1. Ambulance chasers, en bloc chasers. In my previous blogs (Aug 2008 and Feb 2009), I commented that whilst we - as a society - have rejected ambulance-chasing lawyers, we have conveniently turned a blind eye to "no sale, no fee" structure in en bloc sales where marketing agents and lawyers would incur out-of-pocket costs and intense efforts for up to 12+12 = 24 months to collect signatures for the Collective Sale Agreement, source/negotiate/commit a Developer-buyer to a Sale and Purchase Agreement and apply to the Strata Titles Boards for a collective sale order. Thus, the marketing agent and lawyer have a lot to 
lose if the en bloc sale fails. With so much at stake, Behaviourial Economics would likely kick-in. Marketing agents and lawyers are also human beings with frailties and weaknesses ... they may be induced to sail very close to the wind or possibly even over-step the fine line.
The issue may be twisted into a chicken-and-egg situation because - under the Stamp Duties Act - there is provision for the ad valorem stamp duty (but not the penalty) to be refunded if the Sale and Purchase Agreement were to be rescinded or annulled due to STB's "refusal" of the application for a collective sale order.
(d) Where STB dismisses the collective sale application or declines to issue the collective sale order for whatever reason, would the Developer-buyer now cough up the stamp duty and quadrupled penalty since the en bloc sale now cannot proceed or is aborted? Assuming that the criterion of STB's "refusal" is met under the Stamp Duties Act, it may be time-consuming to get a subsequent stamp duty refund, bearing in mind that there is no refund for the quadrupled penalty!
Putting aside any gaps in this proposed amendment, does this 4-year window send a message that it's perfectly kosher to flip and artificially jack-up real estate demand from either sub-sale or en bloc flips so long as you carefully time your flips once-in-every-fourth year. Hmmm ... is there some "full moon effect" on our policy makers in introducing such "leap year" element?
lose if the en bloc sale fails. With so much at stake, Behaviourial Economics would likely kick-in. Marketing agents and lawyers are also human beings with frailties and weaknesses ... they may be induced to sail very close to the wind or possibly even over-step the fine line.In the murky waters of the en bloc pool and the dark alleys of such en bloc estates, the burden of proof is onerous, even for Majority Consenters and much worse for Minority Dissenters.
http://singaporeenbloc.blogspot.com/2008/08/greek-mythology-themis-and-source.html
http://singaporeenbloc.blogspot.com/2009/02/7-purgative-sense-of-deja-vue.html
http://singaporeenbloc.blogspot.com/2008/08/greek-mythology-themis-and-source.html
http://singaporeenbloc.blogspot.com/2009/02/7-purgative-sense-of-deja-vue.html
2. IRAS is not dancing until the music stops. Up till Feb 2009, this "no sale, no fee" connivance apparently extends to stamp duties on en bloc Sale and Purchase Agreements except that the Inland Revenue Authority of Singapore (IRAS) has now stepped up to the plate and (finally) refused to dance to the tune of "no sale, no tax".
On 6 Feb 2009, the Strata Titles Boards (STB) issued Circular No 1/2009 requiring the law firm submitting the application for collective sale order to (i) certify that all documents have been stamped and (ii) provide evidence of such stamping for inspection by the Registrar.
3. The music plays on ... or does it? Under the Stamp Duties Act, Cap 312. stamp duty is payable by the Developer-buyer BEFORE the Sale and Purchase Agreement is being executed. Otherwise, there is a grace period of 14 days from the date of execution to pay stamp duty, failing which it would attract a penalty of double or four times the original stamp duty if stamped within/after 3 months from execution, respectively.
If stamp duty is not paid, the document would not be admissible as evidence.
All this while, the industry practice in individual property transactions is to pay stamp duty on the Sale and Purchase Agreement within 14 days from date of execution (ie, way before the usual 3-month period for legal completion).
On 6 Feb 2009, the Strata Titles Boards (STB) issued Circular No 1/2009 requiring the law firm submitting the application for collective sale order to (i) certify that all documents have been stamped and (ii) provide evidence of such stamping for inspection by the Registrar.
3. The music plays on ... or does it? Under the Stamp Duties Act, Cap 312. stamp duty is payable by the Developer-buyer BEFORE the Sale and Purchase Agreement is being executed. Otherwise, there is a grace period of 14 days from the date of execution to pay stamp duty, failing which it would attract a penalty of double or four times the original stamp duty if stamped within/after 3 months from execution, respectively.If stamp duty is not paid, the document would not be admissible as evidence.
All this while, the industry practice in individual property transactions is to pay stamp duty on the Sale and Purchase Agreement within 14 days from date of execution (ie, way before the usual 3-month period for legal completion).
However, for en bloc sales, it would appear that the prevalent practice is to stamp the Sale 
and Purchase Agreement and pay the quadrupled penalty upon legal completion AFTER the collective sale order is issued by STB. Depending on the speed/efficacy of the whole process for each en bloc estate (eg, applying to STB, going through mediation rounds, getting STB tribunal or High/Appeal Court hearing dates, waiting for judgements, etc), legal completion may well be 12-18 months after date of execution of the Sale and Purchase Agreement. Nonetheless, everything is still hunky-dory if STB issues 
the collective sale order. The Developer-buyer happily pays the stamp duty penalty even though it is quadrupled. At such a steep penalty rate of 4 times, IRAS also has its own version of "en bloc windfall", if I may say so with an impish grin, eh?
4. IRAS getting irate. Now that the music has come to a screeching halt and the pick-up in tempo is likely to take some time ... what with Resilience Package pay-outs, Budget deficits, fall in tax revenues as jobs are lost, salaries are cut and businesses are either being propped up and chalking up losses or are folding-up/re-locating ... with all these weighing us down, IRAS needs to get cracking. Time to top-up public coffers, I suppose.
Interesting questions:
and Purchase Agreement and pay the quadrupled penalty upon legal completion AFTER the collective sale order is issued by STB. Depending on the speed/efficacy of the whole process for each en bloc estate (eg, applying to STB, going through mediation rounds, getting STB tribunal or High/Appeal Court hearing dates, waiting for judgements, etc), legal completion may well be 12-18 months after date of execution of the Sale and Purchase Agreement. Nonetheless, everything is still hunky-dory if STB issues 
the collective sale order. The Developer-buyer happily pays the stamp duty penalty even though it is quadrupled. At such a steep penalty rate of 4 times, IRAS also has its own version of "en bloc windfall", if I may say so with an impish grin, eh?4. IRAS getting irate. Now that the music has come to a screeching halt and the pick-up in tempo is likely to take some time ... what with Resilience Package pay-outs, Budget deficits, fall in tax revenues as jobs are lost, salaries are cut and businesses are either being propped up and chalking up losses or are folding-up/re-locating ... with all these weighing us down, IRAS needs to get cracking. Time to top-up public coffers, I suppose.
Interesting questions: (a) On what basis did the Registrars of STB and High Court admit the unstamped Sale and Purchase Agreements as evidence in tribunal and court hearings for the various estates embroiled in en bloc battles over the past several years? Shouldn't the unstamped document be impounded by the Registrars at the time as they are empowered to do so?
(b) Didn't the Developer-buyer's lawyer advise their client to stamp the Sale and Purchase Agreement within the 14-day grace period? Or did the Developer-buyer as client choose to ignore such legal advice? Was it sheer coincidence during the last en bloc frenzy that so many Developer-buyers of different shapes and sizes
consistently ignored such advice of various law firms (assuming prudent legal advice on stamping was dispensed)? If not, then it would mean that the Developer-buyers as clients were ill-advised, in which case IRAS and Law Society could perhaps get their act together and knock some uncommon common sense into the brains of legal eagles (oops ... they are not bird-brained by any stretch of imagination)!
(b) Didn't the Developer-buyer's lawyer advise their client to stamp the Sale and Purchase Agreement within the 14-day grace period? Or did the Developer-buyer as client choose to ignore such legal advice? Was it sheer coincidence during the last en bloc frenzy that so many Developer-buyers of different shapes and sizes
consistently ignored such advice of various law firms (assuming prudent legal advice on stamping was dispensed)? If not, then it would mean that the Developer-buyers as clients were ill-advised, in which case IRAS and Law Society could perhaps get their act together and knock some uncommon common sense into the brains of legal eagles (oops ... they are not bird-brained by any stretch of imagination)! (c) Since the Developer-buyer has the obligation to stamp the Sale and Purchase Agreement, could such Developer-buyer turn around to require the Sale Committee to apply the en bloc deposit towards payment of such stamp duty/penalty in order to admit such document in STB tribunal hearings?
The issue may be twisted into a chicken-and-egg situation because - under the Stamp Duties Act - there is provision for the ad valorem stamp duty (but not the penalty) to be refunded if the Sale and Purchase Agreement were to be rescinded or annulled due to STB's "refusal" of the application for a collective sale order.(d) Where STB dismisses the collective sale application or declines to issue the collective sale order for whatever reason, would the Developer-buyer now cough up the stamp duty and quadrupled penalty since the en bloc sale now cannot proceed or is aborted? Assuming that the criterion of STB's "refusal" is met under the Stamp Duties Act, it may be time-consuming to get a subsequent stamp duty refund, bearing in mind that there is no refund for the quadrupled penalty!
Since the Developer-buyer is now deprived of the juicy en bloc cherry, would the Commissioner of Stamp Duties be sent on a 
merry goose chase? For the Developer-buyer, since there is no cherry to make sauce, why be a goose now and lump the quadrupled penalty, eh? For IRAS, sauce for the gander is also sauce for the goose and quadrupled penalty is not to be sneezed (or quacked) at, especially when the pickings are lean.
NOTE: By way of digression, it should be noted that a lot is at stake in an attempted en bloc sale for both the Developer-buyer and the owners (whether as Majority Consenters or Minority Dissenters). The owners would be obliged to sell their homes if STB issues the collective sale order - against their will in the case of Minority Dissenters. Conversely, if STB does not issue the collective sale order, shouldn't the Developer-buyer have something at stake that is commensurate with the risks/benefits of the en bloc transaction?
Suggestion: Forfeiture of Developer-Buyer's en bloc deposit but with refund of stamp duty (but not the penalty) unless non-issuance of the collective sale order is due to misconduct of the Sale Committee, Consenting Majority, marketing agent or lawyer. Otherwise, there is no inherent check-and-balance to deter Developer-buyer from less-than-scrupulous conduct, covertly or overtly, directly or indirectly through proxies or nominees. After all, if STB does not approve the collective sale application due to, say, lack of good faith arising from any relationship between the Developer-buyer and the owners (ie, one of the grounds provided under the Land Titles (Strata) Act), then there is no skin off the Developer-buyer's nose because both the en bloc deposit and stamp duty (if paid) would be refunded!!!
Yet another classic case of having your cake and eating it too, eh? Reminiscent of the typical Wall Street culture of "Heads, I Win; Tails, You Lose", correct? With the authorities persisting i
n hands-off approach and without legislative protection, Sale and Purchase Agreements would naturally be drafted to skew towards the Developer-buyer's advantage. The "no sale, no fee" stake is probably too high for the en bloc lawyers to object violently to such skewed drafting, especially when their clients (viz, typically pro en bloc Sale Committee members, clueless Majority Consenters and stonewalled Minority Dissenters) won't or can't know any better.
merry goose chase? For the Developer-buyer, since there is no cherry to make sauce, why be a goose now and lump the quadrupled penalty, eh? For IRAS, sauce for the gander is also sauce for the goose and quadrupled penalty is not to be sneezed (or quacked) at, especially when the pickings are lean.NOTE: By way of digression, it should be noted that a lot is at stake in an attempted en bloc sale for both the Developer-buyer and the owners (whether as Majority Consenters or Minority Dissenters). The owners would be obliged to sell their homes if STB issues the collective sale order - against their will in the case of Minority Dissenters. Conversely, if STB does not issue the collective sale order, shouldn't the Developer-buyer have something at stake that is commensurate with the risks/benefits of the en bloc transaction?
Suggestion: Forfeiture of Developer-Buyer's en bloc deposit but with refund of stamp duty (but not the penalty) unless non-issuance of the collective sale order is due to misconduct of the Sale Committee, Consenting Majority, marketing agent or lawyer. Otherwise, there is no inherent check-and-balance to deter Developer-buyer from less-than-scrupulous conduct, covertly or overtly, directly or indirectly through proxies or nominees. After all, if STB does not approve the collective sale application due to, say, lack of good faith arising from any relationship between the Developer-buyer and the owners (ie, one of the grounds provided under the Land Titles (Strata) Act), then there is no skin off the Developer-buyer's nose because both the en bloc deposit and stamp duty (if paid) would be refunded!!! 
Yet another classic case of having your cake and eating it too, eh? Reminiscent of the typical Wall Street culture of "Heads, I Win; Tails, You Lose", correct? With the authorities persisting i
n hands-off approach and without legislative protection, Sale and Purchase Agreements would naturally be drafted to skew towards the Developer-buyer's advantage. The "no sale, no fee" stake is probably too high for the en bloc lawyers to object violently to such skewed drafting, especially when their clients (viz, typically pro en bloc Sale Committee members, clueless Majority Consenters and stonewalled Minority Dissenters) won't or can't know any better. 5. IRAS playing catch-up with Cha-Cha-Cha. Under the current Public Consultation for the upcoming Income Tax (Amendment) Bill 2009 that will close on 14 Jul
y 2009, a new policy concession is being proposed, viz, the profit from the sale of only one property on or after 1 Jan 2010 will not be taxed if the individual owner has not disposed of any other property within 4 years prior to such sale.
y 2009, a new policy concession is being proposed, viz, the profit from the sale of only one property on or after 1 Jan 2010 will not be taxed if the individual owner has not disposed of any other property within 4 years prior to such sale. With this 4-year look-back window, the Gahmen will 
share in the spoils of the serial en bloc raiders and the sub-sale flippers!!! As the last en bloc frenzy started in 2006/2007 and the Property Market Index hit a new peak by 1H2007, there is a clever twist in crafting this amendment. Applause for IRAS ingenuity! Ooops, not so fast ... because the flippers are more zany and nimble than IRAS - they are now offloading all their units (some even at a loss) before ringing in New Year's Day on 1 Jan 2010!!! As these flippers sip their champagne and eggnog on the New Year's Eve on 31 Dec 2009 with colourful fireworks booming off against the backlit sky, they would drink to the health of the IRAS tax snoops no doubt! Who wants to bet that the flippers will outwit IRAS?
share in the spoils of the serial en bloc raiders and the sub-sale flippers!!! As the last en bloc frenzy started in 2006/2007 and the Property Market Index hit a new peak by 1H2007, there is a clever twist in crafting this amendment. Applause for IRAS ingenuity! Ooops, not so fast ... because the flippers are more zany and nimble than IRAS - they are now offloading all their units (some even at a loss) before ringing in New Year's Day on 1 Jan 2010!!! As these flippers sip their champagne and eggnog on the New Year's Eve on 31 Dec 2009 with colourful fireworks booming off against the backlit sky, they would drink to the health of the IRAS tax snoops no doubt! Who wants to bet that the flippers will outwit IRAS? 
Putting aside any gaps in this proposed amendment, does this 4-year window send a message that it's perfectly kosher to flip and artificially jack-up real estate demand from either sub-sale or en bloc flips so long as you carefully time your flips once-in-every-fourth year. Hmmm ... is there some "full moon effect" on our policy makers in introducing such "leap year" element? Given the nature of real estate purchases, a typical home-buyer or genuine investor is likely to hold the property for at least ten or five years, respectively. As an owner-occupier, how many of us would move house every 4 years? As an investor-occupier, would it take us less than 4 years to fully amortize renovation or furniture/fittings expenses, bearing in mind financing costs and rental/tenancy fluctuations?
Since the present law already provides for gains from property sales to be taxed as "trading gains" or “gains or profits of an income nature”, is this yet another case of a law not enforced and closing one eye or looking the other way when people have been merrily flipping in sub-sales and en
bloc sales? Similar to non-enforcement of stamping legislation for En Bloc Sale and Purchase Agreements under the Stamp Duties Act prior to Feb 2009? Why???
Hmmmm ... and I thought that Singapore is known for its rule of law (and enforcement of laws). Sigh ... so much for Home Ownership policy as a cornerstone of the Gahmen's political/social platform that consequently sanctions use of nest-egg savings from Central Provident Fund to buy residential properties. Another sigh ... so much for the official economic spiel about clampdown on artificial (speculative) demand exacerbating asset bubble boom-bust risks. A bigger sigh ... the fact that "en bloc potential" is already an entrenched investment criterion in the real estate market puts lie to parliamentary speeches about "urban rejuvenation", "higher land use intensity" and "creating more housing units for Singaporeans" when this unjust law was promulgated. Well, Cha-Cha-Cha - one step forward and two steps back? Or more like a salacious La Bamba grind-gyrate with Eyes Wide Shut?
bloc sales? Similar to non-enforcement of stamping legislation for En Bloc Sale and Purchase Agreements under the Stamp Duties Act prior to Feb 2009? Why???Hmmmm ... and I thought that Singapore is known for its rule of law (and enforcement of laws). Sigh ... so much for Home Ownership policy as a cornerstone of the Gahmen's political/social platform that consequently sanctions use of nest-egg savings from Central Provident Fund to buy residential properties. Another sigh ... so much for the official economic spiel about clampdown on artificial (speculative) demand exacerbating asset bubble boom-bust risks. A bigger sigh ... the fact that "en bloc potential" is already an entrenched investment criterion in the real estate market puts lie to parliamentary speeches about "urban rejuvenation", "higher land use intensity" and "creating more housing units for Singaporeans" when this unjust law was promulgated. Well, Cha-Cha-Cha - one step forward and two steps back? Or more like a salacious La Bamba grind-gyrate with Eyes Wide Shut?
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