What happened? Where did it go wrong? The case hinges on a clause in the CSA and the deadline of 12 mths to get the 80% majority consent. The CSA clause regulates the rights of a signatory (someone who signs the CSA) to sell their unit, after they have signed the CSA. In the case of Airview, according to the news report, 2 owners had signed the CSA and then decided to sell their units. The buyers however, only signed the CSA after the 12 mth deadline, even though they had "agreed all along to the sale". The SC and their lawyers argued that their late signing should not penalise the entire sale, because "their failure to sign was due to 'mistake or inadvertence' and so was a technicality". Justice Lee Seiu Kin however ruled that the 12 mth deadline must be adhered to, and if any one misses the deadline, they cannot be counted towards the 80%.
Why would anyone sell their flat, some might ask? Why get out of such a windfall?
For various reasons - urgent need to sell (eg emigration, business despatching family overseas), or owners wishing to capitalise on the enbloc fever. Say a person bought their flat for $1m, and it's now going enbloc and he stands to gain $1.8m. He puts it on the market for $1.4m; any buyer stands to gain $0.4m and that owner transfers the risk of enbloc sale collapsing to the buyer; owner gets a guaranteed 'windfall' of $0.4m while buyer accepts possibility of getting $0.4m.
What clause is this in the CSA, that forces this buyer to join the enbloc majority?
This one, which you should find in most CSAs (with some variation):-
Each of the Selling Owners (people who signed the CSA) hereby represents, warrants and covenants as follows:-
... not to do any of the following from the date of signing this agreement by each of the Selling Owner in respect of his strata unit:
(a) grant an option to purchase
(b) sell
(c) agree or contract to sell
(d) assign or transfer by whatever means;
unless third party/parties having such benefit thereof shall also join in as a party to this Agreement by signing the same forthwith or any Supplemental agreement if required by the SC; provided that the particular Selling Owner shall indemnify the other Selling Owners from any claims, losses, damages and/or otherwise arising therefrom.
A variation I've seen includes a condition, that this sale must be subject to the approval of the SC (yes, they rule your life). What this clause means is that if you signed the CSA, you can only sell your unit to someone who MUST agree to sign the CSA AND any other documents required by the SC. It also means that the seller is responsible for any claims or damages if anything botches up. But is this fair? Why should you as a seller, if you have legit reasons to sell, be held responsible if the managing agent and/or lawyers do not follow up on the sale and chase the new owners to sign the CSA? Why should you also be penalised for signing the CSA, by having such a clause that effectively limits the potential number of buyers (or worse, they must be approved by the SC)? Shouldn't the onus be on the marketing agent and SC to convince the new buyers to sign the CSA, rather than it be your job?
It remains to be seen what's the aftermath of the Airview Towers dismissal - will the 2 unit sellers get into trouble? Will Bukit Sembawang sue the majority owners, like in Horizon Towers? Will the 2 unit buyers get into trouble for not signing the CSA in time? Will Bukit Sembawang let the sale slide, as the news report suggests?
What cannot be denied though - that it is rather sneaky of the managing agent and/or lawyer for the SC to brush off the late signing of the CSA by the 2 unit sellers, as a mere 'technicality'. They really should have known better.
Moral of story - Be careful of what you sign. If the 2 unit owners never signed the CSA, they would not have gotten into any trouble that they might be in now.
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