Lesson from a couple who lost $300k in property investment deal

Singapore Law Watch

a day ago

Lesson from a couple who lost $300k in property investment deal
Source: Straits Times
Article Date: 08 Jun 2025
Author: Tan Ooi Boon
It is always better to invest with a reputable company that offers modest returns than to be swayed by an unknown party that promises the sky.
A couple lured into investing in a private business on expectations of lucrative returns learnt an expensive lesson when they ended up losing over $300,000.
Any private business investment carries an inherent risk: If you can't easily cash out, you will likely not get your money back if the enterprise reneges on the deal.
The couple who learnt this very hard lesson suffered even more pain than most because they spent tens of thousands of dollars on court action to get their money back and all they managed to retrieve was about $20,000 – not even enough to cover their legal costs.
Their plight should serve as a good reminder to always think twice before risking your hard-earned savings with someone you barely know.
The couple were ensnared in the sham deal after they hired a contractor to rebuild their house. After the job was completed, the contractor told them he had just bought a house for about $3 million that was to be redeveloped into two new units that could be sold for at least $6 million.
The couple were told the project would be handled by two of the contractor's companies – one as the developer and the other as the builder to manage the work.
The developer, which was helmed by the contractor's brother, had nine shareholders, including the builder, which would bear the construction cost of $1.7 million.
The contractor gave the couple a chance to take part in this 'heavily subscribed and popular' deal by offering to let them invest $340,000, or 20 per cent of the builder's stake in the project.
He told them the deal would 'minimally yield a 20 per cent profit', or $68,000, after the sale of the two new houses.
He further assured that the deal would be 'safe and profitable' because he was the owner and controller of both companies and his brother was merely a 'sleeping partner' who left everything to him.
The couple were sold and they transferred the money to the developer. But the agreement they signed stated that their money was a 'loan' to the builder and there were no terms stating that the sum would earn a 20 per cent return.
They did not insist on being a shareholder like other investors in the project because they trusted the contractor, who claimed he controlled both companies.
About two years after the deal, the two houses were sold for close to $7 million and the $1.7 million-plus profit was paid to the builder.
But the couple were kept in the dark and they had to keep chasing for updates. They later received an e-mail informing them that the houses were sold and they would be paid once the legal process was completed.
The couple realised they had been duped months later when they discovered another 'investor' had filed lawsuits over the same project.
So the couple also filed their own suit and won a judgment against the contractor and the builder as their claim was unchallenged. But it was no sweet victory because there was only about $20,000 left in the builder's account.
They then decided to go after the contractor's brother and the main company, but they lost their case because they had never once spoken to the brother, let alone showed that he was complicit in the dubious deal.
Here are three important lessons from the case that you should know before investing your hard-earned savings.
Deal with only reputable companies
There is simply no good reason to invest money with unknown parties when there is no shortage of credible investment opportunities to pick from.
It is very easy to trumpet the high yield of any investment but instead of jumping in headlong, always ask why you are offered the deal in the first place.
After all, if you are the controller of the rosy deal, you would certainly think twice about sharing the profits with strangers when you could keep everything to yourself and earn more.
More importantly, you should never be swayed even when high returns are dangled to entice you because you will be risking your entire capital just to make that amount.
For instance, if you are offered a 20 per cent return, this means that you will be gambling with, say $100,000, in the hope of earning $20,000.
This was what happened to the couple – they lost $340,000 because they hoped to make $68,000.
While there is no guarantee that investing with reputable companies would definitely reap a profit, you would at least be spared the trauma of losing everything overnight like this couple, when the parties that took their money became insolvent.
Make sure important terms are documented
The worst thing you can do as an investor is to place your money without being given written records. Just as bad is to have a half-baked agreement that only notes some of the terms but not the most important ones.
When you fail to put important terms in writing, it is almost as good as kissing your money goodbye because the other party can always deny such a deal exists.
The couple were told that they would be investing in the project to build two houses that would be sold at a profit, and they would be given a 20 per cent return on the money that they put in.
But the agreement they signed did not state that they were promised that 20 per cent return because the document merely stated that they were lending the money to the builder.
While they succeeded in suing the company because it did not defend the suit, its bank account only had less than $20,000.
The situation could have been different if they had insisted on signing an agreement with the main developer, like the other shareholders, who were paid after the houses were sold.
Allegation of fraud must be proven
Many people often have the wrong idea that once an employee makes a fraudulent pitch to deprive you of your money, the company or its boss would be held liable too. This scenario is only true if all the parties had acted in concert to support the dubious deal.
For instance, before you sign the deal, ask to speak to the boss for assurance that the deal is genuine and safe. By doing this, you could even sue the boss personally for compensation if the deal turns out to be fake.
If the employee alone is guilty of the fraud, such as promising you the deal but later asking you to sign an agreement that is not even issued by the company, you cannot hold the company liable for his actions.
The couple tried to hold the contractor's brother liable for their money but there was no proof that he was even aware that the couple had put any money into the project.
Indeed, all the documented shareholders were given their proceeds, including the builder, but it was the contractor who chose not to pay the couple.
So the lesson is simple – it is always better to invest with a reputable firm that offers modest returns than to be swayed by an unknown party that promises the sky.
Tan Ooi Boon is the Invest Editor of The Straits Times.
Source: The Straits Times © SPH Media Limited. Permission required for reproduction.
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