Letter of Undertaking to Refund - 2006/02/24 15:37Dear learned forumners,
In my practice, I have recently come across banks who are requiring Vendors to provide an undertaking to refund the loan sum to the Purchaser's Financier should the State Authority refuse to give their Consent to Transfer upon the the issuance of the strata title. As the individual strata title may only be released in anywhere between 3-10 years, I do believe that the Vendor should not be bound to refund the loan sum should the Consent to Transfer be refused later on. I would appreciate any opinion on the above issue. Thanks
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Teo Siew Chin
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Posts: 79
Re:Letter of Undertaking to Refund - 2006/02/25 11:08Dear Siti Aisyah
Is it a sub-sale matter? If so, the sub-vendor should not be required to give this undertaking as it is undertaken by the original Vendor/Developer in their undertaking addressed to the sub-purchaser's financier. If this item is not included in the Developer's undertaking to the financier, then you have to enquire why they are not honouring this obligation (since they have collected the 2% administrative charges from the sub-vendor!).
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Siti Aisyah Choo bt Abdullah
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Re:Letter of Undertaking to Refund - 2006/02/28 12:29Thank you for your reply Mr Teo. Yes, this is a subsale matter. The Purchaser's Financier is requesting for such an undertaking as they do not have confidence in the financial standing of the Developer (this is due to the Developer's inability to pay the quit rent for the last 10 years and no Master Fire Insurance Policy has been taken out on the property) Does this mean that my client (the Vendor should have this undertaking laying over his head for the next 5-10 years?
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Teo Siew Chin
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Posts: 79
Re:Letter of Undertaking to Refund - 2006/02/28 13:03Dear Siti Aisyah,
Is that bank empowered to demand such an undertaking from your client vendor? Hold the buyer accountable for any unreasonable demands from his bank - after all HE chose his own bank! If the bank had no faith in the developer - why approve the loan in the first place knowing full well it will involve this developer? But suggest you take this matter to the higher-uppers cos the lower liners cannot do anything.
Wish you all the best.
MISS teo.
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Siti Aisyah Choo bt Abdullah
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Re:Letter of Undertaking to Refund - 2006/02/28 16:08Apologies for the faux pas Miss Teo. I have managed to solve the matter. Thank you so much for your help.
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Alex Tan Ken Seng
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Posts: 24
Re:Letter of Undertaking to Refund - 2008/10/17 10:34How did you solve the matter, Siti?
I agree with Miss Teo that a bank should not approve a loan if it's not going to abide by the terms and conditions of the S&P between the Vendor and Purchaser, or if they have no faith in the Developer.
In my case, the Bank required this undertaking from the Vendor pursuant to a SUPPLEMENTARY letter of offer, which was only issued after the advice for loan release had been processed by the Bank.
I wonder if the Borrower has any recourse against the Bank should the Vendor forfeit the 10% deposit due to non-release of the loan.
Yours, ALEX TAN
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