MISREPRESENTATION claims have surfaced in Singapore courts recently, with buyers taking legal action against property agents for allegedly making claims about the properties they purchased, which later turned out to be untrue.
While agency leaders have condemned misrepresentation, lawyers said that there can be many grey areas when it comes to distinguishing between sales talk and false representations of fact.
Two notable cases
Last year, two notable cases of misrepresentation were heard in court. The first involved an agent from Realstar Premier Group who was accused by a buyer for passing on a marketing brochure for a good Class Bungalow (GCB) from the seller. The brochure allegedly painted a false picture of the GCB's redevelopment potential.
The buyer, who paid $$18.68 million for the GCB, later discovered there was a drainage reserve onsite which prevented them from fully redeveloping the entire land area.
In December 2023, the High Court dismissed the suit, on the basis that any false impression the buyer had that the entire land area could be redeveloped was a misimpression on her part.
Furthermore, by forwarding the brochure, the property agent's role was "limited to that of a conduit", the judge said.
Another case of alleged misrepresentation involved a Huttons property agent, Ong Jianlong, who was sued by a Chinese businessman, who is seeking about S$1.5 million in damages from him and his agency.
The property owner, Chen Qiming, claimed that the agent had misrepresented that he would be able to help resell a condominium unit without much difficulty. Huttons and Ong have denied this claim.
Chen also claimed that the agent assured him he would be able to extend the length of the study in the unit by 5 m to construct a loft to accommodate his family's needs, but later learnt this was not allegedly permitted.
Huttons and Ong have refuted this, saying the loft could be built without approval, and a bigger loft could be built with approval from the developer or the relevant authority.
In response to queries from The Business Times (BT) on Huttons' view on misrepresentation in the real estate industry, Huttons Asia's chief executive Mark Yip said that salespersons have always been advised to rely on official sources like government plans and press releases.
Many instances of feedback from consumers to the Council for Estate Agencies (CEA) concern the service standards of salespersons, "which boils down to a mismatch in expectations and a misunderstanding of the role of salespersons", he added.
For example, in a rental transaction, the duty of the agent ends upon handover, but the tenant tends to approach the agent for issues that arise subsequently, Yip noted.
The agent, being the first point of contact, is often expected to provide all the answers. But agents should refer buyers to relevant professionals such as lawyers or architects when necessary, and not commit to providing information if they cannot verify the facts, said Adam Wang, the president of the Singapore Estate Agents Association.
For landed transactions, property agents need to be familiar with official redevelopment guidelines, said PropNex's key executive offi- cer Lim Yong Hock. "The projected rate of return, as provided by owners or developers, has to be substantiated for instance, with recent transactions done."
ERA's key executive officer Eugene Lim agreed, saying: "Real estate salespersons should not 'pluck' figures that are not substantiated in any way."
Justin Quek, chief executive officer of OrangeTee & Tie, said that all marketing materials are carefully curated by the agency to ensure data integrity. "Having said that, misrepresentation can sometimes be a grey area. Agents may unknowingly make comments that clients could view as misrepresentation. To minimize such instances, at OrangeTee, our agents are trained to stick to the facts," shared Quek.
However, the line between fact, professional opinion and mere puff is thin, lawyers said.
Mabel Tan, a senior partner at law firm Joseph Tan Jude Benny, said: "Proving that an individual knowingly and intentionally misrepresented information can be very difficult. It is necessary to demonstrate that the person making the statements had the intention to deceive or knew the information was false."
Benjamin Koh, a partner at Allen and Gledhill, said: "A statement of opinion or belief is not the same as a statement of fact, and so a statement of opinion about the future which turns out to have been unjustified will generally not give rise to liability for misrepresentation."
Many misrepresentation cases involved a "she said, he said" scenario, where both parties have different versions of what was said and there are gaps in evidence.
"It is more difficult to prove a misrepresentation that was made orally. The judge will have to consider the strength of the evidence available and determine whether the misrepresentation was in fact made orally based on the balance of probabilities," explained Koh.
The actual words used by parties are critical and present a challenge to prove in court if they were conveyed verbally, said Jason Teo, an associate director at Setia Law. He noted: "You may have thought that the real estate agent said that profits were "guaranteed", but he may claim that he only said that profits were 'projected."
According to the Code of Ethics and Professional Client Care, estate agents and salespersons are required to "act with honesty, fidelity and integrity" and "must not mislead the client or provide any false information or misrepresent any relevant law or fact to the client".
While a breach of the code does not entitle a disgruntled buyer to sue for damages, failure to observe the code could lead to the offending agent facing disciplinary action by CEA, said Allen and Gledhill's Koh.
Failure to comply with regulations could lead to agencies incurring a fine of up to S$200,000 per case, while individual agents could face fines up to S$100,000 per case. CEA may also suspend or revoke a property agency's license, or an agent's registration.
In 2023, 16 property agents were suspended following disciplinary proceedings, the same number as in 2022. There were 28 agents suspended in 2021, 22 in 2020 and 15 in 2019, CEA said.
BT understands these suspensions took place for various reasons, such as when agents failed to act ethically and fairly towards others or committed acts that brought disrepute to their agencies. Suspensions are not classified into categories.
"Sometimes, salespersons can be overly enthusiastic and don't want to pass over a good deal," said Ian Loh, managing director of Quinvest Chambers International Property Consultants. "No matter how much you would like to push a deal forward, you cannot overpromise or say things which are untrue. If you don't know, say you don't know."