Things Homebuyers Should Know About Private Liquidators Who Acquire a Dissolving Company
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When taking over a dissolving company/developer, a liquidator will be entitled to the same duties and responsibilities as home developers. Liquidators are effectively seeking a ‘fee' to conduct something that they are compelled to do under the HDA anyhow by collecting administrative fees to complete the transfer of individual and strata titles.
A housing developer's major responsibility is to ensure that the properties are constructed in time and in a satisfactory manner. A developer's responsibility to obtain the issuing of individual and strata titles, and then to cause their transfer in favour of purchasers, is equally significant.
Property liquidators get involved when a company is forcibly dissolved by a Court Order (usually due to failure to pay a debt) before individual and strata titles are issued and transferred to lawful purchasers. The purchaser will be required to sign a written confirmation known as Direct Transfer. The developer and the new buyer will sign the Memorandum of Transfer (MOT) if the developer agrees to transfer title ownership straight to the buyer. However, liquidators who charged purchasers excessively high administrative fees up to 2% or 3% have become an unhealthy norm for executing transfer documents. The administrative fee is allegedly used to compensate the liquidator for the costs of obtaining purchase paperwork that was allegedly destroyed, misplaced, or damaged by the developer and comparing them to purchase proofs submitted by buyers. As a result, a simple transfer perfection becomes an expensive process.
Developers who have received the full purchase price for a property are no longer the "actual" owners. Essentially, the home developer is simply holding the same property in trust for the buyer's benefit. As a bare trustee, the developer has no beneficial interest in the property whatsoever. Therefore, a developer could not engage with the property as if it were theirs. Liquidators play the role of housing developers after they are appointed by a court. There is no difference between a liquidator's position and that of the developer. The liquidators are serving as 'interim caretakers' of the sold property until the purchasers obtain their titles. In their role as bare trustees, liquidators are not permitted to profit from the trust's assets.
Liquidators assigned to manage the affairs of home developer companies are in no better situation than the developers themselves. According to the HDA and Companies Act 2016, liquidators are temporary custodians of the auctioned property and officers of the Court. Any attempt to make more money than what is allowed by law should be stopped immediately. Liquidators should not be able to hold purchasers hostage in order to make a profit.