Looks like a lawsuit is
looming over the failed UK
It was reported in The
Straits Times today that a group of 30 Singaporeans who invested in the botched
real Estate projects are looking to reclaim their losses by suing the lawyers
who had represented them in the multi-million venture.
The Singaporean investors
said they paid an average deposit of £ 40,000 for units in seven unfinished
hotel and hostel projects built by now insolvent British developer Key Homes.
The investors claim that
their British conveyancing lawyers did not tell them that the projects'
insurer, Northern and Western Insurance Company, is registered in Caribbean
island Nevis instead of Britain
"The investors would
not have put money in the projects if they were told that their deposits were
insured by an unregulated and unrated insurer," said the spokesman of the
law firm representing the investors in the lawsuit. "Their loss in
deposits plus interest is due to the solicitors' negligence."
Three questions came to mind
after reading the article:
1. Is it within the conveyancing
lawyers' scope of work to ascertain the suitability of the project insurer and
make qualified opinions about them to their clients?
Hopefully we have some readers
who in the legal profession that can help answer the question. The wife and
I had worked with several conveyancing lawyers for overseas property purchases over
the years and the subject of who the project insurer was had never came up. Maybe
we were just lucky that all the overseas projects that we had bought into
thus far are insured by reliable insurers. But it has never occurred to us (till
now) that this will become a problem and to ask if the project insurer is
credible.
2. Shouldn't any deposit paid for an
overseas property purchase be held in a trust account jointly managed by the
Seller's and Purchaser's legal agents and only released to the Seller upon the
completion of the project?
We had assumed all along that
such practice is mandatory, since this had been the case for all our purchases
so far. It is probably prudent to ask the question "at what point the
money that's held in trust will be paid to the Seller?" henceforth.
3. Assuming that the deposits were indeed held in a trust account. Can this account be freeze by the governing authority and the money goes into a "common pool" for debt settlement, if the developer becomes insolvent?
If so, does the investors have first right to this money, since it is after all, their money? The wife and I can probably Google this but we will much prefer hearing from our legal-minded readers.
Anyhow, the wife
and I wish those Singaporean investors well on their lawsuit and hope that they
are able to recoup some (if not all) of their investments.
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