Whether scenario A or B..depends on content of Letter of Undertaking exchanged between Developer & Bank.

Most banks want to get away with L/U that says developer has to refund the loan amount disbursed in event of purchaser defaulting on their loan terms, which is unfair. Developers' staff who agree to this ought to be shot as developer does not have to agree to this variation to the SPA as it compromises their position as the title would have been transferred to buyer's name and charge to bank effected prior to full purchase price being paid. So in scenario A, developer has to refund whatever loan already disbursed and have no more further loan release. technically, bank A is then supposed to discharge the charge and buyer A to transfer back ownership back to developer. But in reality, this will probably not happen as likely buyer A will be in no financial position to make this happen.



This is sub-sale case for completed unit.
For unit under construction, tak boleh leh...due to undertakings exchanged between parties...a bit lengthy to explain in detail.
BUT...just for academic discussion, I think it's possible but in practice, no bank and developer will want to get into all these legal hassle.

if want to change hand, bank A must be paid off before bank B comes into the picture.

Alright. So in line of what you had said.. how does the purchaser know if the developer has such undertaking tat if in the event the purchaser default, the developer need to repay back everything to the bank ?

Does the spa signed indicated this clause which is between the developer and the bank ?

Wah...sounds like someone looking for loophole to get out of a purchase

* joke..joke*

No, not in SPA.

Ask for a copy from the end-financing lawyer. All letters exchange via them.

Actually, you are referring to default case or buyer want to sub-sell to another buyer?

Haha.. no loophole la. These are possible scenarios that can happen ma.. since economy no good, is good to know a bit on this, especially developer and financier agreement.

My case study never refer to subsale cases. Subsale cases is completed property, and it will not be so complicated as usually subsales cases are quite straight forward.

Not straight forward case is this under construction property where payment are progressive, and house is not ready, no vp no title (for strata case). So it is very confusing at some point of time when this kind of things happen.

So to get it straight from the feedback..

The project (developer) might had signed an undertaking with the bank to stop financing and also to reverse back all monies to the financier.

If there is no such undertaking, i assume tat the financier will continue to disburse till full VP and lelong it. Then claim anything excess from the defaulter (purchaser)

I will check with some end financing lawyer to ask and see as well. Haha.. very rare question, but it happens.

As far as I knew.

It has nothing to do with SPA between purchaser and developer. But loan undertaking between developer and financing bank.

Financing approval and undertaking condition of it is another set of agreement outside of SPA.

If purchaser wants to know the condition, then can read from the loan agreement signed, it should have clauses stated inside the agreement.

sure bo

When i asked "sub-sale" was referring to a sub-sale of the unit which is under construction. ie Buyer A tries to get Buyer B to take over his unit.

The other scenario is Buyer A defaults in loan interest payment and bank refuses to release further loan drawdown and the developer opts to terminate the SPA.




Exchange of letter of undertakings is part of the loan documentation required. However the content of these letters will vary from case to case. So for specific case, best to ask the end-financing lawyer for copy of the letter for that particular unit; Not any random letter of undertaking from any unit/bank/developer.

Oo.. refering to your question, primarily, i am more keen to know about the consequences of being a developer and the consequences of having a defaulting client.

Now on subsale of the undercon, As far as i know, this special kind of subsales arrangement is very very complicated, unless the new purchaser is willing to take up the same financier. But it would be great to know how the exact process is.


And for the last part. U mean different purchaser have different clause in the facility agreement ? Waw.. like this mah very very headache ??? It shud be a standard arrangement one ma..

Even if new buyer goes to the same financier, tak boleh assign the loan aje lor...or strike off A's Name and replace with B.
New loan agreement must be signed with B..Anyway, most times , it's a non starter as most developers are not going to agree to the subsale.

Any developer worth its salt, should bring experienced people on board to help manage all the intricate issues involved. Not so simple to explain here.



While most loan facility agreements will be pretty much similar for a particular bank, However,the letter of undertaking exchanged between bank and developer may vary. Bank will have their so called "standard" format. So does the developer. In reality, both these "standard" formats will differ . So depending on nego power, they have to come to an agreement on what is acceptable to both parties. Hence the final "not- so - standard" format.