Saturday, 12 April 2008

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 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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