Friday, 31 August 2007

Anti-enbloc Blog - Ocean Park

Typically, people unhappy with the collective sale of their homes are people who have been staying there for a while - what I call owner-occupiers. But even potential owner-occupiers can be unhappy with the enbloc sale of their homes.

An owner who has never stayed in her 'retirement home' is mighty upset that her estate is now up for enbloc sale. She owns a unit in Ocean Park at East Coast Road. Built in 1983 with 298 units, the freehold district 15 estate is joining the enbloc madness that is now occupying the East Side of Singapore (ie Laguna Park, Lagoon View, Mandarin Gardens, Neptune Court, Bayshore Park etc). Prices there, like most 'enbloc potential' flats, have shot right up - from $1071 (caveat lodged May 07) to $1200-$1400 asking price on the market for units there.

Good luck to the anti-enbloccers of Ocean Park. The blog can be found here. I've added a link to in on the Links section on the right side.


Wednesday, 29 August 2007

Land Titles (Strata) (Amendment) Bill - The Interesting Bits

I think every major paper/media source is reporting on this, including the Business Times which had a nice full page spread of the various proposed amendments in the Land Titles (Strata) (Amendment) Bill.

For those who wish to play catch up or read the various reports, a few CondoSingapore forum members have put them up, so go here, here, here and here to read the various media reports on the Bill. Apologies that they're spread out a bit but if you read those 4 threads you'd cover CNA, BT, ST and Today :) Including the nice table from BT :)

Now comes the interesting part.

*IF* you want to read the actual Amendment Bill, you can find it on the Parliament's website and the exact link is here (requires a pdf reader eg Adobe Reader). This is the full legal document so it has to be read against the Land Titles (Strata) Act (the bill contains lots of 'delete this' 'add that'). The important thing you should note in this Bill, is the section of "Savings and Provisions". I'll get to that later :) Note also that there is a separate section now in the LT(S)A on convening of general meetings for purposes of collective sale. I have not had time to read through this carefully yet but over the next day or two, will get back to you with the specifics of the bill.

For the lawman's version, the Ministry of Law has kindly included a tabled version along with their rationale. You can find various information on their site including responses by Prof Jayakumar (on 27 August) here, and the first reading of the bill here. In the first reading is a word document that contains the tabled layman's version I mentioned, which I've included here.
I'd suggest downloading this word document since it contains ALL the changes, including those not reported in the papers.

So what's new (or can be further clarified)? (Have included the s/n so you can refer to the word doc) (Note: These are still proposed amendments)

  1. (S/N 8) - Decision on whether to form a SC must be by ordinary resolution (simple majority) in a general meeting. In effect this is a motion in the general meeting for not just the SC members, but "its powers, duties or functions" (2nd Schedule Para 3(4)). In other words, you can vote NOT to have an SC, or not to have particular members of the SC. It means you as owners are now responsible for the fate of your estate, if you decide to vote for an incompetent group to sell your soul er land.
  2. (S/N 8) - A SC may also be dissolved by an ordinary resolution at a general meeting of the MC. So if you suddenly realised that you did vote in an incompetent group, you can call for a GM and vote to dissolve the SC by simple majority.
  3. (S/N 9) - (2) above is needed because there can only be 1 SC per development at any instance.
  4. (S/N 10) - If the CSA lapse, or if the SC is voted out, the entire enbloc process stops.
  5. (S/N 12) - Para 7 of the 3rd schedule outlines clearly the GM that must be convened to decide on such matters as appointment of marketing agent, property consultant, lawyer, apportionment of sale proceeds, terms and conditions of the CSA. No longer is this done through an Owners' Meeting (where some people may be excluded 'accidentally') but a formal GM. The list of functions for GMs is extensive (p33 of the pdf file). From that Para, I consider that various actions may be possible in a GM - "provide information" (no action required), "to give updates" (no action required), "to consider" (to provide information only). [Updated 22/9/07 - 'to consider' has no voting imperative behind it]
  6. (S/N 13) - Like a proper MC, the decisions and minutes of SC meetings must be kept and placed on notice boards etc. Also, like a proper MC, the SC must keep proper accounts of money received and expended for the sale, specifying the purpose of the expenditure and receipts. And any owner can apply for the accounts to be made available to him/her. (Para 9 of 3rd schedule, pdf p34).
  7. (S/N 18) - Lawyer to certify updates on consent level. This is partly to stop some of the very questionable actions by agents in some estates which do not account for the consent level accurately. Now the lawyer must risk his signature on the dotted line :)
  8. (S/N 19) - SC to give monthly updates rather than 8 weekly updates.
  9. (S/N 21) - Applies to HUDC estates. Age of privatised HUDC estate can be taken from the date of completion of construction of the building as certified by (eg) HDB. (pdf p.19). The date of issue of CSC is the date of issue of Certificate of Fitness.
  10. (S/N 31) - If unit was sold after an enbloc sale has been awarded to a buyer, that purchase price is not considered for financial loss claims. I believe this relates to a particular estate in Dist 10 where an owner sold off his unit right after the SPA but before completion.
  11. Savings and Provisions - (pdf p37). This outlines clearly under what conditions can the new Act apply to the existing enbloc attempts. It applies to any estate that has not executed the CSA (ie achieved 80%/90%) before "the appointed day" (ie day of commencement of amended Act). It does not apply to any application made to or pending at STB before the appointed day, or to any SPA signed before the appointed day, or to any STB decision made before the appointed day. This is why some estates are pushing very hard for the 80% to be achieved before Oct - because if they don't, they have to comply with ALL the regulations in the Act. So if your estate did not elect the SC through a GM (as required in the new Act), then it'll have to do so. And it may risk being voted out if it had been bullish, aggressive etc.

Also, I noticed that there are amendments to the Building Control Act, which may put a major dent on developers' construction costs as well. This may well be another tap on the enbloc brakes, or at least developers will now have to see how much more they'll have to fork out to redevelop.

I want to go through the actual amendment bill and will get back to you with more points on it. Overall, in terms of procedures for enbloc sale, it's a major leap forward. In terms of the rationale for enbloc sale, well, nothing's been done to change the fact that urban renewal seems to be pegged at 10 year old buildings being torn down very soon after they've hit that mark.

Perhaps someone in Parliament ought to ask for the following statistics, to get a better picture:-
  • What is the average age of the estates when it is submitted to STB for collective sale approval in the period of 2005-2007? The statistics should be broken down by districts. (Idea is to see if the age of estates is young relative to other urban redevelopment projects in other highly developed cities such as Hong Kong, Seoul, Shanghai)
  • What is the average consent level for estates when the application is made to STB in the period of 2005-2007? (Idea is to see what is the level of dissent for en bloc sales)
  • What are the main reasons of objection raised at STB hearings and tribunals by minority owners during the period of 2005-2007, and how are these addressed in the Amendment Bill? (Idea is to see fit of amendments to problems raised through STB channels)
  • In terms of urban renewal, what is the percentage increase in number of units from the estates sold en bloc, in the period of 2005-2007? (ie no of new units developed versus no of old units from estate) The increase should be provided by districts. (Idea is to see if urban renewal is significant or not)

Monday, 27 August 2007

Parliament Debates Land Titles (Strata) (Amendment) Bill

Over 400 suggestions from 100 submissions. Result - 30 proposed amendments to the Land Titles (Strata) Act.

News have started to trickle in and you can find details on CondoSingapore forum, here and here. The idea, according to Prof Jayakumar, is to make the enbloc sale more transparent, fairer and clearer. Debate is to continue next month, with the Amendment Bill gazetted by October 2007.

Some of the proposed amendments are listed below. I've noted in blue those that were in the original amendment proposal outlined in Mar 2007:-

  • Requirement for sales committee to be formally appointed in a general meeting, and SC members have to declare any vested interests related to the deal
  • Sales committee required to conduct a general meeting to discuss appointment of lawyer, agent, property consultant
  • Providing updates on bids received and how sales proceeds will be divided
  • 'Cooling period' of 5 days after the CSA is signed, in case owners changed their minds. Can only be done once.
  • Owners' voting rights to be decided by the area of their flats in addition to share values
  • Every home owner must have a lawyer explain their legal rights in the CSA
  • Having a lawyer present to clarify doubts when owners sign the CSA and key terms and clauses to be listed upfront in the legal document
  • Lawyer to be witness to the signing of the CSA
  • STB to be given power to increase the amount minority owners get from sale proceeds for (say) renovation costs done recently
An excellent point raised by Philip Fong of Harry Elias Partnership is to implement a code of best practices: "There are no regulations as to how much information is actually given to the owners, so they know enough to raise questions. So in that sense, what I think would be worthwhile to consider is for the appropriate authority to come up with a code of best practices and if there are deviations from these practices, then they must be justified by the sales committee."

Some initial observations - unless there are more proposed amendments to be rolled out in the near future, it looks like (a) the emphasis is on transparency issues more than fairness issues (b) the 10 year arbitrary margin for triggering 80% enbloc consensus remains unchanged, despite many home owners hoping that something will be done about the senseless destruction of their homes. What MinLaw needs to remember is that the primary drive, the main reason for having enbloc sales, is the idea of urban renewal in the first place (which necessitates looking at the 10 year mark), and not the idea of profiteering (which would necessitate looking at transparency issues).

I'll continue to update you on the Parliament's discussion of the Amendment Bill as and when information comes in.


Lost Pennies - Method of Apportionment Irregularities

The wonderful thing about going to conferences is you meet people of various inclinations and beliefs. Including those who believe strongly in conspiracy theories. In the course of an over-dinner conversation, one person pointed out that when banks round their 6 decimal point calculations, for every penny that gets rounded, banks stands to make millions. Nobody on the end-user side cares, but it happens, so sayeth the conspiracy theorist.

So I went back and picked 2 random CSAs with Method of Apportionment of the Sale Proceeds included. I entered those numbers into an excel sheet and let the program calculate automatically the apportionment and costs for each unit etc. From both CSAs, I found errors and discrepancies ranging from $58 to $6700 for units, and cumulatively variances in the range of thousands to tens of thousands. For example if the apportionment ratio (which typically is supposed to add to 1.0) falls under 1.0 by 0.000040 for a sale proceed of $800,000,000.00, you're talking about $32,000 which goes unaccounted for. And of course, calculations based on 6 decimal points will yield different sums from those based on 4 decimal points.

Since the method of apportionment gives clear costs for each unit, what happens to these 'lost pennies' as it were? Who keeps them? Does it go to the law firm (in which case the sum total cumulatively may be sufficient to buy a nice German engineered car)? Does it go to the SC for their efforts, to go into a Tung Lok seafood celebratory dinner? It most probably does not go back to owners since their proportion of the proceeds are calculated before hand.

What happens to the 'lost pennies'?

Try it out yourself. Anyone with some knowledge of spreadsheets (eg Excel) should be able to input the values from your Method of Apportionment (typically an appended Schedule of the CSA) and perform these calculations. Does it tally with what is printed in the CSA? If not, why not? If available, do the calculations for unit % apportionment (assuming you know the method of calculation for this value).

Moral of the story - sometimes the pages with the numbers don't necessarily tell the truth :)
Sub-moral of story - avoid conspiracy theorists during dinner time talk.


Sunday, 26 August 2007

Mayer Mansion - Owners Win Suit Against Developer

Another Going to Court case. You can find full details at CondoSingapore here. I doubt it will have bearing on Horizon Towers though (since this was a case of the developer not fulfilling the deal). Details are as follows:-

Estate: Mayer Mansion, Devonshire Road.
Source: BT 16/5/07, BT 22/8/07
Stage: Sold 12/12/06 to Travista, a foreign-owned developer for $30m. Travista sued owners through High Court on 3/4/07, Judge dismissed case on 14/5/07. Travista appealed to Court of Appeal but was turned down Jul 07. Estate sold to Golden Flower Group for $42m.
Lawyers for Owners: Mr Hri Kumar & Mr Tham Feei Sy of Drew & Napier for High Court case, Senior Counsel Davinder Singh, Mr Hri Kumar & Mr THam Feei Sy of Drew & Napier for Court of Appeal.
Developer: Travista (voided).
Reason: Travista did not complete the sale transaction by the due date and had therefore rescinded the SPA. Travista sued owners arguing that they are entitled to complete the purchase.
Details: When Travista failed to complete the sale by a stipulated date, owners considered the SPA rescinded. Travista sued the 13 owners, applied for injunction against owners exercising their rights (application turned down). High Court Justice Prakash dismissed case, declared the SPA rescinded, deposit forfeited, caveats lifted, Travista ordered to pay owners' costs of $15000 + disbursements. Court of Appeal dismissed the appeal.

Friday, 24 August 2007

Parliament begins discussing Land Titles (Strata) (Amendment) Bill

I know everyone is now awaiting for news on Horizon Towers, but in the meantime, Channelnews Asia (CNA) has just reported that on Monday 27 August 2007, Parliament will begin to discuss the proposed Land Titles (Strata) (Amendment) Bill, which will affect en-bloc legislation. You can read this little blurb here.

I'll update you on Monday if there's any news on this matter.

Thursday, 23 August 2007

HPL to sue Horizon Towers' Majority Owners

The latest news on the Horizon Towers case just emerged tonight at 8pm+: HPL intends to sue the majority owners of Horizon Towers. This came from SGX and the relevant announcement is included below:

The Company [HPL] wishes to announce that Horizon Partners has today instituted proceedings in the High Court of Singapore for, inter alia:
(i) a declaration that the vendors are in breach of the Option to Purchase;
(ii) an order that the vendors do everything in their power to obtain a collective sale order from the STB; and
(iii) further or alternatively, damages for breach of contract in addition to or in lieu of the order in (ii) above or at common law, such damages to be assessed.

More news as it emerges. It's a major reason that one should always be very aware of their rights before they sign their CSAs, and importantly, what IS in their CSAs that opens the way for proceedings such as above to happen to owners.

Update: Midnight - CNA has started reporting it here.

Update: ST 24/8/07 - STB gave the reason for dismissal: Documents carrying signatures of 3 majority owners were not included in the application. Original SC members made a statutory declaration that all signed documents were included (when they were not). STB are not empowered to allow an amendment to be made to an application once submitted.

Update: ST 25/8/07 - HT owners will meet on 29/8 and 9/9 to discuss path forward. According to ST, two possibilities are available. (1) They could give in, allow the sale to go through at $500m and possibly pay damages to HPL. (2) They fight, and start 3rd party proceedings against possibly agent, lawyer and/or SC.

Saturday, 18 August 2007

Date of Vacant Possession - Maintaining an Estate when It No Longer Belongs to You

In response to an owner's dilemma over developers moving in to build a showflat after completion, the URA and Building and Construction Authority replied in the ST Forum on 17 August. You can find the full text in CondoSingapore here. I've talked about it previously here and here. Because the land legally belongs to the developer after completion, owners or tenants staying there are doing so at the 'goodwill' of the developer, often rent free. However, subject to the SPA, some owners are required to pay maintenance fees and continue to service the sinking fund, if they wish to stay till the date of vacant possession (VP). As Mr Han Yong Hoe (Director, Development Control URA) and Mr Ong Chan Leng (Director, Special Functions Division BCA) pointed out in their reply, owners/tenants staying in the estate after completion are "privately agreed upon between the developers and the residents". They further pointed out: "The developers and stakeholders of the project are directly responsible for safety at the worksite and they should take the necessary safety precautions to protect workers and the residents."

Now I want to show you two bits of legal text from a massive HUDC estate that was sold recently. The first is from the Tender document, and after negotiations, the second forms the Sale and Purchase Agreement which was signed by the SC and the developer:

Text 1:
The Purchaser hereby covenants that from the Completion Date, they will ensure that all the common property comprised in the Property is kept and will keep the same in good repair and tenantable condition and the services provided by the Management Corporation to the Property shall not be disrupted and the level of maintenance services shall not be affected until delivery of vacant possession of all Units and that the Managing Agents employed for the management of the Property at the Completion Date shall not be dismissed or terminated without just cause or reason prior to this date.


What it means is that the developer agrees to keep "in GOOD REPAIR and TENANTABLE condition" the estate, and that the services provided by the MC (security, electricity, cleaning services etc) shall "NOT BE DISRUPTED" nor its "LEVEL of maintenance services" affected until VP. Sounds reasonable right? It means the developer has duty of care to ensure that the estate is as it is, in a "state of good and serviceable repair" similar in spirit to the duties of the MC as defined in the BMSMA (Article 29(1)), irregardless of how many people are staying there.

Now after negotiations, look what happened to that clause (which is now part of the SPA):-

Text 2:
After completion and pending the delivery of vacant possession of all the Units by the Owners to the Purchaser, the Purchaser shall maintain the Property at a reasonable level (including maintenance of reasonable security services for the Property).


The vague term "reasonable" has replaced the much more defined duties of the developer in Text 1 which indicates no disruption, service level to be maintained etc. So what would "reasonable" mean? If there is only 1 owner staying in a 20 story block, does that mean the entire block can have its electricity cut except for that floor, and only 1 lift operational, perhaps between certain hours only? Or if half the estate is empty, that the security may be reasonably reduced, including simply cordoning off that estate and abandoning it? What about if your flat has an external pipe that is leaking badly and causing the floor to be flooded, would you be able to alert the developer to get it repaired?

What counts as "reasonable"? Why was Text 1 replaced by a vague Text 2? Who insisted on the change (Purchaser? SC?)? What form of recourse OUTSIDE of the developer is there for owners and tenants staying there after completion, should the developer ignore repeated complaints? Is the estate even insured? After all, the MC would have dissolved by then, there wouldn't be a managing agent to contact, but yet at the same time, some estates still require owners to pay maintenance charges.

A commenter in the ST Forum said that residents and tenants should be thankful that the developer allowed them to stay 'rent free'. Firstly, there are very valid reasons for staying there - owners may not have the cash capital to purchaser a replacement home until completion (when they get their proceeds), and only then start looking around for a new home. It's not their choice to stay in an estate that may deteriorate if no checks are made on developers.

Secondly, let me use this analogy:- A landlord rents out the flat to you, but comes in daily from 9 to 5 without your permission as a tenant, to renovate parts of your flat while your kids are around. The landlord also allows people to walk in and out of your flat unchecked. The landlord also points out that the leaking roof will not be repaired since it's not reasonable to repair; he's going to tear down the entire place in a few months time. He gives you masking tape and says "Put up with it". He tells you, never mind, rent is free but you pay need to pay utilities, and maintenance fund. He says, "this is reasonable wat, you getting to stay here rent free".

Will you get upset?

Do you even know what your rights are, after completion?

Conflicts of Interest II - Sale Committee vs Management Council

I posted a while back what are the implications if a member of the management council (MC) sits in the sale committee (SC), largely centered around the problem of conflict of interest. You can read about this here. Since then, I've heard of more and more SC members who are members of the MC, in some cases dominating the MC completely.

Can you do anything about it? Maybe :) The Building Maintenance and Strata Management Act (2004) (BMSMA) makes for interesting reading. Did you know that as a subsidiary proprietor (SP aka owner), you can write an application into the management corporation to make available for inspection certain documents kept by the MC? (BMSMA 47(1)-(4)). Why is this even useful?

Because you can ask for:-
  1. The names and addresses of the chairperson, secretary and treasurer of the MC as well as the managing agent.
  2. The minutes of the general meetings of the MC
  3. Book and statement of accounts
Why would you need these? (1) is useful to know. (2) will be relevant later when I explained another section of the BMSMA. (3) is useful because of the period between the date of legal completion and date of vacant possession, which I've explained here and here before. You want (3) to have evidence that the existing level of expenditure is maintained by the developer, when they take over your estate. I'll explain (3) in greater detail in a future post, especially considering the recent forum articles about developers entering the premises and constructing showflats even while people are staying there, or deteriorating existing levels of service and maintenance quality. Knowing what are the typical monthly expenditures for maintenance is good ammunition should you wish to challenge the developer for not holding up their end of the promise to maintain the estate at its original level (if stated in the SPA).

But (2) is interesting for the conflict of interest issue. For this, you need to know BMSMA Article 60 - Disclosure of Interests in Contracts, Property, Offices, etc. 60(5) states clearly:

Every member of a council who holds any office or possesses any property whereby, directly or indirectly, duties or interests might be created in conflict with his duties or interests as a member of the council shall declare at a meeting of the council the fact and the nature, character and extent of the conflict.

In other words, if you have someone in the SC who is also in the MC, that person must declare "the fact and the nature, character and extent of the conflict". Not only must he declare the nature of the interest (60(1)(a)), he shall not take part in any discussion, consideration, or vote on any matters related to the enbloc sale (60(1)(b)), and even be asked to withdraw by the chairperson (60(1)(c)) unless the council explicitly requests for information from the SC/MC member.

The declaration must be made at council meetings and the secretary must document every declaration in the minutes.

This is why you need the minutes, preferably before anyone doctors the documentation and inserts in any declaration. After all, if the SC/MC member fail to comply with this requirement, he/she is liable on conviction of a fine not exceeding $5000 or jail not exceeding 12 mths or both.

Do verify this with a lawyer or the managing agent. Check your minutes - was any declaration made? If not, why not? If the SC/MC member is convinced there is no conflict of interest, it is not up to him to assert that, since 60(5) above states that the SC member, who holds an office (in the SC), and has interests in selling the estate (which contradicts the role of MCs in upkeeping and maintaining the estate), directly or indirectly, is in conflict with his duties or interests as a MC member. Even after declaring his interests, unless asked by the MC, he is not allowed to discuss, participate in any discussion, on any enbloc matter raised in the MC meetings.

Given the complexity of this conflict of interest, should the SC/MC member not give up one committee seat or the other? If not, one must ask, why not? After all, if it's often a thankless voluntary job being in such committees, why take on 2 thankless voluntary jobs?


Wednesday, 15 August 2007

Is Singapore Your Oyster - Proximity and Amenities

Most agents, pro-sale owners and even Mr Mah Bow Tan, would point out that should the sale proceeds be insufficient to afford you a similar location home, you can always move further afield where properties might be cheaper.

A Voices letter in Today Online raises an important issue - what intangibles do you lose when you move "further afield"? The letter by Mr Francis Hong (reprinted in CondoSingapore here) is about 500 patients who petitioned to HDB to retain their family GP when they are forced to relocated for a SERS (Selective En Bloc Redevelopment Scheme) on their estate. Mr Fong points out that the need to be close to certain amenities is not one of luxury but "one of necessity".

What amenities do you lose when you are forced to move away from a community that you are familiar with? How do you calculate the loss of such intangibles, when factoring in what you'll get from the proceeds, and what you'll lose from your home?

Some examples:

For children: Parents often relocate to within a certain boundary around a school of their choice, so that there's a higher chance of their kids going to that school. They have to, without any choice, continue to stay in the same area for their childrens' future.
For parents: Any parent with more than 1 child knows that if they have to send their kids to school, they want (a) their kids to be in the same school/kindergarten ideally (b) a school/route that is convenient for them, enroute to work ideally. Moving home will disrupt this, often requiring that they wake up earlier just to get the kids to school on time.
For elderly: Psychologists have pointed out that as you get older, you want to have familiarity around you. Grandparents hate it when kids come into their homes and really mess things up. Likewise, when old people venture out, they need familiar routes, places, landmarks. Moving home is disruptive, and often traumatic.
For families: Loss of clinics that they have been with for decades, loss of friends and neighbours, people who'd keep an eye out for their homes when they're away on holiday.
For working adults: Unless you move to a home nearer to your place of work, chances are you'll have to device new routes to work. Further afield may well mean longer travelling time, more traffic to encounter, and waking up earlier/coming home later.

These are very real factors that will affect you if you move home, whether by choice or not. These are very real reasons to think about before you decide to enbloc your home or not. I know of people who have spent the past 6 months trying to find a new home for themselves, visiting flat after flat to no avail. Perhaps in 3-4 years' time, one might find a glut of new units flooding the market, but there's no guarantee that prices will not escalate beyond your reach (a very real possibility).

Do you cherish the conveniences and necessities that you have taken for granted, things people and places that will disappear at the stroke of an STB approval?

Devonshire Lodge - Minority Owner Seeks Legal Action

As predicted, more and more minority owners are now plucking up their courage to seek legal action against their enbloc sale. Channelnews Asia reported yesterday on a single minority owner who plans to fight the enbloc sale of Devonshire Lodge in Devonshire Road, a building that's just over 10 years old (TOP 1996). There were no news report on the sale but a caveat lodged with URA on Mar 2007 showed the estate comprising 27 units was sold for $35,680,000 (although CNA reports it at $37.2m).

You can find the CNA news here (including a video). Mr Philip Fong from Harry Elias Partnership (Currently representing Horizon Towers' minority owners) mentioned some possible grounds for taking the sale to court - "inadequate marketing, the sale was rushed into, suppression of facts". He also pointed out the minority owners face an uphill task since they are "not privy to what went on during meetings to discuss the sale of a property" and "they do not have easy access to the sales committee and documents". The CNA also reports that typical minority objections are on grounds of "sale process" and "valuation".

Estate: Devonshire Lodge, Devonshire Road
Stage: Sold at $37.2m in Mar 2007
Party: Sole minority owner, Mr Jeffrey Lai. Lawyer to be hired. No STB Hearing date yet.
Collective Sale Lawyer: Toh Tan & Partners
Developer: Evan Lim & Co
Reason: Sale amount for the estate may not be in line with valuation.
Details: (CNA) "some owners are having second thoughts", "we want to know that it's a fair valuation when they sell the property". Mr Lai plans to obtain an independent valuation report
for submission with his objection to STB.

Tuesday, 14 August 2007

Post-Enbloc Sale aka Free-For-All

A forum letter in the ST today highlights the fact that while our enbloc legislation is very precise in the execution and protocols surround the SALE of the estate, it is extremely woolly about the CONSEQUENCES of the sale, ie what happens after the owners get their hands on the profits.

What happens? Well, after legal completion (the point when most owners get their sale proceeds), the land belongs to the developer. The managing council will be dissolved, there won't be a managing agent, your estate is in the control of the developer. Even though there are people staying there (including children and elderly), the developer (subject to the conditions stated in the SPA) often has the right to invade your estate and put up signboards, erect show flats (yes, in plural), conduct preconstruction testing and drilling. Your security will have a hard time keeping up with who comes in and when. In fact, as my post all the way back in Jan 2007 showed, expats have complained of developers not even maintaining the quality of the estate's service and maintenance (even though owners and tenants staying there after completion are still required to pay maintenance fees) and worse, creating all sorts of health and safety hazards on your land.

But who cares? Pro-sale owners have their money and are gone from the place. The only people left - tenants (some of whom are not even aware the estate's being demolished) and residents desperately looking for alternative homes, hoping for a bullish market to show any sign of slowing down.

What can you do? Nothing much, since any SPA is decided by the sale committee and the developer (with their lawyers), and if the developer wants to come in, will any SC say no? The only hope you have - do not sign the CSA until you get a rock solid written promise from the SC not to allow developers into your own, especially if you are planning to stay there. I'll update if I have more information on what legal recourse tenants and residents have against developers creating health, noise and safety hazards in your estate.

As a colleague wrote to me, "if civilians are required by law to wear safety gear when they enter a construction site, what happens when the construction site enters your home?"

Straits Times Printed Forum
Aug 13, 2007
En bloc sale: Work starts even before all move out
Chio Tan Seng

AMID all the stories on collective property sales readers of The Straits Times have come across, mine in Balmoral View has a twist.

The developer has moved in equipment to build a showflat even though seven units of this 22-unit condo are still occupied.

It means we cannot use the visitors' carpark and the recreation areas, apart from having to tolerate the dirty swimming pool, noise and dust. In the meantime, we are still billed for monthly maintenance.

Yes, our condo was an early bird in the 'en bloc wave', and prices paid to unit owners were low compared to the current level. We accepted the deal, and the last unit must be vacated by November.

But what right has the developer to rush in before everyone moves out?

Some to-ing and fro-ing with Building and Construction Authority officials revealed that, although the deal was completed in May, the developer had already applied for and got the necessary approvals from the Urban Redevelopment Authority (URA) to build a showflat in February last year.
Did the URA check with the Strata Titles Board on the legality of such a move, given that there are residents who do not need to move out until November?

By mid-June, heavy construction equipment was moved in and the construction of the showflat is now in earnest. The recreation area has been cordoned off.

Also, I see obvious safety concerns with children playing in the compound, especially with wooden scaffolding less than a couple of metres from the swimming pool.

I understand the developer's haste to catch the hot property market but this is at the expense of residents still living on the estate.

Can the authorities enlighten us on this unsatisfactory situation?


Myth #9: Understanding the Law and Knowing Your Rights

Nominated MP Siew Kum Hong wrote an op-ed piece to Weekend on 11 August 2007, which highlights his very thoughtful views of enbloc sales in general, and the Horizon Towers situation in particular. I will not reproduce his entire piece, but you can find it on CondoSingapore's Forum here. Note - Mr Siew has his own blog and has posted additional comments on his piece here.

I do want to comment on some of his points, specifically his argument that "just like any other commercial transaction, there are very real commercial and legal risks in collective sales":-

"With so much at stake, inexperienced sellers could and should have engaged lawyers to advise them personally. It is the sellers' own responsibility to ensure they understand all their liabilities and comply with all legal obligations.They also could and should have negotiated for terms they are comfortable with."

"If a seller is uncomfortable with the collective sale agreement (CSA) which binds the sellers collectively, he or she could always not sign it. If the concern is over the SPA with the purchaser, then a seller can seek to impose greater controls and oversight over the actions of the sale committee before signing the CSA. It is difficult to sympathise with a seller who sees only the promised dollar signs and signs without fully understanding its implications."


What Mr Siew said above is the correct interpretation of the law, and of common sense, truth be told. Everyone should read carefully the terms and conditions of anything they sign (be it credit card application, signing up an account on a website, installing a software). But the reality is very different of course (how many read the Microsoft terms and agreements before clicking on the "I agree" checkbox?). But putting aside human laziness to read such text, there's another set of very real problems that works in favour of the sale committee, the marketing agent, lawyers and developers, ie the enbloc sale:-

  1. Anyone with a non-law degree, much less a non-law PhD, will struggle with the CSA and the Sale and Purchase Agreement (SPA). In densely packed multiple subordinate and embedded clauses, these contracts can induce migraines simply by attempting to understand it. If people can barely understand it, how can owners who (a) can't understand English, (b) can't understand legal English, (c) do not have the resources to get a lawyer to read it, realise what rights they have or do not have? If the law requires that the advertisement and announcement of the sale be in 4 languages, why can't the law require that the CSA be in 4 languages as well as plain English?
  2. Most people assume that the sale committee (SC) are selfless people, who represent their interests and rights, and hence will not question in detail the intricate clauses in the CSA/SPA, which is almost always drafted by the SC and lawyers without input from the owners. Most estates have no say whatsoever in the nomination, election, voting and ratification of the SC. How much harder, then, for input into the drafting of a legal document like the CSA or SPA?
  3. The approach advocated by most agents, including the professional enbloc firms, is that a SC should not be consultative in the drafting of the CSA; they see this as only taking up more time and a waste of time. So they advocate that the CSA be prepared and at the first Owners' Meeting, have it ready for signing. "Take it or leave it" without any choice in revisions. At what point can an owner negotiate for terms? They simply can't and can only do so by not signing the CSA. But if 80% are ignorant enough to do so, then what good does your refusal do?
  4. The best method to ensure a CSA or SPA is truly representative of all owners, including minority owners, and to impose greater control and oversight on the SC is to require that owners who have reservations on the sale/CSA to be a member of the SC as well - a form of check and balance or an alternative voice that gives critical feedback to the over-riding pro-sale mentality. However, every CSA I have seen thus far has a clause requiring that each SC member must sign the CSA within a time frame (typically 7 to 30 days). This immediately excludes any form of "control" or "oversight" when owners who have reservations about the sale cannot offer his/her services to the community, except perhaps as a minority voice posting on a blog.
  5. The problem is input by owners into any drafting of the CSA, much less SPA (which is mainly handled by the SC and lawyer in conjunction with the developer), is near impossible. The law does not require it, nor does it form a legal objection in any way when STB hears of it.
Mr Siew has his heart in the right place, and has talked about the legal aspect of any contract that one must be cognizant of. Unfortunately, the reality on the ground which many enbloc estates are facing, is that people who wish to negotiate, feedback, discuss about the CSA or SPA, are not given the opportunity to do so. It is a myth that one can know and negotiate one's rights in an enbloc sale. Transparency, accountability, and due process, go against the nature of a quick sale, after all.

And even more unfortunately, only the law can change this.

Saturday, 11 August 2007

Horizon Towers Contacts Needed & Comments Raised

The initial post on the Horizon Towers' STB dismissal has generated over 160 (and counting) comments, in true MSN style of rapid fire and response. I do not believe in censorship nor do I want to stop people from commenting to one another, so I'll put some of my comments here rather than be drowned out by the continuing discussion (and often speculation) on the plight of Horizon Towers.

Firstly, if there are any Horizon Towers owners/residents reading the blog, a major newspaper reporter who specialises in collective sale reporting is looking for contacts to interview with regards to the situation in Horizon Towers. If you'd like to talk to the reporter, please let me know - enblocsingapore@hotmail.com . I'll hook you up. The reporter is bona fide, and anonymity can be maintained should you choose. It'll be good to get some information from the residents and owners, to at least calm some of the very rampant speculation. Just note that if you have been advised by your lawyer(s) not to speak to the press, then you should comply.

Now aside from the glaring question of who sues what where how when, two other issues have turned up in the comments - (a) is the CSA still valid for it to be resubmitted to STB (b) during the owners' meeting where they decide what to do next, should any voting be public or confidential.

Voting, Anonymity and Why Current Enbloc Favours Certain Parties Over Others

I'll address the latter (b) first. For a while now, I have been advocating the fact that the current system of enbloc procedures is not efficient and mindful of the needs and concerns of owners. What I'm referring to is the fact that any signature collection for the CSA can last for a year.

Think of it this way - if a powerful political party is given not a short period of time to campaign for votes (as is currently practiced), but a whole year to garner votes, and by garnering I mean actively in-your-face constant reminders to vote for them and why it's good to vote for them etc, do you think elections will be fair? No, because (1) a sustained campaign is only feasible to the party with the financial resources and clout to do so; any party that does not have that power will face serious problems trying to get their own votes, (2) there is a very real risk of wearing down - a voter might vote irrationally simply because they want to get it over with.

The period of time to collect a CSA is 1 year. That favours a sustained campaign by the agent and sale committee to push for a sale, and to wear out resistance if any. Unlike voting, CSA signature collection is not anonymous either. In other words, the agents and SC know who voted and who didn't. They are under no obligation to keep that confidential (see your CSA, are there any clauses which require that such information be kept confidential? Doubt so). Any owner who signs on the CSA can see who else has or hasn't signed. They can then persuade, coerce, even threaten their neighbours, resulting in an ugly community divided into two.

When the owners meet to decide the fate of their estate, one commenter said that any voting should be kept confidential. Absolutely. No raising of hands. Have proper ballot cards for all registered SPs to decide, and that result should be compiled by an independent party.

This should be the way with CSAs as well, to be honest. Hold 2 voting sessions in a 4 month period (not 1 year and given the bullish property market, even pro-sales owners should think a year too long), with voting done anonymously but verified and certified by an independent party. Failure to achieve 80% means accepting that it's not going to happen, and owners moving on with their lives.

CSA and SPA Validity

I want to preempt by saying I'm not a lawyer nor trained in Law. I read things carefully and logically. All discussion is based purely on rational and not legal reading, so CAVEAT EMPTOR (BUYER BEWARE - READ AND ACCEPT AT YOUR OWN RISK!). One commenter asks if Horizon Towers wishes to resubmit, can they 'reuse' the CSA?

Okay, there's TWO contracts involved in a collective sale. The Collective Sale Agreement (CSA) which binds the owners, sale committee, outlines the responsibilities of agents and lawyers (sometimes), method of distribution etc etc. The Sale and Purchase Agreement is a contract between the buyer (the developer in most cases) and the seller (the majority owners).

Each of these two contracts vary, sometimes subtantially, between estates. This depends on the law firm hired and the SC's decision to include/exclude certain clauses, indemnities, conditions etc.

Typically, the CSA will have a number of expiry or period of validity clauses. The Horizon Towers (HT) CSA should contain them as well, outlining when the CSA will lapse (eg when 80% is not achieved by a particular expiry date, when no SPA is achieved, when no application to STB is made etc). Assuming that the CSA has a clause to the effect that (for example) if STB approval is not issued within 12 mths from the execution of the CSA, it means that so long as HT has not reached that deadline, the CSA is still valid. Hence, everyone who signed on that CSA is still bound by it. They can extend the deadline (if permitted in the CSA), eg to apply to STB to obtain approval but the signatures stand.

The SPA should likewise contain clauses that outline its validity subject to an STB order. For example, if the STB dismisses the application within X number of months from the date of the SPA, then the agreement shall be deemed to be cancelled etc. It might even outline claim clauses eg "the purchaser shall have no claim whatsoever against the owners for compensation, costs, damages" etc. So in all likelihood, if the HT SPA contains such a clause, the STB dismissal would have cancelled it BUT not the CSA. If the CSA goes past the expiry date and no submission to the STB has been made, then the SC will need to recollect signatures again. I do believe that if HT SC decides to resubmit, since the SPA has been nullified, they'll need a (most likely) redrafted SPA to submit to STB as part of the documentation.

That's my (amateurish) reading of it. Do let me know if it's wrong, but like I said, it'll depend on the individual CSA and SPA. The best advice on this would be to seek a lawyer. And no, I don't have the HT documents. :P

It's a really rough time for HT owners, both majority and minority I'm sure. All the best to everyone there.

Of Social Good and Individual Rights - Follow up to Lucy Huang's Letter

Another forum letter appeared today as a follow up to Ms Lucy Huang's letter (which I've included in the blog here). Lucy's letter has elicited strong opposing views about en-bloc sales. Some said she should blame herself for buying at a premium during a booming market, others said that she needs to respect the majority vote because of societal norms. Yet others said, if the majority vote is all-important, then reinstate the 100% majority vote. (You can find the exchanges in the post's comment.) I will address these issues in the next few days but here's the letter which empathises with Lucy's plight. Here Jane touches on a crucial issue - that of the individual rights of home owners.

For the record, I strongly believe Lucy to be a victim of enbloc sales, rather than someone who signed the CSA. Of course, any interpretation of a text is possible but given the way she had framed her situation, the dominant reading is that she did not wish to move from her two homes. If Lucy reads this, please feel free to expand on your letter.

Straits Times Online Forum
10 August 2007
En-bloc sales: What happened to fair treatment and rights of minorities?
Ms Jane Ee

I READ the letter, 'Govt should intervene in property market' (ST, Aug 8), and it strikes a chord.

I am also one of the thousands who are being turned out of our homes because of the en-bloc frenzy.

Being forced to seek legal advice, we were told that the only protection that we have by law is that we will minimally get what we paid for our home 10 years ago without bank interest.

We have spent weeks searching for a new home in frustration and realised that we too can only downgrade or move to the very borders of Singapore.

Many of us own a home. If someone walks in through your door today and demands that you exchange your home in Central location with his in Choa Chu Kang, how would you feel?

If someone demands that you sell your house at the price you paid for 10 years ago without bank interest for the mortgage that you have arduously serviced over the years, what would you do?

You can throw the person out the door. Yet, this is exactly what some minority owners in en-bloc sales are forced to accept, without choice.

It is ironical that, as a Singaporean who has worked hard to own our home in this land, I am made to ponder the prospect of losing our home and wonder, in the name of facilitating en-bloc sales and supposed progress of the nation, what has happened to fair treatment and the rights of individual Singaporeans?

Wednesday, 8 August 2007

Property Market Intervention - Reality vs Statistics

Today's Straits Times highlights Ms Lucy Huang's very real predicament of being forced to move home and not being able to find a suitable replacement in the current bullish property market. Her evidence, while anecdotal, is very real and very personal not just to her but many other home owners, particularly owners who are evicted due to enblocs and forced to buy a replacement home in an area they have grown used to, or in a size they need.

I can almost visualise the governmental response: Swanky statistical charts showing 1996 levels relative to 2007 levels which will confirm Mah's statement. Effectively debunking what many on the ground are painfully feeling - the prices of replacement homes, in a community and vicinity they are familiar with, rapidly moving beyond their reach.

In 1995, not far removed from Ms Huang's first eviction, Goh Chok Tong in his National Day speech asserted that "there is no better stake in the country than a flat or a house". Looking at the En-Bloc List I've been tracking from 2006-2007, and considering the increasing likelihood of enblocs going to STB at just marginally above 80% consensus, how many citizens have lost their flats, their stake in the country? (Hint: Thousands.)

Happy National Day, eh.

Straits Times Forum Printed Edition
8 August 2007
Lucy Huang (Ms)

NATIONAL Development Minister Mah Bow Tan said on TV last week that the Government does not need to intervene in the property market yet, because prices have not risen to 1996 levels. I disagree. In that year, we were forced to leave our home because of an en-bloc sale. We spent many months looking for a replacement flat. At that time an HDB executive maisonette in Bishan was going for $650,000; a Lakeview HUDC unit, $800,000; and one at Braddell View, $640,000. A private freehold flat of 1,600 sq feet in Devonshire Road was advertised at $1.05 million while a Cavenagh Court high-floor unit was selling for $750,000.

We are now obliged to find a new home again. HDB five-room flats and executive maisonettes are going for over $750,000; the point blocks near the Farrer Road market, $800,000; Braddell View is now being offered for $1.25 million. Private 99-year-leasehold property like Queens on Commonwealth Avenue are priced at $1.1 million, while prime developments like the one at Orchard Turn opposite Tangs are being booked at over $4,000 per sq ft. All these are way above the 1996 prices.

Thousands are being turned out of their homes because of the en-bloc craze. The money paid to us means either a downgrade or a move to the very borders of Singapore. It is time for government intervention.


Meeting your MP - A Guide

There's rampant discussion about the Horizon Towers debacle in the various forums, so we'll do something completely different.

For some, going to meet a Member of Parliament is a useless gesture. For others, meeting an MP is an alien idea. Some people, distraught enough with the enbloc of their homes, might be brave to venture into the unknown and make their MP earn his/her keep in a "Meet the People Session". Here's what happens at a Meet the People Session:-

  1. First things first - you need to locate your MP. Each constituency/GRC has a number of MPs with each MP usually assigned a specific location in the GRC (in this case). Go to the Community Development Council's (CDC) website here. On the bottom right you see a "District Detector". Enter your postal code and it'll pull up which CDC you're in as well as a link to the CDC's website. Click on that and go to the website which will have a Meet the People Session page. Locate your MP from there.
  2. You can find more information about your MP from the Singapore Parliament website (which contains their CVs). You can find Meet the People session times/days here too but NOT the location where the MP is attached to.
  3. Once you've found your MP, head to the session location and be prepared for a long wait. Most Sessions begin in the evening (7pm onwards). Like most Singaporean activities, get ready to queue.
  4. You will first be verified that you are indeed in the right constituency for the Session. In other words you cannot go to Potong Pasir if you are not IN Potong Pasir. They will turn you away if you're not verified. Once you've passed verification, you'll be given a Queue Number.
  5. Depending on how many people before you, you may have to wait for up to 1 hour before you're called up for "Registration".
  6. During registration, you'll need to present your IC card, and fill in your details on a computer for their record and for future visit purposes. Then you wait (approximately) an hour for a volunteer to draft out a petition for you.
  7. Bear in mind some of the people who wish to meet the MP for various reasons may not be native English speakers (or in some cases, know how to write). So the volunteer prepares a written petition that will be recorded and passed to the MP when you meet.
  8. Impress the volunteer - write your own petition! This is useful because the MP can bring back a copy of your own petition for follow up, rather than a quick summary written by a volunteer.
  9. When presenting your case to the MP, be polite and to the point. Air your grievances and the problems with the enbloc in your estate (doesn't matter what stage you're at). The idea is the more petitions/complaints/letters to the ministries about enbloc, the more likely they have to do something, especially in response to the MPs.
  10. The time from start to finish can be several hours (3 hrs or so) so be prepared. The result? You'll get a formal letter from your MP which will be addressed (depending on your issues raised) to the permanent secretaries of the Ministries of Law and National Development, requesting that they look into the matter on the MP's behalf.
The fact is there's been a few people (not a lot) who have approached their MPs so far. The MPs have to be accountable to their constituency members, irregardless of socioeconomic class status. Bring up issues on transparency, due process, conflict of interests, bad faith, cowboy antics, poor legislation covering enblocs, new amendments to enbloc laws etc.

The MPs are, as a senior member of government once said, "as good as it gets". Let's see if they're willing to pull their weight on the increasingly disturbing matter of enbloc sales.


Saturday, 4 August 2007

VICTORY for Horizon Towers - Enbloc Application Dismissed

[Updated 4 Aug morning to include news reports and names of law firm/agent as printed in the news]

Given the hundreds of enbloc applications that have gone through STB, isn't it ironic that there's been very few STB dismissals so far? Prior to Horizon Towers, the only two cases I could gather were Mandalay Court (March 2000) and Grenville Condominium (June 2000), both occurred right after the Land Titles (Strata) Act amendments in 1999. Mandalay and Grenville were dismissed due to procedural errors in their enbloc sale application, and in both cases relating to extraordinary general meetings (EOGMs) either being held late (Mandalay) or not being held (Grenville). Because of this technicality, STB dismissed their applications. Subsequently, both estates' SCs reapplied for a 2nd application to STB and both were approved.

On 3rd August, Singapore Stock Exchange News listed the following announcement about Horizon Towers:-

Following the hearing of the Strata Titles Board ("STB") in connection with the application (the "Application") by the vendors of the Property for the STB to order the sale of the Property in accordance with the Option to Purchase, the Company wishes to announce that the STB has on 3 August 2007 dismissed the Application.

The Company understands that the Application was dismissed by the STB because the Application had been made by the vendors without full compliance with statutory requirements. Horizon Partners is currently considering the STB's decision and reserves all its rights, including its rights against the subsidiary proprietors of the Property who signed the collective sale agreement and the Sales Committee of the Property.


An inside source highlighted that the dismissal was done due to possible procedural errors. From the 3 main news sources, here are their 'sketchy' descriptions of these errors (all dated 4 Aug 07):-

CNA: "applicants failed to include certain documents"; "some papers were defective"
BT: "insufficient notices were posted and some documents were not filed"
ST: "a notice put up on July 11 last year saying that owners with 80.81 per cent of share values in Horizon Towers had signed the sale agreement. A sale needs 80 per cent consensus. But only 79 per cent had agreed to the sale at that time, lawyers said." (Incidentally, they did achieve 84% but I guess the point here was that on 11 July the notice was incorrect.)

Update: ST 8 Aug 2007 gave clearer details of the law firms and lawyers involved.
HPL - SC K Shanmugam and William Ong of Allen & Gledhill
Majority owners - SC Jimmy Yim of Drew & Napier, SC Chelva Rajah or Tan Rajah & Cheah.
Minority owners - Kannan Ramesh, Senior partner of Tan Kok Quan Partnership, Phillip Fong, Senior partner of Harry Ellias Partnership.
A company owning several units hired Dr SK Phang who enlisted SC Michael Hwang.
Agent for Horizon Towers remained, as far as I could tell, First Tree Properties Pte Ltd (BT 22 Aug 2006).

The interesting points are:-

  1. Again, STB emphasises the need for all applications to conform to the law in terms of procedures. Note that the merits of the application (done in good faith, method of distribution, financial loss) were not considered in these dismissal cases so far. It appears even seasoned law firms and enbloc agents may stumble over the legal protocols needed for enbloc sales. The moral of the story - make sure you adhere to the law. To the letter.
  2. For those who are against the sale, it means not just objecting on the grounds of lack of transparency/lack of good faith/poor distribution/financial loss, but documenting meticulously every single letter/event/meeting that has ever occurred with regards to the enbloc as well as taking minutes/recording the sessions. Such information may turn out to be very useful later on. It also means that people have to be brave to object to the sale of their homes (preferably as a collective group), and that means objecting on all fronts - not just on the enbloc sale but on the procedures that were done to begin, move and secure the sale. Some agents and law firms are being paid hundreds of thousands if not millions to sell your homes and by golly, why should they have it easy? :)
  3. Most CSAs/SPAs have indemnity clauses protecting SCs and majority owners from anything but acts of God (okay I exaggerate but you get the idea.. read your own CSA/SPA). Can Hotel Properties Ltd sue the SC/majority owners for procedural mishap?
  4. A deja-vu may occur again when the new amended enbloc legislature kicks in later this year. I've already seen one CSA with contract-out clauses, or clauses that attempt to bypass the new laws. Even a clause that compels majority owners to agree that an EOGM occurred to elect the SC (a new proposed amendment to the law) even when it didn't actually happen. What will be the consequences for all owners (majority/minority) when the law is changing and people (including lawyers) are caught in the middle, waiting to see what fixes/amendments need to be done to their enbloc process? In the meantime, can current CSAs be worded such that they bypass or circumvent the new laws? Surely this can't be the case?

Staying Ahead of the Game - Protem 'Inside Trading'

A look at the expat forum's thread on enbloc sales and you'll see it swamped by local Singaporeans trying to jump onto the 'enbloc wagon' by trying to suss out where the next 'enbloc potential' is and getting a unit or two there just before they hit the enbloc sale road. Speculators are jumping around the East Coast, lurking in condos in hope that some poor chaps will unsuspectingly sell their homes to an enbloc investor who can then cash it all in and reap the millions (the going rate nowadays, as they say).

But what happens if certain people within the estate have privileged information that an enbloc is going to occur, and buy up units in said estate before any enbloc announcements?

Yes, the only group of people who are aware of such things are the Protem Sale Committee (PSC) members. In an email, I was told this happened in an estate where members of the PSC who already own units there, decided to buy up other units in the estate, and shortly thereafter announced to everyone that they will be starting the enbloc sale.

Why should this be a problem?

  • From the perspective of a unit owner who wishes to sell their home (for whatever reason) - usually if word goes around of an impending enbloc, the owner would either sell at a premium or hold back on selling, at least until the amount s/he could get is known. In this situation highlighted above, most owners who sold their units to the PSC were not aware of any enbloc and hence sold it 'on the cheap'. To the people who were planning to do the enbloc.
  • From the perspective of a unit owner in general - Most owners will want to wait and see what are the pros and cons of selling their units collectively. They therefore want a PSC/SC that represents them and are fair in their dealings with agents/developers/lawyers. But if owners know that the PSC members have several units in their estate, bought precisely because of an oncoming enbloc, what confidence is there that they do not have ulterior motives of their own? Are they truly representing owners or themselves? Are they selling for the benefit of everyone (which might require taking a higher RP for example), or for their own benefit (which might be a lower RP but faster sale, since they have bulk purchases)?
  • From the perspective of the law - the new amendments will address a key issue of transparency. Any PSC members who utilises privileged information not available to public (including all owners) for their own benefit is not trying to be transparent to everyone. In fact, it is the exact opposite since they are most likely to have their own motivations and drives to push the sale through (eg have to pay off hefty loans taken up from snapping up units). The law needs to protect owners from such 'insider traders' and to have procedures in place that require all owners to declare when they bought their units (and have such information open for scrutiny).
In the meantime, the wild wild west continues.