By Elena Chong

A YOUNG couple who put down a deposit on what they thought was a 1-1/2-storey dream house now feel like the transaction is turning into a nightmare.

While paperwork for the sale was being done, Mr Mervyn Lim We-Jin and his wife, Ms Jessie Tham Yi Min, found out that the extra storey in the house was an unauthorised structure.

They went back to the sellers to push them to put it right and pay for the alterations.

The sale of the house in Lorong 105 Changi Road never went through.

As the dispute could not be resolved, it was taken to the High Court, which on Wednesday threw out the couple's application for damages with costs.

Mr Lim and Ms Tham now have a month to decide between abandoning the purchase - which means they lose the 5 per cent deposit on the $1.18 million property - and seeing the sale through and paying interest for the delayed completion.

The sellers - civil servants Jason Teo Shen Yuan and Chan Sue Li - had, through their agent, put out an advertisement for the sale of the house last November.

Their lawyer, Ms Foo Soon Yien from Harry Elias Partnership, argued that at the time of the sale and purchase contract, there was no notice or order from the Building and Construction Authority (BCA) about the unauthorised addition.

Even if there had been one, it would have been irrelevant as it was, at best, a potential liability, said Ms Foo.

She noted that the BCA's reply to the buyers' lawyers about the status of the structure came only after the contract of sale and purchase.

In a somewhat similar case in 1993, which Ms Foo also handled, the Court of Appeal held that unauthorised works did not in themselves constitute defects in title as long as the BCA had not issued a notice.

Ms Foo said that Mr Lim and Ms Tham's claims for her clients to rectify the unauthorised works and for compensation were thus misconceived, as was their claim that the unauthorised structures were an encumbrance.

Also, she argued that the plaintiffs had not inserted a special clause to cancel the contract if any unauthorised structure was found. Such a clause would have protected them.

Counsel submitted that once the option was exercised, the risk of the property passed to the buyer.

The buyers were represented by Mr Khoo Boo Jin.

This article was first published in The Straits Times on 27 June 2008.