Couple win right to buy house despite backdating contract

PHOTO: Couple win right to buy house despite backdating contract

SINGAPORE - Home buyers Boon Lay Choo and Law Khim Huat had their eye on a $3.68 million landed property.

The trouble was that tough housing loan rules had just kicked in and reduced the amount they could borrow.

So the married couple tried to get around the regulations - by putting the wrong date on their option to purchase forms.

They backdated the paperwork by two days - giving them the chance to borrow 80 per cent of the property price.

When the seller found out about the illegal move, she tried to pull out of the deal.

Now, however, the couple have won their battle for the right to buy the house in Simei after the High Court ruled in their favour.

Judicial Commissioner Lionel Yee said that although backdating the forms was a breach of the regulations, this really affected only the bank.

It had nothing to do with the completely separate contract between buyer and seller. This meant there was no reason why the sale could not go ahead.

The couple - who say they were acting on their agents' advice - tried to bend the rules last October after deciding to buy the three-storey terrace house.

They had previously been eligible for an 80 per cent loan. But property cooling measures introduced by the Monetary Authority of Singapore meant they could borrow no more than 60 per cent of the home's value.

The couple, who are both business owners in their 50s, backdated their forms to Oct 4 - two days before the regulations took effect.

This meant they could apply for a loan under the older, less stringent rules.

The seller, Madam Ting Siew May, signed the paperwork but later decided not to go ahead with the agreement. So Madam Boon and her husband took her to court to try to force the sale.

Their lawyer, Mr Ng Lip Chee, accepted that the backdating was done to get a better home loan deal. But he argued that this did not mean the contract could not be enforced.

He added that the couple were prepared to go ahead with the deal as though it had not been backdated, and settle for a smaller bank loan. Meanwhile, Madam Ting's lawyer, Mr P. Balagopal, argued that by putting the wrong date on the forms, they had invalidated the whole agreement.

But the judge disagreed, saying that it was "merely incidental to the contract".

He added that the agreement between the buyer and seller was completely separate from the loan deal with the bank.

It was therefore "not an obstacle" to enforcing the option to purchase exercise.

The judge said that while backdating the forms could have breached the Banking Act, there was no provision in it that made the loan agreement invalid.

The couple are now set to buy the property - but with the smaller loan of 60 per cent.

It is not known whether any further action will be taken over the backdating.

vijayan@sph.com.sg


Get a copy of The Straits Times or go to straitstimes.com for more stories.