.4 Handing Over Property • SP to ensure inventory list is prepared before handing over – both sale and/or lease • Inventory list to be signed by seller/landlord and buyer/tenant and will form part of transaction documentation, including photographs if any • Where appropriate take photographs and include notes on damages such as chips, scratches, cracks etc 105 of 106 Summary • The PSM is to strictly complied with • To read the PSM in conjunction with the Estate Agents Act and the relevant PGs and PCs • When in doubt, seek clarification with the estate agency • Finally, put clients’ interests before your own 106 of 106
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