Why three siblings fought over the sale of their late mother’s HDB flat

Three siblings who inherited a $600,000 Housing Board flat from their late mother ended up fighting in court because they could not agree on the seemingly straightforward process to sell it.

It all seemed rosy at first when one of the siblings offered to pay $400,000 to buy out the others’ share. This was gladly accepted and all looked on track for a happy resolution.

But things went south after the siblings clashed over how the sale should be done, even though there are clear guidelines in the HDB standard option to purchase (OTP) forms.

For instance, while the two siblings wanted $5,000 for the option fee and its exercise fee, which is the prescribed maximum amount, the buyer wanted to pay only $1 plus another $500 for this part of the process.

The sellers were willing to accept the lower deposit since it merely meant that the buyer would have to pay more for the balance sum.

But the buyer’s next request – to prolong the completion date to four months, which was twice the norm for HDB resales – proved a major stumbling block for the two siblings.

The buyer wanted them to ask the Housing Board to amend the standard form to reflect this request but their lawyer said that the changes to the OTP could not be made.

The buyer’s lawyer responded on the same day, stating that the onus was on the sellers to obtain HDB’s consent to modify the OTP to reflect the parties’ agreement.

Instead of responding to this, the next letter from the sellers stated that they would apply for a court order to sell the flat and then divide the proceeds equally among the three of them.

But the transaction still hit a brick wall: The court dismissed the sellers’ application, noting that they cannot ask for such an order to “short-circuit” the conveyancing process just because they thought it was tedious.

The case highlights two important lessons on why parties should not simply resort to court orders as a way to force a property sale.

When it is necessary to order a sale

Applications for the sale of a property are usually filed because one or more owners refuse to sell or that the consent for the sale could not be obtained because the owners had died or had lost mental capacity.

The courts consider the state of the relationship between the parties as well as the property’s condition in deciding whether it is necessary to green light a sale.

For instance, if the dispute concerns two parties who are bitterly opposed to each other, a sale would usually be ordered as it offers a “clean break” to prevent the relationship from deteriorating further.

However, a sale may not generally be ordered if it violates a prior agreement between the co-owners concerning selling the property.

For instance, if two siblings had agreed that they bought a property jointly to allow their parents to live there for the rest of their lives, it would be hard for one side to apply for a forced sale if those parents were still living in the unit.

In this case, other than making a bare assertion that they have had “difficulty” in dealing with the buyer, the siblings did not produce any evidence to show that their relationship had worsened since they started discussing selling the flat.

Moreover, there was also no record that the buyer had withdrawn from his agreement to buy out his siblings’ shares.

The court instead found that the buyer was “clearly making good-faith attempts” to convince the sellers that the onus was on them to inform HDB about the necessary amendments to the OTP.

Indeed, the court found that the buyer had raised legitimate concerns about the sale such as the length of the completion period on the OTP and the party who was supposed to write to HDB to ensure that the changes are reflected in the OTP.

As a result, the court found that the sellers could not construe such “reasonable requests” as evidence of the buyer being difficult and then using this to obtain an order forcing the sale of the flat.

Court order not meant to pressure other owners

Rules relating to property transactions are clearly defined so that such sales can go through without any hitches after the parties have settled on the process.

So the courts will generally dismiss attempts by one side to abort discussions midway and exert pressure on the other party to effect the sale.

This is especially so when it has not been shown that the other owner is unwilling to sell the property or is being unreasonable, such that negotiations would be fruitless or would likely end in a stalemate.

In this case, the court found that the buyer had not behaved unreasonably and had even remained willing to buy the flat by engaging in good-faith negotiations on specific terms, such as extending the completion date.

Rather, it was the sellers who had failed to show that such negotiations would be impractical or useless. As a result, the court rejected their attempt to prematurely terminate negotiations and to apply pressure on the buyer to effect a sale on their preferred terms.

The case is yet another timely reminder for parents to get their legacy planning in order so that they can avoid costly and unnecessary conflict in their families.

In this case, the owner of the flat had died without a will and that resulted in the flat being shared equally by her three children. When a non-liquid asset has multiple owners, disputes can easily erupt if one owner disagrees with the rest.

Even so, lawsuits should always be the last resort, especially when the courts have routinely advised parties to try to resolve their differences amicably.

For instance, if the parties have a good reason to extend the completion date of their property transaction, the HDB website states that such requests can be considered if made jointly by both buyers and sellers.

Even if they do not want to make such requests, both sides can still come to an agreement to submit their sales application two months later, so that more time can be given to the buyers to raise the required funds, if this is the reason for the delay.

Ultimately, disputes relating to money can be resolved if both sides are willing to discuss their problems amicably, with a view to finding a solution that does not require spending even more money to fight a legal battle.

Tan Ooi Boon is the Invest Editor of The Straits Times

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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