Last month we sourced a 3 acre piece of land in Balik Pulau, Pulau Pinang (Mukim 6, Daerah Barat Daya) through our banker who was able to get the price down from the asking price of RM4mil to RM3.1mil. We then took a week or two to do some of our own due diligence and expressed strong interest in purchasing the property, and subesquently had our lawyers draft up the S&P docs. Meanwhile, our banker managed to get the sellers (3 Malay sisters) to reduce their price further to RM3mil. We immediately agreed and transferred the 10% deposit of RM300K to our lawyers to hold till the owners agreed to and signed the S&P. Note, there was nothing in black and white re. the acceptance of this price, but a verbal agreement and SMS from the owners agreeing to it.

Over the next week, the owners came back to us saying that since the purchaser is a company, they wanted more money! Needless to say, we were very surprised as what does it matter whether the property is purchased by individual or company? I've never ever heard of a price premium when purchased by a company, so I guess it was just greed and lame excuses). This seems very unprofessional and totally unethical behaviour to me? We then thought of giving them 3 days to agree to sign the S&P or the deal was off, and we would sue for legal costs incurred so far. However, at the advice of the lawyer, we played their bluff and just told the owners that we would change the S&P and the buyer would be in an individual's name, so the price should be the amount agreed to. From that day they never got back to us, and were unreachable.

Our lawyer told us that our case for a law suit against these enethical sisters was somewhat weak, but there's always a chance since we have the SMS from them, and the fact that we have already paid the 10% deposit to our lawyer shows that what the agreed upon price was.

Should we sue these people or let it go and move on to the next property? Even if we move on, I think other's should be forewarned about these unethical owners who play games and waste other people's time and money out of greed.

if the deal is too good to be true, it probably is.
MOVE ON

Since, you were negotiating through a third party (Banker) without an option letter or letter of undertaking, its possible it could be a case of miscommunication, misintrepretation or even breakdown in communique. When there is an interest, invariably, demand increases.

To begin with, the laws and regulations governing the housing/property ministry is vague and inadequate, therefore, defaulters know they can get away 'scott free'.

Cordially,
Tony John

I don't know Malaysian law very well, but here is what I can say.

Technically your case would be weak as there is no written contract. They can easily say yes, they agreed to sell but only if it was closed in 1 month and when you showed the S&P it was 3 months. Or 100's of other reasons like that. When people are being unethical they will lie too. And when there is no written agreement then it's easy to lie about the verbal agreement.

And then you'd be up against Malays - and you'd be probably dealt with with a Malay judge. Hmmmm. It's not a perfect world.

Then the whole process would take years.

I would say forget it, move on...

Thanks for you replies. Yes, you're right, and we have decided to move on.

Just FYI however, the banker finally got in touch with the sisters last night (to clarify the situation, and not at our request) and they claimed they changed their minds because we were not honest and lied to them about the buyer!!! Go figure. They referred to the fact that they were told that it was an older retired person who was buying their property, and not a company. Again, I have no clue what difference it makes who's buying it. The banker then told them it WAS the older guy buying it, but in his company's name, but they somehow inexplicably saw it differently. Well, I guess there are stupid and illogical people everywhere and it's just a part of the everyday obstacles in life we have to deal with.

Life goes on.

Just an update and to try and figure out the way people do deals in this country?.....we moved on to another potential property for development. The sellers asked for RM22 per sf, and a few days later we readily agreed without any bargaining, and subsequently started drafting up the S&P. Then the next day they cam back and told us they changed their minds and now wanted RM23 per sf! What the heck is going on with these people and their sense of business ethics eh?! Geez! As a matter of principle, we're not proceeding with it and moving on to the next.

RE Investor. I have been there too. You know what, sometimes it's best not to offer the asking price. Malaysians are so used to bargaining that they feel that if someone offers the asking price they must be selling it too cheap. Even if you want to pay the asking price, best to give a lower offer to start with. Even if the the seller has said they wouldn't accept anythingless than the asking price! You're more likely to close the deal, and you might save some money too.

farin, that is good tip. i think you understand malaysian mentality well.

Thats Malaysian's right there! My best advise to give you when it comes down to dealing with this 'kind' of people, or even to anyone in fact, just have everything in black & white. Sometimes being paranoid is not a bad thing after all.

MOVE ON...NO NEED TO CHANGE COURSE IF THE DEAL WAS GOOD

I do not believe this is a matter of bad ethics by the sellers, but illegal activity by your Bankers.
They have no business transacting property deals. That should be left to the experts - The Licensed Estate Agent.

The Agent would have had the vendors signed up at the price and with terms clearly stated. A 2% holding deposit would have been collected and retained in the agent's client's account pending execution of the S&P.

If the terms are not agreed by both parties, this deposit is refundable in full.

If after accepting the price and terms, in writing, the vendor backs out you are entitled to specifi performance - minimum refund of the 2% and another 2% as compensation.

As it stands now, you have lost the land and will have to pay your lawyers for work done to date !!

A quick add on to my post earlier on this subject.
My advise - put it down to experience and move on + use Estate Agents for property deals, Bankers for finance matters.
Waste of time to sue. Lawyers always happy to fight to your last sen - they get paid win or lose !!

Love the racial angle. The Bankers, with no knowledge of procudures, screwed it up. Malaysian property law is clear : no money - no contract. verbal contract - just hot air. Just like in all Countries

Again - use a Registered Estate Agent and save the pain

Now it is all Malaysians, not just the Malays.
Malaysians are as crooked/greedy as everyone else. It is not a National trait
Use a Registered Agent and save the pain.

There is a saying, "Too much cooks can spoil the broth".

Likewise, overcooking can do no better.

Actually, if every concerned party can take some time to abide by the usual
way negotiations are taken, this should be more like knowing what is what
rather than hearing from who or who.

So, hearsay can be siphoned out early. In that way, the process of decision making
can be more realistic. After all, some good efforts in making land search early is
the best way to find out most of the questions posed.