Saturday, 19 April 2008

Suggestion of Short Term Lease to be Included in SPA

Received this email from an owner whose estate is due to be torn down in a few weeks' time. He made an interesting suggestion for inclusion in the Sale and Purchase Agreement - for developers to consider short term lease for owners one month before the Date of Vacant Possession. Reader has requested anonymity.

Our estate has already gone en-bloc, and the Date of Vacant Possession is end of the month. We were given 6 months from Completion to Date of Vacant Possession (DVP). However, as owners and residents slowly started to trickle out of the estate in the last few weeks before Vacant Possession, some of them began to contact the developer asking for an extension of the DVP. I was one of them.

Why would people want to request for extension, if they know they have 6 months to clear out, I'm sure some may ask. After all, 6 months is a long time to get a new home ready, renovated, moved in.

  • Some people have kids still in school, and moving them out during school time isn't ideal or appropriate.
  • Some have to do renovation work, and that can get delayed and delayed.
  • Some bought units that became available, and are now rushing to have renovation done.
  • Some have work commitments that cannot be adjusted to the developer's deadline.

Some of us called the developer individually, and the developer categorically said no to us all. This was about 1 month before DVP. About 2 weeks before DVP, the developer turned around and asked if any of us were interested in a short term lease. To some, it was too late - they'd already moved out but they said if given a choice, they'd have taken up the lease. We were about to move, so we were interested - any extra time is useful for us. But wait, there's a catch... There's a minimum period, the rental is at market rate, and unless enough people signed up, there won't be guard or cleaning services.

Unreasonable! The place is becoming a waste dump with people leaving and dumping their things everywhere. The mosquitoes are rampant because of the abundant puddles of water (and abandoned fishtanks). And they want market rate with no cleaners or guards?

We heard the same situation with Leedon Heights. People there were given 8 months short term lease, but were offered it so close to their DVP that it doesn't make sense. Many of them (and us) have already made preparations to move out - movers, termination of services, temporary storage, temporary accommodation - that a LAST MINUTE OFFER of short term lease just isn't practical.

I can only imagine what is going to happen when Farrer Court hits the DVP. As it is, renovators are so busy that they can't commit to schedule... movers are fully booked up... how 600+ owners from Farrer Court plus hundreds more from Leedon Heights.. Farrer Road and surrounding areas will be jammed with movers and renovation workers!

I would strongly suggest, in the future, that all owners push for an additional clause in the Sale and Purchase Agreement: That the buyer will offer a short term lease for owners and residents, at least 2 months before the DVP, so long as they do not intend to immediately tear down and develop the land. The terms of the lease should be aligned with market rates and conditions (including retaining essential services in a condo), and should allow owners to target the main school holiday periods (June, December) for them to leave.

This will be of great use to all owners, so that they don't have to rush around looking for temporary lodging, and can wait until it is the right time to move. Developers can benefit from the rentals of an otherwise empty estate. Can't see why it can't be done!

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