In what is fast becoming common practice of late due to increasing property prices and the deteriorating economy – where everyone is looking to make a quick buck, or trying to save wherever they can – and more prevalent because of the relatively ‘low risk-high gain’ perception surrounding real estate investments, home buyers and investors are abandoning conventional real estate agents and flocking to bank auctions in the hope of acquiring properties below market value.
The buyer, after winning – frequently at a greatly discounted price, a property that he thought had a great potential – happily signs off on the Proclamation of Sale thinking about how much he has saved/can make on the property, and hands over his hard-earned cash to the bank.
Of course, the intelligent buyer makes sure he is as informed as he can be – that he has taken all precautions and did his due diligence (typically with auctions, a bidder is only provided the address and a cursory description of a listed property and not much time to inspect it).
Some of the due diligence that the buyer may have exercised would be:
- Driving by the listed address to see that it was not a sham listing;
- Ensuring that the property was not dilapidated – but even if it was, he is able to flip it making a considerable profit;
- Checking with the land office to ensure that there are no liens or caveats on the property;
- Ensuring that he is not be bidding for a sum more than the property’s worth;
- Expected returns in that particular area is high; and/or
- It is a good neighbourhood to live in.
Subsequently, the transfer of title is completed and the buyer receives the title documents. Now with the title of the property in his name, thinking everything else should fall into place, the buyer picks up the keys to his latest fruit of labour and decides to make a visit to properly inspect the property.
He unlocks the door and to his bewilderment, finds himself face to face with someone who appears to have been living comfortably there for some time and claims to have rightful possession of the property. The buyer waves the title documents in the other person’s face and points out his name on the title and states that he is the rightful owner.
The person occupying the property waves back a seemingly valid tenancy agreement and insists on staying put and that he is promised uninterrupted enjoyment and use of the place. In some cases, the person occupying the property changes the locks on the property, preventing any possible entry from the buyer.
Angry but not one to resort to violence, the buyer heads to the bank with his title documents, demanding that the person occupying the property be removed from his property. The bank then produces the executed Proclamation of Sale, pointing out a particular (and usually boilerplate) clause which reads:
The buyer is now faced with the current scenario:
- He has no idea who the person occupying the property is;
- He has no way to immediately claim his property even though he holds title;
- The bank is not required to return his money nor are they required to deliver vacant possession;
- Forceful entry is illegal; and
- He has reported his grievances at the nearest police station but it doesn’t mean that the person occupying the property can be removed immediately.
- What then can such an aggrieved buyer do to remedy this situation and recover possession of his property in return for what he has paid?
Unlike a breached tenancy agreement, wherein the landlord who wishes to evict a tenacious tenant can do so under laws governed by the Distress Act 1951, the Contracts Act 1950, and the National Land Code 1965, there is a dearth of legal literature on what to do when faced with the above buyer’s scenario.
When a company is promoted, a company secretary, and soon after, an auditor is at the point of incorporation, all the necessary statutory documents are prepared and filed. One such document is the Memorandum and Article of Association (M&A). The M&A is akin to an agreement between the company and its shareholders and all shareholders are bound to adhere to its terms and conditions. However, the M&A does not take into account the relationship of the shareholder as between themselves and many of them prepare their own document or none at all.
The most common reason given by founders is because their co-founders or partners are friends. Some founders are even apprehensive to approach this topic as they believe that such documentation indicates a lack of trust in their co-founders. This is especially true at the start of the business when relationships between all the parties are rosy and camaraderie is at an all-time high.
It is interesting to note that usually, when relationships are rosy and the business is fresh, it is the best time to create and crystallise all the necessary internal legal documentation as negotiations move smoothly. However, failing to plan ahead and being reluctant to address this issue can result in a number of significant problems which we shall explore shortly.
What a landlord can do
Fortunately, an aggrieved buyer does not have to resort to engaging the likes of Bentong Kali or Botak Chin to effectively drive these trespassers out for good. Although less notorious than trespassers of the tenant-variety, a remedy for those who find someone occupying a recently purchased property is tied up neatly in the Rules of Court 2012 (ROC 2012). Under O.89 ROC 2012, a buyer may, through an Order of Possession obtained from the court, lawfully evict an occupier.
Giving the occupier a chance
A buyer may find that the occupier is an innocent victim of circumstance and as such does not wish to immediately take court proceedings against her/him, which can seem harsh and ruthless. The buyer will first have to place a Notice to Vacate on the main door of the premises – on the gate/other conspicuous part of the premises if he cannot go past the gate. This will give the occupier 30 days to voluntarily vacate the property. However, post the 30 days, the buyer may then proceed to serve an originating summons under O.89 ROC 2012 and commence proceedings to evict the occupier. The originating summons must be served personally on the person occupying the property even though the buyer may not have a clue whatsoever who is residing upon his property.
In such cases, the occupier may be unnamed in the originating summons, and service is effected by affixing the originating summons and affidavit on the main door or any other conspicuous part of the premises, or inserted through the letter box.
Merely a paper judgment?
An Order for Possession may be obtained in as little as five days (if urgent) from service of the originating summons. However, the Order is for all intents and purposes merely another piece of paper for the buyer to wave at the occupier if he/she refuses to step foot outside the door. The Order also does not actually allow the buyer to break any lock and/or forcefully enter the property as the occupier has protection under the law to life, liberty and freedom.
Seeking court bailiff assistance
The buyer will have to apply for a Writ of Possession to enforce the Order. Pursuant to the application, the Writ of Possession will direct the Court Bailiff to forcefully enter the property in dispute and execute the Writ of Possession. This will also involve payment made to the Court Bailiff for his services. Customarily at this stage, even the most obstinate trespasser will be removed from the premises. The buyer may then finally reap the benefits of his hard work and revel in the luxury that is his newly purchased property.