Real estate agency HSR fined $74,000 over en bloc sale incentives
PUBLISHED ONMay 17, 2016 5:15 PMByLee Meixian
THE Council for Estate Agencies (CEA) said yesterday it has imposed a financial penalty of $74,000 on real-estate agency HSR International Realtors for two counts of acting for a client in a way that puts its interests in potential conflict with that of the client, without declaring so in writing to the client.
The disciplinary committee of CEA also disallowed HSR from undertaking any collective-sale work for one year from April 20.
The subject incident has to do with the en bloc attempt of Thomson View condominium, for which HSR was the marketing agent.
In October 2011, the collective sale committee received consent of 80 per cent of the total share value of the condo and proceeded to launch the tender.
A third tender in August 2012 attracted a bid of $590 million from Wee Hur Lucrum.
In the same month, however, the minority subsidiary proprietors filed objections to the collective sale. A stop order was issued in January 2013.
The sales committee took the matter to the High Court, where it was found that HSR had offered incentive payments to four subsidiary proprietors to sign the collective sale agreement.
The committee had eight subsidiary proprietors.
While the court ruled that the collective sale committee had not acted in bad faith, it said HSR had breached its duty as an advisor to the committee by offering the incentive payments.
The court also ruled that HSR had breached its duty of transparency by not disclosing the incentive payments to the collective sale committee or the subsidiary proprietors.
Subsequently, CEA's investigations revealed that the lead property agent in HSR's sales investment team had approval from HSR's management to offer the incentive payments.
HSR pleaded guilty to the disciplinary committee on April 12. Action was also initiated against the lead property agent but the latter died before the disciplinary proceedings could be completed.
This article was first published on May 18, 2016.
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