How to check if a potential rental is/isn't undergoing estate enbloc?

I realised that a number of tenants/potential tenants are not aware of how to find out if a choice unit they'd viewed is in an estate that is undergoing enbloc or not. Some agents will be honest and lay it out that it is, while others won't (their logic being, if tenants find out the estate is being enbloc'd, there's a chance the tenant won't take up the tenancy).

So here's some information, tips and DIY advice :)

Things to Realise:

1. The primary concern for a landlord in an estate undergoing enbloc is whether the tenant will move out by the Date of Vacant Possession (ie date when the developers can bring in their heavy equipment and begin demolishing buildings). If the tenant fails to do so, and it is found that it is the landlord's fault, the landlord pays massive penalties for every day of delay from vacant possession. Therefore, most Collective Sale Agreements (CSAs) - legal documentation owners have to sign to agree to the sale - will include clauses to the effect that landlords must ensure proper notice is served on the tenant, and that clauses are included in the tenancy agreement that allow the landlord to terminate the contract within X no. of months (typically 1-2 mths). Bear in mind as well that the sale committee will get very antsy should any tenant approach them with information that their landlord has failed to inform him/her and that he/she fully intend to stay in the premises until agreement expiry (which may well be after vacant possession).
2. Some CSAs are more explicit about other conditions eg landlord must inform tenant of enbloc sale process in estate, landlord must not keep damages deposit (since the place is going to be torn down, what's the point of doing so) etc. But this will vary. (1) above is the primary thing for you to remember and look out for.
3. Ongoing enbloc can mean anything from 6 mths to 2 years. The maximum period for an enbloc is 2 years (1 year to collect signatures, 1 year to tender, submit sale application to STB and get approval). That does not stop people from attempting enbloc year after year, especially if the estate is a prime location spot. So it really depends on what stage your estate is at.

How To Sniff Out an Enbloc Estate:

1. The first stage of an enbloc process is typically the signature collection stage. That's when owners are approached to sign the CSA and obtain the mythical 80% consensus (if the building is over 10 years old). If they have begun signature collection, notices (on notice baords) should be around the estate on the % consent level for the sale. That's a good indication of how long the estate has before you need to seriously consider finding alternative accommodation.
2. Check with the security guards - source of all gossip in the estate. They can tell you if an enbloc is happening, or at the very least, if it is happening, the name of the managing agent for the estate, or the marketing agent for the enbloc sale (if they know the latter!).
3. Check with the managing agent (MA). Get the contact from the security guard. Ask the MA if they know anything about an enbloc.
4. If you have the marketing agent's contact, call them and ask them what the stage of the enbloc is at. It's in their best interest to tell you since they want the sale to go through smoothly (and not have errant tenants still staying at the estate past vacant possession!)
5. Ask on the various expat forums. Some expats may well be staying in the estate you're eyeballing and may be able to offer information on the enbloc status (if any). Go here and here for starters.
6. Check the En-bloc List that I maintain. I try to get what information I can and update the list as often as possible.
7. Check your tenancy agreement. If there's a clause for short termination by landlord (eg 1 mth), this might be a sign as well.
   
8. DIY Investigation - Use the URA website for information on caveats lodged for the estate in question. The logic is this - typically there would be sales in the estate if there's no enbloc or smell of an enbloc yet. Once there's rumours of enbloc, some people might attempt to sell at premium rates ('enbloc potential') to capitalise on the impending enbloc. But once signature collection begins, owners will begin to bolt down for the enbloc sale. This means there'd be far less caveats lodged with URA for the immediately preceding months as people start to hold on to their units, since it makes more sense to hold and wait for the enbloc sale where they get higher returns, than if they sold it off now.

Eg, someone asked about these following 3 estates. You can find information about the estates at various property websites, including this one. You then find information about sales from URA's website here (it's free). You can gather such information like these:-

Regency Park - 1990 TOP - 292 units - 21 units sold in 2007.
Tanglin Park - 1989 TOP - 274 units - 11 units sold in 2007.
Sommerville Park - 1978-1990 TOP - 456 units - 25 units sold in 2007

Compared with
Botanic Gardens View (enbloc ongoing) - 1970 TOP - 146 units - 4 units sold in 2007. None in 2nd half 2006 at all.
Brookvale Park (enbloc ongoing) - 1983 TOP - 160 units - 4 units sold in 2007.

You can see the difference between the 2nd group which have owners bolting down for enbloc, versus the 1st group where there was active sales in the preceding months. You can also check the property websites to see how many units are for sale in the estate in question, to confirm the bolting down activity (or not). If there's still a lot of sales going on, chances are slim that an enbloc is happening.

Finally, you should check out other topics under "Rental" and "Tenancy Agreement" on the right, to keep yourself informed of the other issues surrounding enbloc estates for tenants. It's a real pity that some of the nicest old estates are being knocked down - these are the ones with large, spacious units with plenty of green surroundings, in really nice locations.

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Tags: tenants, renting enbloc, collective sales, condo, condo, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale, property, collective sale, singapore

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?

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Tags: date of vacant possession, vacant possession, sinking fund, maintenance fund, collective sale, collective sales, condo, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale, property, singapore, real estate

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?

Tags: completion date, construction work, collective sale, collective sales, condo, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale, singapore

Tenants in En Bloc Condos - Protecting Yourselves

[Again, information on the REACH discussion forum can be found here and the Ministry of Law public consultation on en bloc legislation here and request for information on STB mediations here]

All these talk about en bloc sales, we tend to forget that aside from owner-occupiers and owner-investors, there's another group of people who will be greatly disadvantaged in the process of a successful en bloc - The Tenants.

Whether they're local or expatriates, the fact is that once an en bloc sale goes through, most landlords are not too concerned about your rental flat (it's going to be torn down), your surroundings (it's going to be torn down), and your contract (typically in the landlord's favour). Consider the following:-

1. If you do not have any clause protecting you in the event of a successful en bloc sale, the landlord can turf you out anytime (subject to notice, usually 1-2 mths), but YOU cannot move out on the grounds of deteriorating conditions, increased noises etc. You have to give notice, and yes, even though the place will be torn down, the landlord can still deduct costs for damage to property due to wear/tear!
2. Unknown to many tenants, there's a grey period between the legal completion date and the date of vacant possession. (Click on the "Completion Date" topic on the right.) For example, in my condo which has just been sold, there are clauses in the agreement that allows developers to come in during the period between completion and possession to (a) set up a showflat (b) conduct tests on the grounds (which may include drilling and much banging about).
   
3. After legal completion, the estate belongs to the developer and there are no management committee to turn to for any grievances. The developer is within his 'rights' to keep a minimal cleaning/security crew and ignore any urgent repairs (like a leaky roof over your flat). Depending on the agreement between the SC and the developer, there are instances where this period between completion/possession is considered 'rent-free' which means there's no need to pay maintenance fees. Of course, you can expect your landlord to continue to extract that from you (even though there's no more maintenance whatsoever).

So what can you do? Not much, except at the crucial point of accepting the contract you need to think about some of the things suggested below by a chap in the Expat Forum. Bear in mind - TONS of condos in Districts 9,10,11 are going en bloc, which means there's no guarantee you won't be subjected to the above problems unless you stay in a brand new condo (aka pigeon holes). Some suggestions include putting in a 'moving out clause' so that if things get unbearable, the landlord will pay your moving costs to your new home. But some disagree with this...

From "Expat Source" posted at the Expat Forum:

If you opt to put in a clause for your Landlord to pay your moving costs should you be forced to moved in the event of an en-bloc sale, you may end up disadvantaging yourselves. As they will keep you there till the last and then you will have to fight them for the money. You could be surrounded by empty apartments and progressive construction driving you nuts.

I would suggest that instead you put in the following:

1. An en-bloc clause that gives you 3-6 months notice should a sale go through, with the OPTION that you can leave at any point during that period should you find suitable accommodation.

2. A clause that in the event that your living standards are compromised by on-site construction, destruction of facilities, lack of standard of maintenance, facilities not being fixed etc that you have the option of giving notice and being released from your contract.

3. In the event of having to move because of an en-bloc sale that you have one month's free rent to cover your moving and re-siting costs, if your rent is above $5k be reasonable and ratio it down to 2 weeks etc.

This way you get to move out and are not stuck until the final days in a deserted condo with construction workers surrounding you. You have an option of moving out if they start to tear up tennis courts for show flats or drill holes for soil testing.

And you won't have to fight for the moving cost money as you will just simply deduct the rent.

Of course right now you should also look at putting major construction clauses in your contracts, if you move into an area that is currently peaceful with no sign of construction and the landlord or their agent tells you that none of the surrounding buildings are coming down or going up - you should have the option to move out if that situation changes dramatically within the term of your contract. However, you have to be reasonable, if you move into an area with ongoing construction or condos emptying out you have to take the responsibility for your move there. Again you add in the clause about moving costs deducted from rent.

It might be a sellers market but they also need the buyers in order to get the rent.

These clauses make them more accountable for the information they tell you and gives the landlord a cost if they or their agent are not being truthful.

Tags: en bloc rental, tenancy agreement, rental contract, legal completion, vacant possession, landlords, tenants, Enbloccing Singapore, Enblocing Singapore, Enblocking Singapore, Enblocking Singapore, collective sale, property, enbloc sale, enbloc, en-bloc sale, en-bloc, en bloc, condo, collective sales, real estate, singapore