Sunday, 30 September 2007

"Consider" This

A commenter "ngiamsw" posted an interesting comment about the nature of the word "consider" in the new bill, particularly in the context of general meetings held for collective sales (discussed here). A lot of people believe that "consider" means the following together: (a) to think rationally, (b) to discuss in a meeting, (c) to vote on the matter. I would have agreed on this except when I read lawyer Mr Ong Ying Ping's slides from a seminar he gave. In it he raised the question with regards to EOGMs - should resolution be passed to comply with para 1(c) Schedule to LT(S)A (which is to "consider the collective sale")? In other words, should voting for a resolution be allowed? He referred to Sim Lian (Newton) Pte Ltd v Gan Beng Cheng Raynes and Anor [2007] SGHC 84 which was a case on Lincolnsvale. In the High Court judgment, Asst Registrar Paul Tan stated in Para 77 the following:

The propriety of the EOGMs:
The respondents raised the point that the EOGMs held to consider the collective sale did not comprise any voting and were therefore void or invalid. This argument holds no substance. Under para 1(c) of the Schedule to the LTSA, the EOGMs are held to “consider” the sale; there is no requirement for any voting or any passing of any resolution.

"There is no requirement for any voting or any passing of any resolution" when it comes to considering the sale. Now I've long discovered that in matters of law, there is no black and white, and it remains to be seen if AR Paul Tan's argument about "consider" will be used against owners who wish to vote or pass a resolution. Of course, if the committee chairing the EOGM allows for a vote to be passed, it gives them a stronger mandate (since it does not require them to do so) and that speaks a lot more for that estate's sincere attempt for transparency and fairness to all owners. But will estates do this, or will they merely "consider"?

Now note that ngiamsw's quote of p26 of the amendment bill on the Notice on General Meetings (2nd Schedule) that the clause to "consider" (2b) is separate from the clause to vote (2d). So what can be voted? (1) in respect of each considered proposed resolution (2d) and (2) the election of members of the collective sales committee (2d).

So here is where things get tricky. I quoted the 3rd Schedule which lists the various purposes of the general meeting, most of which are "to consider". But 2nd Schedule requires a notice of the GM to be delivered to owners, which must include the proposed resolutions. So can an owner vote ("may vote in respect of each proposed resolution" - "may" not "can" or "must"; "may" infers option)?

There's therefore 2 interpretations, and until a ruling is made or a clarification is made on this matter - the court is still out on it.
  • (A) In accordance with AR Paul Tan's ruling, 3rd Schedule's various "consider" means that no voting is necessary - a resolution need not have a vote, although the sales committee might invite for such a vote.
  • (B) Every resolution should require a vote, which means at every general meeting #1-4 there will be voting on the various purposes as outlined in the previous post.
I doubt B is the correct interpretation though, because at two crucial points, if put to a vote, the entire sale process may be thrown right out: "consider [or vote for/against under interpretation B] the terms and conditions of the CSA" and "consider [or vote for/against under interpretation B] the terms and conditions of the SPA". Would the law be written in such a way that a resolution/vote at the 2nd and 4th EOGM might jeopordise the entire process if the vote is against the CSA or SPA? I don't think so. Which would mean interpretation A is the more likely meaning.

So what can owners do? If interpretation A is the correct one, while SCs are under no compulsion to vote, they can be pressured to do so; after all, it gives them a strong mandate and they have to be convinced of their own conviction that the process will result in a successful sale, right?

Hope I'm not losing people in this interpretation of the general meetings (which ultimately, is my own interpretation... so "consider" it lol). Do let me know if this is a wrong interpretation; I welcome comments on this. What is not for consideration is the VOTE on the right hand side, with only a few days left!

Saturday, 22 September 2007

How Many EOGMs Does It Take To Lay the Golden (Nest) Egg?

A commenter asked how many EOGMs is required under the new amendments. Let’s count them up:-

EOGM 1: Election of Collective Sale Committee (CSC)

According to the Section 84A Subsection 1A, and Third Schedule Para 1, the first EOGM is to elect the CSC comprising no less than 3 members and no more than 14. Such election is to be conducted by ordinary resolution (majority vote). If this is like election for management councils, each candidate will have to be voted in, which means some may not be elected if the majority votes otherwise. During this EOGM, all candidates must declare any interests (direct or indirect) in any property developer, property consultant, marketing agent or law firm. (Third Schedule Para 2)

EOGM 2: Appointment of Law Firm, Marketing Agent, Apportionment of Sale Proceeds, and Collective Sale Agreement.

This is the 2nd general meeting. To “consider” the appointment of lawyer, marketing agent, to “consider” the apportionment of sale proceeds, and to “consider” the terms and conditions of the CSA. Now “consider” means it is purely informative; you do not get to vote on the matter. But I wonder if a subsidiary proprietor or a group can requisition for a motion to vote on these matters during the general meeting or not.

Some have tried to argue that since EOGM 2 is informative, it can be collapsed into EOGM 1. This means that the CSC is highly confident that (a) the SPs will elect for the formation of the CSC (b) all of them would be elected (c) they have lined up the law firm, marketing agent, and CSA already. However, I suspect some marketing agents and law firms will now insist that before they sign a contract to be their agent, the CSC must be fully ratified first (since the election of the CSC is an ‘internal’ matter now, and it might not even get off the ground).

EOGM 3: Execution of the CSA

The 3rd general meeting. This is to give an update on the total number of SPs who have signed the CSA and to provide information on the sale proposal and process. This is before the public tender.

EOGM 4: Number of Offers, Sale and Purchase Agreement

The 4th general meeting. This is to provide information on the number of offers from the tender, their respective amounts, and to “consider” the terms and conditions of the SPA. This will be held “as soon as practicable” after the close of the tender, auction or private treaty.

EOGM 5: Dissolving the CSC

This is not officially in the process, but a group can requisition for the dissolution of the CSC by ordinary resolution at an EOGM. (Third Schedule Para 12)

So a total of 4 (or 3 if some groups decide to shoot for compressing EOGM 1 and 2), or 5 if a group thinks the CSC should be dissolved. Only EOGM 1 and 5 currently allows action by the SPs, the rest (EOGM 2,3,4) are purely informative only. As I said, because these are general meetings, there's a possibility that a SP or a group can requisition for additional motions to be entered into the notice as well. This will have to be tested of course.

The EOGMs 2 to 4 are stated in the Third Schedule (you can find the document here) reproduced below:-

7.—(1) The collective sale committee shall convene one or more general meetings of the management corporation in accordance with the Second Schedule for the following purposes:
(a) to consider the appointment of any advocate and solicitor, property consultant or marketing agent;
(b) to consider the apportionment of sale proceeds;
(c) to consider the terms and conditions of the collective sale agreement;
(d) to give an update on the total number of subsidiary proprietors who, immediately before the date of the general meeting, have signed the collective sale agreement;
(e) to provide information of the sale proposal and sale process;
(f) to provide information on the number of offers received for the collective sale and the respective amounts; and
(g) to consider the terms and conditions of the sale and purchase agreement.

(2) The meeting under sub-paragraph (1)(a), (b) and (c) shall be convened before any subsidiary proprietor signs the collective sale agreement.
(3) The meeting under sub-paragraph (1)(d) and (e) shall be convened after the subsidiary proprietors referred to in section 84A(1) or 84FA(2) have signed the collective sale agreement but before the launch for sale under paragraph 11.
(4) The meeting under sub-paragraph (1)(f) and (g) shall be convened as soon as practicable after the close of the public tender or public auction or, where applicable, after the collective sale committee has entered into a private contract under paragraph 11

The End of Enblocing Singapore?

Parliament has passed the amendment bill. According to the draft legislation (Attachment B):-
"To provide that the amendments to the Land Titles (Strata) Act will not apply to a development where the collective sale agreement has been signed by the required majority owners before the date when the amendments were passed by Parliament."

Likewise in the Consultation Paper (Attachment A):-
"26. The LT(S)A will be amended to give effect to the confirmed changes. The confirmed changes will apply to all projects except those that have already obtained the majority of 80% / 90% (based on share value) at the time the proposed amendments are passed by Parliament."

I take these both to mean that the new rules on enbloc processes just kicked in yesterday. Someone let me know if this isn't the case. You can also read Prof Jayakumar's Second Reading of the amendment bill here; there's information of some of the changes made to the amendment bill based on subsequent feedback (but not the criticisms by the various MPs).

So what now? Is the blog done? Unlikely. What I call the 'baby months' of a new law will comprise of various parties using everything they can to push the boundaries of how the new amendments will affect their estate's sale. Pro-sales will do their best to cut corners if possible, anti-sales will do their best to ensure corners are not cut, and adhered to. While the process will take longer, it will ultimately allow many points of access for those who wish to keep their homes (and conversely many points of attack for those who want to sell).

Here's the prediction for the near future:-
  1. Enblocs won't stop. Sales committees will have to be more sociable and actually do the ground work of meeting people, gathering support. Likewise, those against the sale will have to mobilise themselves and gather support. Questions about suitability of potential SC candidates will become frequent. The outcome will be largely positive because in many ways, if everyone turns up with their questions and grill the candidates, only those who are well-supported will emerge as more representative than pre-amendment time.
  2. Marketing agents will bump up their commission fees, citing more work that they have to do to get the process moving along. Typical rates of 0.3% will probably go up to 0.4-0.5% for baseline RP, and 1.5-2% for above RP. The more established agents will be monopolistic and very quickly, you'll see standardised rates across the bigger firms. Owners will be in a conundrum - hire a big firm and pay the premium; hire a smaller firm and suffer a potential Horizon Towers. While decisions will rest with the various owners/protem-SCs, what must be clearly outlined now are the duties and responsibilities for the agents, in accordance with the new amendments. Eg some agents are saying you don't need 4 EOGMs but can compress them into less. Will this mess up the application? Maybe not, but maybe it might too. The beginning stages of a new law is always a painful time when both parties (pro- and anti-) strive to find ways to counter one another. Better be safe than sorry though.
  3. Likewise for law firms and their fees. Again, the bigger ones will standardise quickly and the owners need to make clear what are the duties and responsibilities for the law firms. Through the law firm, the owners should also engage the SC directly to clearly outline their duties and responsibilities. Horizon Towers is an example of how things can still go wrong post-amendment since some aspects of the problems reside in the CSA and the responsibilities of the SC.
  4. For those who love their homes, what can you do? Document everything, take note of when announcements for EOGMs are made, when they are held, whether a notice of who are eligible to vote is placed up, who voted, how was the voting done etc. Everything counts now. Attempts will be made by pro-sales people to interpret the new law in their favour and it'll be up to anti-sales people to ensure this does not happen. It means you need to mobilise yourselves into a group if possible. Look at the Love Bayshore Park and Dairy Farm groups, both fairly successful in raising the profile of their intention to keep their homes. Get together, read up on the new law, read both the Land Titles (Strata) Act and the Building Maintenance and Strata Management Act. Push the envelope yourselves - can you submit a motion before an EOGM to require all potential SC candidates to present a CV of their relevant experiences? Can you submit motions that require voting of a particular resolution to be done? Can you query the CSA during the EOGM? Can you demand an account or justification why particular agents/law firms were selected? Can you vote on these matters (or put in a motion to vote)? Bear in mind an EOGM doesn't mean that the pro-sales people hold the reins; any SP can submit a motion according to the BMSMA as shown below.
  5. Use the forums eg condosingapore (but do create an account!) or create your own blogs, document for others to see what you have succeeded (or not succeeded) in doing. Many estates are now more emboldened by the knowledge that there are other estates that have like-minded owners who wish to do something about protecting their homes against mindless destruction. Information shared is always a good thing.
The baby months will be a time of testing and contesting the boundaries, as both pro- and anti-sales try to find their feet under the new regulations. The pro- have the advantage of big estate agencies and law firms to help them (since these firms will undoubtedly share their knowledge and intelligence about other estates among themselves and their clients). Anti-sales have only the internet, and their strong determination to fight back.

Good luck.

Building Maintenance and Strata Management Act First Schedule Requisition for motions to be included on agenda for general meeting
12. —(1) Any subsidiary proprietor may, by notice in writing, served on the secretary of the council of the management corporation or (as the case may be) subsidiary management corporation, require inclusion in the agenda of the next general meeting of the management corporation or (as the case may be) subsidiary management corporation of a motion set out in the first-mentioned notice and the secretary shall comply with the notice.
(2) The secretary of the council shall give effect to every requirement in every notice under sub-paragraph (1).
(3) Sub-paragraph (1) shall not require the inclusion of a motion on the agenda of a general meeting for which notices have already been given in accordance with this Schedule, but in that case, the secretary of the council shall include the motion in the agenda of the next general meeting after that.

Friday, 21 September 2007

Comments on Parliamentary Debate on Amendment Bill

I've been torn between ploughing through the videos tonight of the debates in Parliament on the enbloc sale, and churning out 2 papers that are due, VERY soon. So as a compromise, I watched some of them, and Prof Jayakumar's closing responses to all who raised concerns.

A couple of interesting observations. Each of the MPs raised extremely valid concerns and suggested ways to tweak and improve the amendment bill. Why were these raised at this stage and not earlier, right after the amendment bill was made public? I ask this because their concerns, ranging from collective exchange models, concerns for the elderly owners, method of apportionment, clearer standardisation of CSAs, duties and responsibilities of SCs etc, would have gone much further into improving the mess that enbloc sales are currently in. While admitting that the amendment bill is a major step forward, it could have been a GIGANTIC leap forward if such considerations were seriously taken on board. But it seems, when raised in Parliament, (a) they don't seem to have an impact on any possibility of tweaking the amendment bill (someone correct me if I'm wrong here), (b) the major arbiter is Prof Jayakumar (listen to how often counter-responses to the suggestions or concerns raised by (N)MPs are preceded by first person reference "I think", "I wish to point out", "I would not favour", "I'm reluctant to" etc). The latter point seems to suggest that rather than a careful consideration of some of the suggestions (many of which were raised during the public consultation, some by me LOL) by a group of experts/researchers/lawyers, the buck seems to stop at Prof Jayakumar. If he agrees with it (eg NMP Siew's suggestion that SISV look into clearer stipulation of guidelines for method of apportionment) it goes through the gate and MinLaw will consider following up on it (in this case, working with SISV).

For me, this is the first time I've witnessed Singapore's Parliamentary debates on a specific topic and watched/listened to it carefully with my analytic cap on. Having seen British Parliament in action (they have a dedicated TV channel broadcasting it even), and how lively (and intelligent in some cases) the exchanges can be, this is quite... monologic, let's put it this way :) I saw a post on condosingapore that seems to capture the sentiment well:-

I watched the Parliament news this evening, and seems that all MPs have some very brilliant idea about how the enbloc legislation can be further improved. E.g. banning SPs who have bought a unit < 2 years from being in the sales committee, etc
But it is a matter of "too much but too late". This is Singapore. Any proposed bill, surely will be passed without amendments. If only, instead of engaging in meaningless "for-show only" debate in the parliament, prior to the drafting of any new laws or revision, each MP can drop an e-mail to the Highly Paid Superscale Admin Service staff to have his/her view considered.
This is probably much more effective, and save the Minister from being bombarded in the Parliament. We will also be happier citizens, knowing that our dear MPs have been looking after our interests....via e-mails at least.

I'd strongly suggest watching the videos of MP Alvin Yeo, NMP Siew Kum Hong, NMP Mehta, MP Irene Ng, and of course Prof Jayakumar's closing responses.

Parliament Passes Land Titles (Strata) (Amendment) Bill

On 20th September 2007, Singapore Parliament passed the new amendments to the Land Titles (Strata) Act that will affect enbloc sales. You can read the brief reports on this on the Straits Times Online here, and ChannelNews Asia here. Both are reproduced on CondoSingapore here where you can discuss should you wish.

I'm including video links to CNA which kept streamed videos of the Parliamentary debate on this amendment. You may need Adobe Flashplayer to view the videos, and the videos are long (about 10-20 minutes each) as they cover the entire speeches given by the various Members of Parliament :-

  1. Second Reading by Prof Jayakumar here.
  2. Speech by MP Teo Ho Pin here.
  3. Speech by MP Alvin Yeo here.
  4. Speech by MP Ellen Lee here.
  5. Speech by MP Irene Ng here.
  6. Speech by NMP Kalyani Mehta here.
  7. Speech by NMP Siew Kum Hong here.
  8. Closing speech by Prof Jayakumar here.
You can find them archived on CNA's website covering the Parliament here (in case the links above did not work; look for videos dated 20th September 2007).

On a sidenote, HPL's Ong Beng Seng has met up with some Horizon Towers owners. You can read about that here.

Wednesday, 19 September 2007

Parliamentary Responses to Collective Sale Queries

Yesterday's parliament had an initial foray into the Land Titles (Strata) Act Amendment Bill, which will be discussed this week. Facts and figures were offered in written response to questions posed. You can read the full CNA article here and reproduced here. I will add in additional information from the written responses.

  1. The average age of all developments which applied for collective sale from January 2005 to end-August 2007 was 25.9 years.
  2. The average age of the developments in the Core Central Region (CCR), Rest of Central Region (RCR) and Outside Central Region (OCR) was 25.3, 28.4 and 23.9 years respectively.
  3. The average percentage of owners who had signed the collective sales agreement at the time of application was 89.2 percent. About half of these developments received a consent level of 90 percent and above.
  4. The common reasons for objections raised by minority owners to the Strata Titles Boards were that they would suffer financial loss and that the transaction was not done in good faith in view of factors such as sale price of the lots and common property, the method of distributing the sale proceeds and the relationship of the purchaser to any of the subsidiary proprietors.
  5. Since 1 January 2005, a total of 3,700 private residential units have been issued Strata Titles Board orders for collective sale. When redeveloped, there will be 8,303 new units.
  1. Given the statistics above provided by MinLaw and Ministry of National Development, it is no surprise that the amendments did not consider the age of the estates as a possible factor for change (ie the 10 year arbitrary mark). A market-driven policy on enbloc sale has produced in the last 3 years or less, redevelopment for estates that are on average 25.9 years old. On its own, that average is a very good justification to leave the 10 yr mark as it is.
  2. What it does not show, however, are the following: (a) the quality of a 25.9 year old estate and whether it is a blighted/run-down estate or whether it has been carefully kept and well-maintained for decades by judicious owners and management councils; (b) the spread of estates that are increasingly being attempted to go enbloc. I compiled the TOP data of all estates in the En-bloc List I have, and separated them into two charts. One for completed sales (which would correspond with MinLaw's data), and one for tendered/ongoing sales (not in MinLaw's data). The document is available here as a pdf with the usual caveats that the data is not 100% complete due to unavailability of some TOP data. However, when broken into two charts, and 5 yearly ranges, the spread of estates going enbloc are clearer. For example, while my data more or less confirms the 25.9 year average, the data also shows that for ongoing attempts, there is a noticeable increase in attempts on estates that are less than average range of 1981-1985, ie 1986 and younger.
  3. This means that IF urban renewal is the driving impetus for enbloc policies then estates older than the average range should be going for enbloc. But instead, it is estates that are younger than the average range that are going enbloc, especially estates in the 1986-1990 range. These are pretty young estates by international standards. There's essentially an increase in attempts on estates that are younger than 1981-1985, and a decrease in attempts on estates that are older than 1981-1985. It is possible that the supply of older estates is decreasing. I can't comment on this because I don't have data on un-redeveloped estates that are older than the average range (which are enbloc potentials). However, the issue remains: Is urban renewal still the rationale and driver for enbloc sales (which my data that shows younger estates going enbloc suggests otherwise), or is it the rationale of economic maximisation of individual assets (selling for maximum profit)?
  4. The common reasons for objection runs the whole gamut, but anecdotally I'd have expected financial loss to be less of an issue nowadays, than issues of good faith and on points of law. It's a pity a breakdown of the various objections was not disclosed.
  5. A twofold increase in units available in the near future from redevelopment is a pretty good justification for enblocs but again, the statistics belie the qualitative aspect of urban living - that most of the newer units are smaller, with new estates more packed in. This will invariably affect the quality of living in Singapore's condos where increasingly the only major structural differences between mass market condos and HDB estates are the presence of security and sports facilities (swimming pool, tennis courts, gym).
  6. With half of the developments exceeding 90%, the other half would be less than 89.2% which sounds about right, given that larger estates would typically obtain a consent level in the lower range of 80.1% to 89.2%, while smaller estates would hit 90% and above easily. Or combining two values, 10.8% minority owners of 3700 units is about 400 units that did not agree to the sale. Again, without a breakdown by size of estates it'll be hard to gauge exactly how many minority owners there were (ie 10% in an estate of 1000 units is more than 10% in an estate of 20 units).
I'll keep you posted with more information on this.

Monday, 17 September 2007

Banning Enblocs on Newer Buildings

It is rare to see a reader-submitted letter on enblocs in the Sunday Times, so it's interesting to see Mr John Lee Junshi's letter in the Inbox where he advocated that newer buildings should be banned from enblocs. At least until their 20th birthday. You can read that entire letter reproduced here.

His words:-
"The proposed amendments could have done better by prohibiting the collective sale of buildings that are less than 20 years old, and making the collective sale of buildings progressively easier for buildings 20 years and older.

For example, by requiring 80 per cent share value approval for buildings that are at least 20 years old but less than 30 years old; 75 per cent approval for buildings at least 30 years old but less than 40 years old and so on.

This formula will ensure that there is a balance between environmental concerns and urban renewal."

I actually submitted something along the same lines to MinLaw during the public consultation - a staggered method of calculating consent level based on the age of the buildings, rather than the simple 10 year mark as is currently implemented, and which is kept for the new amendments. Guess my suggestion got fed to the shredder :)

But I added additional clauses to the model. You see, while the idea of a staggered consent level is one way to go, it does not take into consideration the possibility that older buildings may not necessarily be more blighted, or decrepit, or rundown. I'm always heartened when I see 30+ year old condos that are well kept, very well maintained, upgraded consistently over the years with new lifts, improved security, renovated common hallways/gardens etc. When an effort is made on the part of owners who wish to keep their estate in pristine condition regardless of age, they should not be penalised by the possibility of the wrecking ball. So I suggested that if an estate has undergone substantial renovation/upgrading, they could apply for a 'stay order' against enblocs. In other words, it would be as if time has reset itself.

This point is important - owners should be given the possibility to take ownership of their own estate in two ways - not just in collectively selling (current mode) but collectively deciding to upgrade/renovate their estate (not in current mode or Mr Lee's letter). Should the latter happen, they should be rewarded with at least 10 years of enjoying their newly done up estate. A building inspector can certify such a renovation as being one that is substantial to formalise the stay order.

If estates in global cities like New York, London, Paris can be kept in pristine condition despite them being over 50-100 years old, why not in Singapore?

Sunday, 16 September 2007

Bayshore Park Goes on TV Monday 17 Sep 8.30pm

The new season of "Get Rea!" with Cheryl Fox begins with a documentary on the situation over at Bayshore Park. The opposition for enbloc sales, the Love Bayshore Park group (link here), has mobilised themselves even before the EOGM to elect the sales committee has begun. You can read the article on CNA here and reproduced here. The Get Real programme will be shown on Monday 17 September 07 8.30pm-9.00pm Singapore Time, CNA channel.

The blurb is below:-
"Episode 1: The en bloc fever's spreading in Singapore. For those chasing the property boom, it's the best time to cash in but it's a different story for those who want to stay. And the battle to sell or stay put, could get ugly. Your home could be your Singapore Dream or your Singapore Nightmare."

Going to Court: Phoenix Court Sale Put On Hold

This will be 'old' news by now, but still, in attempting to be comprehensive in the "Going to Court" (or STB in some cases) series, better to have this included :)

Details are below as usual. But before that, a few points - the article by Today paper is an interim report, as the judge has not given his decision on the case yet. You can read the Today paper article here or reproduced here (along with discussion). Also, SC Michael Hwang who raised these points to the judge is not some flaky lawyer firing a legal shotgun (metaphorically speaking) and hoping that a target will be hit. Senior Counsel Michael Hwang, aged 63+, was formerly with Allen & Gledhill, and one of their prized litigators (along with SC K Shanmugam). Trained in law at Oxford U, he joined A&G in 1968 after he was called to the English bar at Gray's Inn (a prestigious thing). He left A&G in 2003 to develop his arbitration practice, and his portfolio included being a Specialist Judge in the Subordinate Court, an ambassador to Switzerland, a deputy chief justice in Dubai International Financial Centre Court (2004), chairman of Singapore Dance Theatre, High Court judicial commissioner, SMY's law school advisory board, and the first batch of 12 lawyers appointed as Senior Counsels in 1997. What this means is that when he raises certain points of law, it is not a frivolous or nonsensical gesture. So bear this in mind before making any judgments about his objections to the Phoenix Court sale.

Estate: Phoenix Court, St Thomas Walk/Killiney Road
Stage: Sold at $88.1 million Oct 2007. STB rejected minority owners' case. Appeal to High Court.
Source: Today 8 Sep 2007, Today 6 July 2007, BT 8 June 2006
Party: 1 elderly couple as sole minority owner.
Minority Owners' Lawyer: Senior Counsel Michael Hwang
Agent: Dennis Wee Realty
Collective Sale Lawyer: Mr Christopher Yong, Legal21 LLC
Developer: Hiap Hoe
Reason: Appeal to High Court for sale to be dismissed due to 'defective' procedures.
Details: (Today 6/7/06) "some majority residents were also against an extension to their CSA.. but to no avail. The STB las week approved the sale to Hiap Hoe for $88.1m". (Weekend 8/9/07) (1) SC Hwang argued that 2 of the 3 majority owners who had applied to STB were not authorised to do so. (2) CSA signed Apr 06, 6 weeks later valuation done (approx Jun 06), STB application Jan 07, SC Hwang took issue with valuation report (possibly due to it being completed more than 3 mths prior to STB application) (3) method of distribution omitted from the SPA. SC Hwang: "the S&P agreement must define the contractual obligations between a buyer and the individual owners — since members of sale committee "lose interest very quickly, especially if they have gotten their money""; "This is in effect a compulsory acquisition. The onus is on those who acquire my clients' properties to adhere strictly to the requirements set out by the law."

Saturday, 15 September 2007

Architects - The Invisible Victims of En-bloc Sales

Friday's Straits Times carried a lengthy article on Singapore's veteran architects whose babies were subjected to the wrecking ball recently, courtesy of enbloc sales. Architects like Victor Chew, Timothy Seow, and William Lim, designed some of the earliest post-independence buildings and condominiums. These landmarks - Beverly Mai, Futura etc - are the true icons of Singapore's modern architecture. Yet in gaining huge windfalls, they are losing, as William Lim said "collective memories". Willaim Lim - "The Red House Bakery in Katong, the National Theatre - these may not be fantastic examples of architecture but they said something to the people"; "But there is no respect for the memories of the invisible public."

Victor Chew's question is poignant - what does a building mean to people? Is it just an investment waiting for the enbloc profit? Is it memories and histories for people who lived there? Is it just a place to stay, in true pragmatic Singaporean style?

Dr Timothy Seow's suggestion is likewise significant - he pointed out that many of the condos he designed were "well-designed buildings which if given a chance to be upgraded, would still be able to take on a new look that is relevant to the times".

Will the government continue to let the market-driven model of urban redevelopment systematically demolish the collective memories and architectural heritage of Singapore's modern era? Or will the government step in and put into place, like what Dr Seow suggested, upgrade schemes for condos which are worth conserving?

It's not impossible, it's a question of will. And if the government's actions in the past were any indication, when there's a will there's a way, as they say.

This article couldn't be more timely. I grew up on the west side of Singapore, and used to imagine Westpeak Condo (currently being torn down) as a giant Transformer (with its noticeable 'head'). Now I will never be able to drive past it and remember my childhood memories.

You can read the article reproduced in condosingapore here.

Friday, 14 September 2007

Questioning STB's Jurisdiction on Gillman Height's Sale

Not really a court case but an STB case. Here, the 2 minority owners from Gillman Heights have argued through their lawyer that the application should be dismissed on legal grounds. You can find the article from CNA here and reproduced here. An added note of interest - Capitaland who purchased Gillman Heights sold 50% of their stake to Hotel Properties Ltd (HPL - 25%) and 2 private funds (at 15% and 10% respectively). One wonders if it's the same 2 funds embroiled with Horizon Towers currently.

Estate: Gillman Heights, Alexandra Road
Stage: Sold at $548 million 7 Feb 2007 toppling $500m by Horizon Towers in Jan 07
Source: CNA 14 Sep 2007, BT 7 Feb 2007, BT 16 Feb 2007
Party: 2 minority owners. STB Hearing due in 2 weeks' time.
Minority Owners Lawyer: Eddee Ng of Tan Kok Quan Partnership
Agent: DTZ Debenham Tie Leung
Collective Sale Lawyer: Lee & Lee
Developer: Capitaland & HPL (+2 private funds)
Reason: Number of legal reasons raised as to why the sale should be dismissed.
Details: (CNA) Some of the legal grounds for dismissal are: (1) Age of estate - Estate built in 1984 but CSC issued in 2002. Contention is that the estate is < 10 years old, and hence 90% consent required (Current level at 87.5%). Note that new law will address this but it does not apply to Gillman Heights which had already achieved 80%. (2) CSA (inked in June 06) has expired with no valid extension in supplemental CSA. (3) Because CSA has expired, SC is not authorised to represent owners in STB application.

I'll update when I get more information on this.

Tuesday, 11 September 2007

Seminar by SISV on Collective Sales - 14 Sep 07

There's this guy lurking in my blog, asking about a seminar on collective sales that's upcoming. Well, further to the previous seminar conducted by Ahrals (the one which lawyer Mr Ong Ying Ping gave his seminar), I understand from someone that Ahrals may conduct a repeat event (although this is not confirmed - do contact Ahrals directly on this).

However, what IS confirmed is a seminar by the Singapore Institute of Surveyors and Valuers (SISV) on the 14 September (Friday) from 9am to 1pm at Furama. You can find information on the SISV website here, and the specific flyer (in pdf format) here.

It's not free (public = $150). What I like about it, when reading the blurb, is the bit on "Some Thoughts From a Collective Sale Committee Member" - "The collective sale process needs three parties working together - the property consultants, the lawyer and the sale committee representing the owners" so said Ms Kwang Heng Lee (the presenter). It's quite telling that the fourth party, and probably the most important group, is not in this "working together" bit - the subsidiary proprietors (aka owners/residents). I guess an enbloc sale process can work without the owners, as I'm sure many would agree is the case nowadays :)

For those of you who are interested in issues of valuation (of your sale price and method of distribution), you might want to see what the President of SISV has to say.

ps. I'm aware of the Phoenix Ct case, but have not had time to sit down and read it carefully. You can find the information about the Phoenix Court appeal and the staying of sale here.

Sunday, 9 September 2007

Is This Possible? A Transparent Sales Comm?

I found this pro-enbloc blog set up by the Bedok Court Condominium Sales Committee. (They have an older one here.) Now normally I would not advertise pro-sale blogs since there's hardly a need to broadcast them (they have plenty of resources from the agents to do their own advertising).

However, this blog is interesting in that it looked like they took the higher road of announcing all their meetings, % voted, % present, minutes from the meetings, who are the sales committee, where they stay, what were the motions passed, who were the agents they contacted etc. In other words, they are in many ways attempting what the new amendments would like sales committee to do on their own accord - to be as fair, transparent and equitable to all owners as possible.

It's a good step towards ensuring the enbloc process respects both majority and minority owners.

What I'd like to see in the Bedok Court blog though -
  1. Activating the comments so that people can post comments on the meetings say, and get feedback from the sales committee. If the SC is attempting to be transparent, why stop comments?
  2. Minutes of the SC meetings to be put up as well, so all Bedok Court owners are kept informed of the discussion and important issues raised therein.
  3. The ability for owners who are not keen to sell to have a dialogue with the sales committee, and have this dialogue in a public space such as the blog (or an internet discussion forum etc).
Too often, I've seen sales committee ignore and disrespect non-signatories and people who may choose not to sell. The mentality is that if they can achieve 80% they don't need to care about the remainder. What I'd really like to see, is a sales committee who endeavour to do their utmost best to get every owner on board, and to address concerns that minority owners may have, especially if it's sentimental reasons. For example, I've not seen any sales committee work with their marketing agent to secure or obtain replacement units for people who wish to stay in the same area. After all, how hard is it for the investment division of a major estate agency to contact their sales division and attempt to work out a good deal on behalf of minority owners who wish to remain in the vicinity?

I can only hope Bedok Court will take the high road, and not the bulldozer road (ie bulldoze through everyone until you obtain 80% then bulldoze the minority completely).

Saturday, 8 September 2007

Horizon Towers Update: A Trust that Failed

On Friday night, HPL (the buyers) filed an affidavit with the High Court, suing the majority sellers including the SC members. You can read that article here. In particular, the affidavit alleged that some members of the SC "tried to defeat the collective sale by encouraging the other majority sellers to go back on the agreement".

The majority owners met on Friday night from 8pm to close to midnight as well, to decide the next moves. You can read the reports from Business Times, Straits Times and CNA here. In essence, the SC disbanded/quit at the end of the night, leaving the majority owners completely directionless. The SC was disbanded because the CSA stated that a minimum of 5 was needed in the committee and that quorum was not met (with only 3 left).

Some points to be made so far:-

  1. Check your own CSA. Almost every one will have a minimum number of owners needed to be in the SC. This is typically 3 (which is the number needed to represent owners for the STB application) but it can vary depending on the PSC that drafted the CSA. Indirectly, as this case showed, it also allows a SC to be disbanded leaving owners without leadership.
  2. The affidavit cites, among other things, the fact that some SC members have (presumably on their own motives) encouraged sellers to rescind the CSA. Yet every majority owner is sued by HPL. The actions of a few SC members have given the fuel needed by HPL to show that the owners (and SC) were not doing their best to secure the sale. What it also points to, is the unquestioning faith many owners place on their SC members to do the best for all owners. People forget that (and not just in HT but in many estates) some SC/PSC members (a) are not even residents (b) are not duly elected (c) are individuals out to make a profit (d) are not necessarily suddenly going to develop strong ethical responsibility to all owners when thrown into the lawsuit fire (neither are they obliged to). After all, as the HT reports showed, those who want to step into the SC insist on "blanket immunity from legal proceedings". It's typically the first thing all PSC members will ask for - indemnity and exclusion from liability. It's in most CSAs.
  3. The new amendments might resolve some of these problems since it shifts responsibility from SC to owners to ensure everything is as transparent and fair as possible, including the need to revert to owners for the election of SC, agent, lawyer, approval of sale etc through formal general meetings. But some estates are trying to avoid going through such 'hassles'. Will the HT case haunt them in the near future? Isn't it safer to let the new amendments to the LT(S)A kick in and work within the new framework, rather than rush through things and risk legal repercussions?
The tv show X-Files theme is applicable here: TRUST NO ONE. Can you put the fate of your home (and more) in the hands of a group of self-motivated people (some of whom don't stay in your estate) who gathered together to sell an estate, with standard CSA clauses to protect them, while often giving them rights to do many things without asking owners for consent under the current law?

At the end of the day, the HT case shows just how complex and intricate the legal transaction of a collective sale and its consequences are, and how many people are unaware of this. And while outsiders may speculate about what could've been avoided, what might have gone wrong, how the majority owners and SC might remedy, who to blame, etc, I'm absolutely certain each of these outsiders, myself included, do not want themselves to be a HT owner at this very moment.

Thursday, 6 September 2007

The Horizon Towers Story Compiled Into a Blog

A chap calling himself "Enblock Victim" has painstakingly gone through over 1000 postings and more, to compile the Horizon Towers case into a blog. Now if anyone has even visited the CondoSingapore forum thread on Horizon Towers (currently standing at 1344 posts!), one would immediately find tons of irrelevant (troll) postings which just seek to flame other posters. The fact that CondoSingapore allows unregistered postings has unfortunately helped fuel trolls. But Enblock Victim went through pages of it and compiled various thoughts, comments on the matter into his blog.

So you can read the rather lengthy, but salient, points of the HT case here. Enblock Victim - great work there :) Will update my links accordingly :)

Wednesday, 5 September 2007

Poll! Would you enbloc your home?

Just realised that blogger has a polling system. So the question is simple - Would you enbloc your home? For those of you who've never voted before (walkovers and all that)... Just check one button and click "Vote"! You can only choose one of the choices but with 9 possibilities, I'd have thought one of them should cover your answer :)

Go vote!!

Something Completely Different

And now for something completely different :) :)

My texts can be dry and overly serious sometimes. So it's nice to see someone who is much more capable of expressing his thoughts about enbloc sales than I could ever be.

Sei-ji rakugaki (wonder what that means) is one of those rare political cartoonists (at least that's how I'd label him :) ). He drew one on enblocs :) He's done lots of cartoons for other issues too (here) :)

Love the cigar :)

Monday, 3 September 2007

A Dissenter's Point of View - From a Lawyer

Found this on the internet. Mr Ong Ying Ping of Ong Tay & Partners gave a presentation recently about enbloc sales, but this time from a dissenter's point of view and from a legal perspective. I believe Mr Ong runs a Singapore Law Blog which does tend to go offline often but you can try it here. The actual powerpoint slides (in pdf format) are available here.

Some very interesting points were raised by Mr Ong around the theme: "Would it be better to revert to the original position before the 1999 changes ie with 100% consensus?" He gave a number of cases that I'm unfortunately unable to access (will try dropping into the Law Library to see if they have it), but here are some of his points:-

  1. Residual method of valuation is often used (Chew Ming Teck v Collector of Land Revenue and Anor [1991] SLR 8) and may be a point of contention.
  2. Can a MC council member abdicate all responsibility of overseeing the conduct of the SC, especially given that it is their responsibility under the BMSMA to control, manage and administer the estate?
  3. Mr Ong raised many points about CSAs which are addressed either on this blog or in the upcoming amendment bill. But one point he raised was this - when an EOGM is called to "consider the sale" (as required by law), does this mean that the activity is purely an informational one - SC announces a sale is achieved with a developer etc, or is a resolution required to be passed, in which case a vote may be called for? He referred to Sim Lian (Newton) Pte Ltd v Gan Beng Cheng Raynes and Anor [2007] SGHC 84 which unfortunately was in May 2007 and out of the 6 mth archiving by the Supreme Court online. So if anyone knows this case please let me know the details. Still, some CSAs have built into it that anyone who signs it MUST vote in favour of any motion or resolution passed by the SC (rigging the vote).
  4. Finally, Mr Ong pointed to the possibility to apply for a "Declaratory Order" for out-of-control pro-sale groups. If anyone know what such an order is and how does one apply for it, I'm sure people here are very keen, especially considering the previous poison pen letter from Tampines Court.
So if anyone could dig out the judgments for the above cases, and what this declaratory order is (sounds like some sort of restraining order doesn't it), do let me know :)

Saturday, 1 September 2007

Will New Law Make Poison Pen Letters a Thing of the Past?

I just saw this flyer sent out to owners at Tampines Court, written by someone who views him/herself as a majority owner. You can view the flyer at the Tampines Court blog (here). I'm disheartened by the distinct element of threat included in the flyer.

The very idea of dividing an estate up into two camps is built right into the enbloc protocol. So long as there's an arbitrary 80/20 (or 90/10) requirement for majority/minority consent in a 10 yr+ estate (another arbitrary number), the estate will invariably be split into two, often opposing, camps. The difference in the past and now is that the minority group is getting more vocal, present, more organised and importantly, more knowledgeable in the facts surrounding enbloc sales and their rights.

Will the new Law make such poison pen letters a thing of the past? Not likely at all. Until the government begins to address the social and psychological impact of urban renewal, rather than the procedural and legal aspects, the ugly side of enbloc sales will continue to exist.

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.