Sri Tanjung Pinang subsale vendor cancelled sales

Public Voices (Guest Post)

Hi all,

I had in early March'10 entered into an agreement to purchase a courtyard terrace in Sri Tanjung Pinang from a foreign owner via an agent. During the negotiation stage, the owner representative had clearly highlighted that the S&P can only be signed by mid-May'10 due to the 3-year restriction on foreign ownership to disposal property in Penang. We had agreed upon that 1% earnest money would be paid upfront to the vendor with the balance 9% payable to vendor's solicitor upon signing of S&P within 14 days. The transfer in escrow shall be dated in mid-May'10 and upon which, the 9% shall be released to the vendor with the balance 90% payable within 3 months thereon.

The unfortunate turn in event was after 1 week of entering into the Offer for Sales and Purchase contract and payment of 1%, the vendor has instructed his lawyer to claim that his client is canceling the sale due to the restriction to dispose the property prior to mid-May'10. Included therein is a cheque refunding the 1% earnest money paid by us without compensation when there is a clause in the Offer for sales & Purchase contract stated that " In the event the Vendor fails or neglect to execute the S&P Agreement within the stipulated period as aforementioned, the Earnest Deposit shall be refunded in full together with an equivalent amount in compensation and in addition thereto, pay a further 1% of the Purchase Price to the Purchaser as agreed liquidated damages".

Hence, I would like to hear from fellow forumers comment on the below:-

1. Based on the aforesaid cancellation clause, my solicitor has rejected the refund and seek on my behalf for the rightful compensation. It took nearly 1 month for the vendor's solicitor to reply that his client is ready to refund my 1% plus the equivalent sum as compensation. I had decided to accept such compensation than fighting for the additional 1% compensation. However, till to-date we have yet to receive any payment nor refund yet and the deadline has passed for the vendor to pay.
My question is should I initiate legal action to summon for the payment? Is there any other action(s) that I should consider?

2. To matters complicated, during this period I had made several calls to agents who advertised E&O property for sales and found out that it was the exact unit that I have paid for but with the vendor now calling for higher price.
Could I use this fact to prove that the vendor canceling my sales is more towards trying to fetch higher price than because of the said restriction?

Any comment would be much appreciated.

David C


April 10, 2010 at 7:37 PMameer

And yes,you can file this case at the TRIBUNAL COURT,if your claims are less than rm5k.
Hope i did some help,best is get advice from your lawyer.

April 11, 2010 at 1:33 PMameer

As a property agent,in my view,i think the vendor/owner got greedy,and that could be the main reason he cancel your offer/sale.And 100% sure,you should be refunded and be paid the compensation.The main question is when?I have personally dealt with this kind of case before,and bear in mind,it is never the agent's fault.

April 11, 2010 at 2:45 PMdavid

Hi Ameer,

Thanks for your comments. I agree that it's not the agent fault under such situation. To be fair, the vendor has every right to cancel the sale for higher profit too. The issue that we're unhappy is the indecisive attitude from the vendor and his refusal to honour the compensation clause as stated in the Offer for S&P contract.

We have given in for not asking for the additional 1% compensation as per the clause and yet, there's no commitment from the vendor's part to meet his obligation within the timeline. So, guess we're now left with no alternative but to take this issue to another level.

April 11, 2010 at 2:53 PMameer

Hi David,

Yes,you should take it a higher level i.e court.

Anyhow,this could be a blessing in disquise.Who knows,maybe you will get a better home.

Do keep us updated on your proceedings.
Only time will tell when you will be compensated.Remember to push the vendor's lawyer.

April 11, 2010 at 5:41 PMKen Saw

Hi David,
You may consider to hire a lawyer to issue legal letter to the vendor. If they do not refund within time frame, normally there are 2 options - issue summon to vendor or issue caveat to that house.
In that case, the vendor will not be able to sell his house, if there is an caveat on his house.
* This can only be done if you ernest document is properly stated.


April 11, 2010 at 6:21 PMameer

Ken Saw may have a point there but bear in mind,once you engage a lawyer,you have to pay your lawyer fees.

April 11, 2010 at 8:18 PMdavid

Hi Ken,

Thanks for your input. Will update you guys after I have a detailed discussion with my lawyer. I'm pushing my lawyer to issue a summon last week upon the expiration of the deadline but the vendor's lawyer verbally requested for an extension till monday. So, I'll definately get my lawyer to issue summon after tomorrow if the payment is not delivered.

As for caveat, I doubt I'll have that option as my document didn's specify I'm entitled to specific performance. So, it's a lesson learned for me. :p

April 12, 2010 at 10:37 PMpoaysee

Do you have any receipt while you pay for the 1% and other written agreement?

April 13, 2010 at 11:15 AMdavid

Yes, we do have the receipt and the vendor had cashed in the cheque.

My stand if I'm willing to settle this amicably by seeking my refund plus the equivalent sum as compensation while foregoing the 1% of purchase price compensation. So, it's left to the vendor to show his willingness and commitment to settle this amicably within the agreed timeline.

Anyway, just a caution note to fellow buyers who are interested in this property, please make sure that you have everything write down clearly to avoid unnecessary complication. In this case, the vendor was trying to get away without compensation and if not for the compensation clause, he would have enjoy turning over my 1% for 1month without cost!

April 19, 2010 at 4:56 PMYanny

Hi David,
I am facing almost the same case as yours. Hope you can give more input. I have paid 1% to the real estate agent for buying a house. After that, the vendor's lawyer told me that the agent shouldn't sell the house now as the owner might not able to move out in 3 months time. He said the owner can only move out end of the year and i have accepted the term. He still seems like refuse to sell and keep saying that the owner doesn't know when can move out. Now the agent refuse to pay me the compensation. He only ask me to take back my cheque. He said the owner did not cash the cheque yet. I did not lost anything on my side. I have signed the form when i paid the 1%. May i know where can i make a complain abt this?

April 21, 2010 at 9:28 PMdavid


I've resolved my case thru my solicitor. How does the cancellation clause spelt out in the form that you signed? I believe you should be able to claim for compensation if the form are signed by all parties including the agent regardless of whether the vendor cashed in your cheque.

For my case, I've received my due compensation after my final notice to bring the case for litigation.

Let me know if you need further info.