A review so soon? Possible MinLaw Review of Amended Enbloc Law

If you haven't heard the news, this quietly came out this weekend on the BT paper - MinLaw may be planning a review of the revised enbloc law. You can read the full article on condosingapore here.

I'm surprised that a review is happening so quickly, barely 6 mths after the amended law kicked into being in early October. Why am I surprised?

• It would make more sense to do a review of the law, in its entirety. That is, it'd be a better use of manpower and resources to wait for at least 1-2 years, see how the new law has worked through from start to finish (STB stage), so that any kinks in the entire stream can be analysed and worked out. Does that make sense?
• Right now, given the dearth of enblocs going into the market, most estates attempting enbloc would have gone through, at most, the first 2-3 EOGMs. I suspect no estate post-Oct have hit the Public Tender stage at all. Most tender announcements are for pre-Oct attempts (80% achieved before 4 Oct 2007). So, the most anyone can say anything about the new amendments, is what's going on in these EOGMs.
  
• The BT article stated categorically that MinLaw has been keeping track of its feedback from the public via it's service enquiry line (eg contact@mlaw.gov.sg) and other channels. Now most "affected owners" may have written in to complain about the problems with the new law, especially with regards to EOGMs, the constitution of the SC, the selection of lawyer/agent, ie the early stages. If they complained about other stages of the enbloc process, it'd largely be an academic exercise because it has not happened yet in their estates. Any other complaints or suggestions will have to refer to the situation pre-Oct amendments, and I'm sure lots of us, in the middle of last year, wrote in during the Public Consultation with our 2 cents worth on the pre-2007 law.
  
• However, what is happening now in the market?
  
• Not more than 5 enblocs since the new law. Bad for business - for agents, lawyers, developers, construction industry, or and stamp duty.
  
• Problems from estates trying to kickstart the enbloc process.
  
• Difficulty trying to obtain requisitions for EOGMs
• Problems holding EOGMs of which some have quickly devolved into ugly shouting matches
• Increased costs from legal and agency fees
• The last point I'm taking with a pinch of salt because it is in the interest of firms to gain as large a profit as possible from the enbloc sale. The increased costs is not a concern to firms except when owners are now seriously reconsidering going for an enbloc try.
  

So let's see - Thus far, maybe only EOGMs, forming of SC, hiring of lawyer/agent, looking at CSAs have happened. A review at this stage would be premature if it's only about such problems. So why trigger a review?

I'd conjecture that the lack of enbloc attempts since the amendments has suddenly worried the Ministry, esp if given feedback from stakeholders such as developers, SCs, marketing agencies and enbloc lawyers. After all, the amendments were meant to strike a balance between protecting the rights of owners, and facilitating enbloc sales. Some would argue that the balance has tilted to the left a bit too much, with enbloc sales being stalled, halted or derailed.

So stakeholders might want clarity about the new law. Nothing wrong with that. More clarity is good for everyone. What everyone should start to get worried about, is if stakeholders want the law RELAXED.

What can you, as a concerned owner, a stayer who wishes to keep his/her home, do?

Chances are you'd have gone through the early stages of the enbloc attempt under the new law. Write to MinLaw about your experiences with the problems in the early stages. Some examples may be:

1. Bullying or disorderly behaviour during EOGMs.
2. Lack of procedures concerning voting procedure - raising of hands (dubious count) vs proper ballots.
3. Lack of clarity on the possibility of an owner to submit a motion for the EOGM.
4. Lack of clarity on what it means to "consider" something at EOGMs ("consider" is used in the Third Schedule of the LT(S)A Section 7 which details the purposes of the EOGMs).
5. Lack of clarity on whether owners can ask questions and obtain responses from the SC, agent or lawyer, during EOGMs. Some estates have refused owners to speak during EOGMs.
6. Can items in the CSA override the intention of holding EOGMs? Eg in some CSAs are clauses that states if you sign the CSA, you automatically agree to be included in all future requisitions by the SC for EOGMs. This means the SC need not start 'from scratch' to get people to requisition the EOGM, but can rely on everyone who signed the CSA, irregardless of whether you disagree later on with the sale.
7. Problems with Management Council members who are in the SC, and who refuse to provide a fair representation from minority owners or people who wish to query the enbloc sale.
8. Sequencing of EOGMs - Lack of clarity on whether some EOGMs as outlined in the Third Schedule can be collapsed into others, so instead of holding 3 EOGMs to vote in the SC and select lawyer/agent and CSA, all can collapsed into 1. Is this allowed?

Think about these items and whether you've encountered them (or any others that I may have missed). Write here in the comments section (where I'll gladly compile, but please leave a contact email for further correspondence!), or directly to MinLaw's feedback unit.

If you don't, all MinLaw is going to get in terms of feedback for the review would be from stakeholders who may well say (among other things):

1. Amendments have effectively stalled the process and prevented the urban renewal of Singapore, the basis of the enbloc law.
2. Suggest that EOGMs be compressed into 1 or 2 at most.
   
3. Any requisition for EOGMs should automatically apply for subsequent EOGMs.
4. No motions allowed to be entered, no voting allowed, no Q&A for more than 10 seconds
5. In general they will paint a bleak picture of EOGMs and the process being stonewalled by administrative and logistical difficulties as well as resistance from anti-enbloc owners.
   

Would you prefer these immediately prior points to become reality? If not, get ready to consolidate your thoughts onto paper.

Good luck.

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Tags: EOGM, EOGMs, collective sale, collective sales, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale, singapore

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.

Tags: Siew Kum Hong, collective sale, collective sales, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale, real estate, singapore

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.

Tags: Meet the people session, Member of Parliament, collective sale, collective sales, condo, en bloc, en-bloc, en-bloc sale, en-bloc sale, enbloc, enbloc sale, property, real estate, singapore, Enblocing Singapore

Measures to Ensure Transparency - Deconstructing a Parliamentary Discussion

The Pariah sent me a link to what looks like a 'transcript' of the parliamentary discussion around en bloc sale committees and the en bloc process in general, dated 22 May 2006. This was between A/P Ho Peng Kee, Snr Minister of State for Law, and Mr Chiam See Tong, Opposition Member. You can read the transcript here.

The discussion centered around en bloc sale committees (SCs) and the need for transparency, fairness, and accountability ('do not abuse its powers'). Let's take the points raised in this discussion paragraph by paragraph. In no way is this intended to be a direct attack on A/P Ho, but it is meant to open up a space for further debate on what is seriously lacking in the legislation, and on the issue of transparency.

Para 2: "The Board takes all objections seriously and examines them very carefully."
While this is true, the issue here is that the STB is bounded by what the legislation defines clearly as permissible objections - financial loss (defined in a limiting manner), acting 'in good faith' (again, defined in a limiting manner), and being partisan to the redevelopment. Given these tight boundaries, what 'objections' fall through the cracks, which can then be thrown out as legally excluded? Issues of intrinsic value of home, valuation of units that are factored in the original sale price but excluded in the en bloc method of apportionment, aggressive behaviours of SC/agent/law firm, lack of transparency, etc.

Para 3: "the Board had, on two occasions, dismissed the applications because the procedures set out in the legislation were not complied with."
Two out of what must be close to 100 en bloc sales by now, is not a lot. IF, however, one counts how many en bloc sales has to go TO THE STB (ie did not achieve 100%), then the number rises substantially. Has the government or the STB asked (and produced findings) on why these estates never achieved the 100% consent? Note the addition qualifier - "set out in the legislation" - which means there are numerous owners who might have complained about the issues mentioned above, but couldn't because these are not set in legislation. Furthermore, the proposed changes include one which aims to make it such that minor non-compliance with procedures would not cause the sale to be dismissed.

Para 4: "[Requiring the CSA to be signed within 12 mths will make it such that] all owners.. will not be kept in suspense for an indefinite period."
How about all owners being subjected to repeated en bloc attempts, on an almost regular basis? The 12 mth limit to an enbloc process will not preclude SCs from forming again and again. Unfortunately, I don't think the government has a record of how often estates repeat the enbloc process.
More importantly, while I applaud the effort to make the update of the enbloc process accessible to people in 4 different languages, more needs to be done to make the CSA itself accessible to laypeople, not just in different languages, but in everyday English rather than its current legalistic form.

Para 5: "[The proposal to require a general meeting to start a SC] will also serve as notice to all owners of a possible en bloc sale initiative being started."
I think this is the clearest case of where the policy makers are not in touch with "the ground". The fact is that almost all en bloc initiatives are started by a broadcast letter by the marketing agent to ALL owners, requesting them to attend an owners' meeting (or in some cases even a general meeting). Any agent with enbloc experience knows that the initial stage of announcing to all owners in as public a manner (notice boards, registered letters to owners etc) is crucial in getting the prerequisite 80%. Will the EOGM requirement change anything? Not likely.

Para 6: "I expect many useful points [from the public consultation on proposed changes] will be incorporated into the final amendment Bill."
I certainly hope so!! Over 100 feedback was sent to MinLaw, surely that has to cause them to consider some of the problems with current, and proposed, law.

Para 7: "the sale committee is perhaps the most important component in the en bloc sale process."
Absolutely, but posting "minutes of the sale committee.. so that all owners, whether majority or minority, will be kept au fait with the discussions" (Para 8) is insufficient. Anyone in the business world will easily realise that minutes are cleaned up versions of what transpired in a meeting. A transcript might be better, but an even better solution would be to require the sale committee to comprise of both pro- and anti-sale members. Something that Prof Jayakumar suggested but was not seen in the proposed changes.

Para 10: "[the idea of legislating a 1-to-1 exchange] is one area where we should leave it to the owners to decide, because not all owners may want a replacement flat."
Do read Pariah's blog for more details on collective exchange; she's probably the most knowledgeable person in terms of exchange. She points out that the suggestion raised by Chiam is not that everyone must receive a replacement flat via an exchange, but that the option be legislated such that should an owner want a replacement flat rather than cash payout, they may do so. Australia is looking into such a suggestion, as mentioned previously, and perhaps Singapore should consider it seriously too.

Para 10: "I know on the ground that owners who want a replacement, in fact, negotiate with the developers who are buying the property."
Wow. Can anyone who has in fact negotiated with the developers please contact me, so that I can believe this statement?
(a) Most agents don't even bother offering possible replacement flats for displaced owners (ie the investment arm is separate from the residential sales arm).
(b) Most CSAs do not include or build into it the possibility for owners to obtain a discount or first dibs, much less negotiate, with the developers on new units. If it does, it means a much lower sale proceed and that might upset investor-owners who prefer the higher premium.

I would dearly love to obtain a negotiated replacement flat, but was never given that opportunity at all. Those I've spoken to recorded the same situation. The whole issue of negotiating for new units before it is built, or even planned (or designed), is highly complicated, perhaps on par with the process of exchange. Unless A/P Ho is referring to owners approaching the developer/new unit agents and asking for a discount because they sold the land to them. In which case the usual discount would be given, rather than a special one, I suspect. Most sales agents want their commission after all.

Did the parliamentary discussion address the issue of transparency? Only narrowly defined, and certainly not enough to tackle the increasing dissent and frustration over the aggressive machinations of SCs. But for all the points raised above, they are made outside of parliament and it's a small voice in a sea of greed. I can only hope some of the feedback sent by the little people, actually make a dent in the law.

Tags: Singapore Parliament, En bloc parliamentary debate, sale committee transparency, collective sales, real estate, singapore, condo, en bloc, en-bloc, en-bloc sale, collective sale, enbloc, enbloc sale, property, Enblocking Singapore, Enblocing Singapore, Enbloccing Singapore

Feedback Unit's REACH Discussion on En Bloc Legislation

REACH, the Feedback Unit's public forum, has posted a discussion thread on the proposed en bloc legislation changes. You can find it here. By all means, feel free to chip in there as I do believe the Feedback Unit reads the discussion.

Reach's Our Common Space Forum Discussion - Proposed Changes to En Bloc Sale Legislation

While I'm not familiar with the forum protocols, I think you can submit responses to the discussion thread anonymously (like I did) or you can register an account. In either cases, I'm sure your IP address is logged so anonymity is an illusion :)

Tags: Reach forum, feedback unit, en bloc sale legislation, en bloc sale changes, collective sale, property, enbloc sale, enbloc, en-bloc sale, en-bloc, en bloc, condo, collective sales, real estate, singapore, Enblocking Singapore, Enblocing Singapore, Enbloccing Singapore

The Time is Now - Ministry of Law Public Consultation

This is the moment we've been waiting for.

To all those who have suffered from enbloc sales, the Ministry of Law is holding a public consultation on the proposed amendments to the en bloc sale legislation. Information can be found here (includes consultation paper and draft legislative amendment document). While the main intent is to discuss the 3 particular amendments (additional consent, empowering STB to increase sales proceeds for minority owners, improvements made to en bloc sales procedures), if you send to them a well-argued, well-justified critique (and importantly, suggestions) of the current en bloc sale legislation, I do not think they would turn you down.

All of us minority owners and people who may be going through enblocs now, we have from 2nd April to 12th May 2007 to send our reviews and comments to the Ministry of Law. There are two methods of delivery to the Ministry:

1. By Mail: The Ministry of Law, 100 High Street, The Treasury, #08-02, Singapore 179434. Attn: Mr Gary Goh.
2. By Email: MLAW_enbloc@mlaw.gov.sg

Please send constructive comments and critiques to the Ministry... It's no point sending a major complaint letter as it'd get nowhere except the governmental bin. Bear in mind as this is a public consultation, it won't be just minority owners voicing out to the government; the Ministry will receive letters from property agencies like CBRE, Knight Frank, etc about why the changes are bad form. They'll get letters from law firms that handle enbloc sales with legal counters to the amendments. There will be sales committee members who will write in to attempt to stop these changes too. So it's not just minority owners who will be writing in but everyone who wants the status quo to remain.

This means you MUST write in and voice your concerns, issues, suggestions. Or the majority will gain the upper hand again.

Some suggestions for you to think about:-

• You are going through an enbloc sale and you're not happy. List down the reasons why you are not happy with the way the sale was conducted, the bullishness of sales committees or agents, the aggressiveness of majority owners etc. For each of these reasons, think about how they can be converted from a complaint into a suggestion. So if the sales committee was being a major bully to every minority owner, how about suggesting, like true elections, anonymous voting at selected period in the enbloc process? An accounting firm can handle the voting and it can be done in writing rather than the way it's done now (collecting signatures so that everyone who signed the CSA knows who has not). Be imaginative but pragmatic. Give valid reasons why you're suggesting such improvements.
• You've been through an enbloc sale and you're not happy. Again, your complaints will get you nowhere unless you can change them into critiques and suggestions. Did you feel your entire estate was suddenly pushed into the enbloc at lightning speed without clear protocols? What procedures would you want to include to ensure this does not happen again?
  
• You've been evicted from your enblocked home and now you're worried that your new home will be removed from you in a few years' time. A good suggestion from The Pariah is to have legislation over how frequent an estate can hold an enbloc sale during the fixed period of time. So say after the first failed attempt, make a suggestion to the Ministry that it should regulate the next time it can be done (say 4 years). How about a permit that must be obtained (like COE) to allow any sales committee to even begin the enbloc. Such a permit would require say a surveyor's report indicating the state of the estate, showing how any upkeep costs would no longer be sustainable, ie justify why an enbloc should be done. This would cut down on environmental wastage and give many owners some security that no single group of ambitious owners can take away your home without sufficient justification.
  

You get the idea. Constructive criticism and suggestions are key in governmental discussions. Lamenting the fact that you lost your home must be balanced with how the government can improve things so that it will not happen to you or anyone else in the future.

Let's get this rolling people. Start writing to the Ministry! Don't sit there thinking others will do the work for you.. please put your frustration, sadness, anger and thoughts onto paper and let the government know enough is enough.

Tags: Ministry of Law, Proposed enbloc amendments, en bloc changes, en bloc amendments, public consultation, Singapore en bloc legislature, collective sale, property, enbloc sale, enbloc, en-bloc sale, en-bloc, condo, en bloc, collective sales, real estate, singapore, Enbloccing Singapore, Enblocing Singapore, Enblocking Singapore