Thursday, 19 July 2007

The Worrying Trend of Self-Replicating Committees

A good friend just contacted me, upset and frustrated. Her estate, Botanic Gardens View (BGV), has popped out another Sale Committee. Out of the blue. With another property agent (Huttons) while the first Sale Committee (SC) is still active (with CBRE). Looks like a two way fight has begun in her estate to garner interest and signatures.

The difference that the 2nd SC and agent is offering for owners of BGV? 1-for-1 exchange.

In and of itself, an enticing carrot and certainly a compromise for those owner-occupiers who wish to continue staying there. Move out for 3 years, move back in, presto, brand new apartment.

Except it's not really a collective exchange - the flats are 30% smaller, there's no guarantee what floor, face, etc you'll get. It's also doubtful if people opting for the exchange will have any say whatsoever in the design of the new apartments. In other word, not only are you getting a smaller flat, you're going in blind.

That's partly why collective exchanges are (a) damn difficult, (b) handled with finesse by a few small law firms such as Phang & Co, (c) appealing but in reality having the potential to shortchange owner-occupiers in the end.

But the carrot isn't the point. The worrying fact is that while the first SC has barely started to get around to collecting signatures, the second has emerged. Each with their own carrots.
Who's to say a third, with Ah Beng Agency ("we force your signature by hook or by crook, both sure painful wan") will not emerge? Or a fourth, or fifth? I wrote about the problem of multiple SCs in the past, in the case of Watten Estate, and it looks like BGV's hit with that issue too.

With the development charge increase, developers are now getting fussier in selecting which en bloc to go for (if any). But now all it takes is an eager agency to step in, offer their services (often 'free') so long as a group of like-minded owners is willing. And prime spots like BGV are in demand nowadays, with agencies very keen to win the 80% signature race and get the windfall (along with the owners of course).

Sure it means 'greater choice' for owners, but think this through:-

  1. If an owner signs the CSA with Agent A, can he sign the CSA with Agent B as well? What are the consequences if he does so, and which CSA is valid (or are they nullified)?
  2. One CSA is already legally tricky (full of legal terms, definitions, loopholes even), but two? Agents and lawyers will give you the short and sweet version during their presentations of what's included in the CSAs, but you can NOT trust what is said because it is what is NOT said that is equally important (sometimes more so). Many en bloc'd estates are now beginning to realise that their CSAs contain clauses that give a lot of their rights away, or have hidden clauses that allow SCs to do unscrupulous things (such as 'bribe' fencesitting minority owners with your money). Considering the multi-million dollars nature of some of the sales, you must be careful and go through each clause. That's double the time needed now, what with 2 CSAs/agents/lawyers/SCs.
  3. Under what conditions will one SC bow out of the competition? If two SCs were to compete within the same estate, and each owner can sign only ONE CSA, that's a 50% distribution between the 2 CSAs. This means one may never achieve 80% unless one SC quits and nullifies their CSA. So when should one SC quit in favour of the other (considering both are self-interested/selfish groups who's going to blink first in the showdown)? Under what protocols (eg if an SC is able to achieve 50% in 6 mths time, the other should give up) or rules of the competition?
  4. 2 SCs = 2 aggressive groups of people out for your signature = double the hassle and double the annoyance if things get out of hand between the 2 SCs. Given that there's no need for professionalism between the two competitors it can become a slugfest with owners caught in the middle (eg half-truths hurled against the opposite party). Imagine - Monday Huttons rings your bell, Tue CBRE rings your bell, Wed Huttons comes back to clarify some stuff CBRE might have said, Thu another party calls you to say that "the other party smokes pot", Fri both parties call you to say that "the competitor is in league with Voldemort, don't go near them". Sat you just want to cast the Cruciatus Curse on the SCs. Sun you plan to expelliarmus the annoying SC mugglies and boot them out of the estate.
  5. Shouldn't there be some regulations that management committees can set up for the creation of SCs, to curb the potential rampant replication? Considering that any SC must work with the MC, or for that matter, obtain the owners' list from the MC, couldn't MCs impose non-refundable fees for any SCs that wish to set up shop? Such fees must come from the SCs themselves, and cannot be deducted from the sale proceed if successful. The fees can then go into the sinking funds for communal use, and should be a significant sum (eg $5000 per SC member) to deter the frivolous creation of SCs. That way, owners know that these SCs are serious about their intention to help sell the estate, and not there for their own self-interests.
In the meantime, I wish BGV owners good luck in their 2 way fight. Looks like it's going to get complicated.


Anonymous said...

Dr Minority, where is your conscience? You are misleading everyone here. In this posting of yours, you claimed that there are 2 SCs at BGV. Do you have proof to substantiate that? In your yet another post, "Who needs a Pro-tem Sale Committee?", you insisted that agents can just walk in into any estate and make a presentation. I rebutted you with my replies that this was not possible unless the security of the estate was lax. Your reply was that you attended the meeting at BGV and went on to relate the following in your reply, "3. When asked in a public forum whether there was a pro-tem sale committee, the agent said they were in the process of forming one. When asked further, the agent began to hedge and no names could be given from him, neither did anyone stand up to present themselves."

In other words, you are aware that there was no second Pro-tem sale committee formed at BGV, since you have attended that meeting in person. Am I right Dr. Minority?
Pls do not distort the truth and be upright in your postings.

Dr Minority said...

In the matter of BGV, yes, further to thisposting on the matter of 2 SCs in BGV dated 19/7/07, I will correct and clarify some points. Prior to this, I will point this out to the anonymous poster - at no point in time did I make any connection between this post, and the one after this titled "Who needs a Pro-tem Sale Committee" dated 22/7/07 . That connection was made on your part and presumably you are the same poster as the one who submitted 2 comments in that particular post as well (although that is an assumption I myself make). Now for the clarification :-

1. Based on the latest information from BGV, there is currently only 1 PTSC in BGV. I stand corrected on that matter since this discovery was made AFTER this particular post. HOWEVER, there are TWO agents vying for the enbloc of BGV.
2. I assumed, wrongly of course, that one MUST have a PTSC before an agent will make the effort/do the groundwork to present their sales pitch to the owners. Given the situation at BGV, one does not necessarily need to have formed a PTSC to approach an agent at all. In other words, if a resident contacts (say) Credo and Phang & Co, and asks them to present at BGV, given their collective expertise on en bloc sales and collective exchange respectively, could that happen? If Credo agrees to it, there is absolutely nothing to stop them from making a presentation at BGV. Thereafter, a PTSC can be formed, whether it will include that resident or not is not the issue.

I make no claims to connecting the 2 posts. Read through the later post carefully; assumptions are made on the reader's part. I do thank the anonymous poster for highlighting the correction for this particular post. Whether BGV will have 2 PTSCs (or more) will be a question of like-minded residents following up on an alternative angle (eg collective exchange) and nominating themselves as another PTSC. This, is legally and entirely, possible.

Anonymous said...

Dr Minority,

Thanks for clarifying. It is the right thing to do. However, even though you insist your two threads are not related, I believe they are. There are just too many similarities and anyone reading them will form the same opinion. I rest my case.

Anonymous said...

Dr. Minority,

Since you have clarified the matter, may I request that you also edit this thread to reflect the true picture to all those who chance upon this site.

Anonymous said...

Dear Dr Minority

I live in Botanic Gardens View. I think the previous person is living in his own world of “righteousness”. I believe he is the one who cannot see the truth and is using distraction tactics to keep people from the real problem.

The truth is there are greedy people trying to sell our homes for a profit and are willing to do that at our expense. These people, of which I believe this person is one of them since he calls you anti-en bloc, will stop at nothing including starting their own protem sales committee. I do not doubt for one second that in a few weeks’ time, another committee will appear if the people who spoke up at the meeting at the end is anything to go by. His “true picture” is very different from the stress I go through everytime I see another en bloc letter be it from CBRE or Huttons or some other unscrupulous agent. To each his own but I encourage you to keep your posting as it is. I rest my case.

Anonymous said...

My estate is hitting 80% on the CSA. i guess it is inevitable as it is one of the last few eligible condos in a very good, accessible location in Prime. So i can relate to BGV.


I'll take it!

Going in blind is not a problem for me. In the case of BGV, any developer who buys it would be constructing it with very very high quality materials and furnishing. Designer fittings should be expected, as it is for every new super prime condo these days.

I'd be extremely happy if i were offered a 1-for-1 for my condo.

Dr Minority said...

>>I'd be extremely happy if i were offered a 1-for-1 for my condo.<<

Just watched the videos on Parliamentary debate on the amendment bill. MP Irene Ng put forward the possibility of legislating for collective exchange but Prof Jayakumar turned down the idea, citing practical and logistical reasons why it should not be legislated, but rather, left to market forces and negotiations between buyer and seller. I know that in countries like Seoul and Australia, such models are legislated or considered for legislation, so it's not impossible. But currently, given that the faster, and easier option, is to just take the cash, the collective exchange model is not considered by most SCs. The only way forward is to hope that you don't hit 80% before the new law kicks in, and then push hard during the general meetings for the SC to consider collective exchange, or they won't get voted in etc.

Good luck.