9. Can a purchaser refuse to complete the purchase of a stigmatized property after signing the provisional or formal sale and purchase agreement?
Unfortunately, a stigmatized property is not a defect in title of the property. There is no legal definition of what constitute a stigmatized property e.g. does it mean a flat where a homicide or suicide has happened? Does it include a flat where a person die out of natural cause such as heart attack? Therefore it would be difficult to make enquiry with vendor and agent on whether a flat is “stigmatized “or not.
However, some banks may have a “black list” of properties where unfortunate events had happened in the flat and had been widely covered by media eg homicide cases. There is no legal defect in title in the property but banks may be unwilling to advance mortgage loan to these black listed stigmatized flat for fear that in the event the banks need to exercise their power of sale due to default in mortgage repayment, the stigmatized flat may be difficult to sell as buyers may be deterred from buying the property due to the previous unfortunate event associated with the property. As the title of a stigmatized property is not defective, a purchaser cannot refuse to complete the purchase of the flat because previously an unfortunate event has happened or associated with the flat. However the purchaser would have difficulty in getting bank finance if a flat is listed by the banks as stigmatized flat.
The only practical solution for a purchaser is to seek pre-approval of mortgage loan before signing the sale and purchase agreement.
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