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

Who Needs a Pro-Tem Sale Committee?

In an worrying twist to the en bloc madness, I witnessed over the weekend a troubling new incident. Now, traditionally, to begin the en bloc process, the following stakeholders are involved in the following sequence :-

1. Step One: PTSC - Group of like-minded subsidiary proprietors (aka owners) get together and commit to the task. This is the pro-tem sale committee (PTSC) which need not be voted in or nominated.
   
2. Step Two: Agent - The PTSC contacts property agents (typically real estate investment division) to draw their attention to the estate, and to ask them to give presentations to the PTSC.
3. Step Three: Owners - The PTSC nominates the most suitable agent to present to the remaining owners and begin the CSA.

I went to an agent presentation this weekend, in an estate in District 10, one of the few remaining super prime estates near numerous conveniences (embassies, up and coming eating places, schools, national park etc), and the above order is reversed. In other words:-

1. Step One: Owners invited to agent presentation. Agent obtained information on SPs on their own accord (this was found out quickly when not all SPs received the invitation letter).
2. Step Two: Agent encouraged those SPs present to nominate them as their en bloc agent.
3. Step Three: Agents then begin the process of soliciting PTSC members.

What this means is that the agent actually went into an estate, without any official invitation by any SP at all, to offer their services, make a presentation on selling the estate collectively, and then asks owners who would like to form the PTSC.

The key word here is "without any official invitation by any SP". Has the Wild Wild West expanded its frontier again in the story of enbloc madness? Can any agent go into an estate now, particularly one in a prime location, and present themselves as a suitable agent for the SPs?

Technically, yes.

The law is so open about the protocols for starting en blocs that nothing prevents this from happening. In fact, nothing can stop any number of agents (typically citing that they have X number of developers they're in talks with, who have expressed 'deep interest' in the land) from going into an estate uninvited, unwarranted, and give their sales pitch. Again and again. Without any invitation by any SP.

This brings new meaning to "representing the interests of all subsidiary proprietors" when they begin the process without any SP in mind at all, or without their permission. It certain indicates strongly that this is a self-serving agent who has taken the term "proactive" to a whole new level. And with such an agent, how can any owner be assured that they will be sufficiently represented, or their assets protected from any unscrupulous methods or tricks that an agent might do?

We're not talking about some chap putting a leaflet under the windscreen wiper of your vintage Rolls Royce when it's parked outside. We're talking about a guy walking into your home unannounced, saying he's interested in your car, he has your details, no need to testdrive he's already checked it all out, and claiming he has several buyers interested in it. Just agree to him being your sole agent and he'll sell your car for you, whether you wanted to or not. The buyer will of course pimp it up (or in mrbrown's term, zhng your car).

My good friend who stayed in this estate felt very angry about this whole deal, and especially violated by this agent who came into the estate without permission and started talking about selling it all off.

If the law does nothing about this, I fear more agents will be attempting the same trick in hopes of securing that juicy agreement that will fatten their coffers courtesy of a successful en bloc.

Tags: sale agents, en bloc sale agents, collective sales agents, collective sales, condo, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale, property, collective sale, singapore, real estate, Enblocing Singapore