Update on 29 Aug 2007:
Oooo-la-lah ...
Copy-and-paste the following link to MinLaw's announcement on 27 Aug 2007 relating to the upcoming legislative amendment of the Land Titles (Strata) (Amendment) Bill:
http://notesapp.internet.gov.sg/__48256DF20015A167.nsf/LookupContentDocsByKey/GOVI-76GF93?OpenDocument
To read the "FULL LIST OF AMENDMENTS": After you access the above First Link, do scroll all the way down to para 17 and click on the Second Link there! Nah, this Second Link won't bring you to Johore ... it may just send you into another transcendental air-space (tell me when you get there, eh?).
As you read intently, I reckon some of the changes will be met with your approving nods and zesty yelps of "yes". Some may cause you to do a double-take. But, but, but ... just as you may have heard of this oxymoron of "deafening silence", I'd venture that "when you look, you will not see" ... because what's NOT in this list of amendments is also pretty glaring!
IF YOU WANT TO HAVE A CHANCE OF STRIKING A $2,000,000 LOTTERY, YOU FIRST MUST FORK-OUT $2 FOR THE LOTTERY TICKET!
When you are selling an estate running into 10- or 11-figures in the hope of reaping a 150% collective sale premium (even though it's a 200% discount from replacement cost), the would-be-Consenters must surely dole out a 4-figure expense each UPFRONT to pay for a proper (1) Valuation Report, (2) Development Baseline Search and (3) Outline Planning Permit to establish a fair value Reserve Price and Apportionment Method??? The Valuation Report could be updated for a nominal fee upon close of public tender and all these costs could be clawed-back from the marketing agent's commission upon successful legal completion of the en bloc sale - in other words, if successful, EVERYBODY will be sharing this cost through the CLAWBACK and NOBODY IS MADE A SUCKER (although the Dissenters will probably feel scarred for life and definitively suckered after being booted out from their homes)!
Otherwise, on what basis did you pluck the figures and percentages from the air in setting the Reserve Price and Apportionment Method? You are selling OTHER PEOPLE'S HOMES - so you must surely bear A HIGHER DUTY OF CARE, yes??? If you are just dealing with your own home, you could give it away free for all I care!
Well, "they" always know better, I suppose, eh? As for moi, I'm not only incidental but similarly transcendental in "their" scheme of things.
I ask with all angst a la foreign talent Jackie Chan who was en-bloc'ced out of his Grangeford apartment recently:
"WHO AM I"?
In the enbloc aftermath, maybe our home-grown talent, Jack Neo, can do a story on Squatters, Refugees, Downgraders and Downsizers of:
"WHERE AM I"?
In between agonising moments ... I found another PRECIOUS GEM in Dr Minority's blog with a very helpful link to the Singapore Law Blog where Lawyer Mr Ong Ying Ping from Ong Tay & Partners shared the presentation slides on the legal pitfalls at an en bloc seminar. For your access convenience, I have added a link to the Singapore Law Blog - do scroll down, past the "Wailing House" and "topic headings" on this page until you see this blog name and click on it.
_______________________________________________________
THE EN BLOC PLEDGE ©
We, the en bloc consenters of Singapore,
pledge ourselves as one united people,
regardless of transparency, accountability or propriety,
to build a coercive society,
based on cashflow and greed,
so as to achieve happiness, prosperity and
progress for ourselves only.
Today Singapore celebrates her 42nd year of nationhood. In a sense, we are a First-Generation-Nation.
It is a credit to our leaders AND our people that we have come thus far and remarkably so ... from a fishing village with no natural resources other than a deep sea harbour and a strategic geographical position along the maritime trade route, evolving into an entrepot trading post in the colonial days, through the atrocities of the Japanese occupation, barely escaping the clutches of communism and Konfrantasi, being thrusted in and out of the Federation, confronting the daunting economic prospects after the British troop withdrawal ... to what we are today and holding out the promise of what's to come tomorrow. And we ain't seen nothing yet ... if we (ie, U-n-I: we, us, Tom, Dick, Harry, Ah Beng, Xiao Lan, Ahmad, Lashimi, Ignatius, Suryianto) continue to get it right with the blessings of the gods and the super-powers!!!
Let's get down to the brass tacks of A-B-Cs ...
A: Sales Committee, Lawyers, Property agents, Developers
B: Gahmen ... munching on incomplete crunched numbers
C: The "system" ... and PM's 2007 National Day speech
PART A: Who's doing what to whom how many times over?
1. What underpins this Remarkable Remaking of Singapore? Many factors ... foremost of which is Respect for the Law, I reckon. For those of us who may have forgotten our National Pledge, let me remind you that the 5th line of our pledge says "based on justice and equality"!
2. What will continue to underpin this Continuing Reinvention of this Little Red Dot? I ask this question because I believe that en bloc sales - in its inimical way - encapsulate a microcosm of our societal values. It doesn't matter whether you own a HDB public flat, or an in-between HUDC/Executive Condo or a private apartment in a condominium or a semi-detached house in a Good Class Bungalow district or a terrace house in the suburbs. Singapore is so, so small and our economy is so inextricably integrated that the ripple effects (NOT just on accommodation cost but a whole host of other comparative and competitive issues) are felt sooner rather than later.
3. A "microcosm of our society", I say. Why? At an emotive level, it affects our "homes". At a primal instinctive level, it affects the "roof over our head". At an economic level, it affects our Central Provident Fund nest-egg savings and - for most of us - the most chunky asset in our entire investment portfolio.
4. So what does it say to you about this "microcosm of our society" when the current en bloc frenzy catapults at a pace more frenetically now than ever before in anticipation of the upcoming legislative review which is largely expected to redress the officially-acknowledged current gaps in the law???
What does it say to you when developers, property marketing agents, lawyers, en bloc flippers, property speculators who even do option-trading these days, Sales Committee members, owners with cashflow needs (some more pressing than others) ALL ACT IN CONCERT to die-die must hit the 80% (90%) majority consent now, now now?
Why? Because they are intensely intent on beating the upcoming review of the laws governing en bloc sales. How else could one account for SUDDEN and STEEP price spikes dangled by marketing agents and/or Developer-Buyers in various prime estates which have NOT yet hit the requisite majority consent in the last couple of months???
5. How? The loose way as allowed under the present law - by quickly forming a self-appointed unregulated SALES COMMITTEE. The slightly improved way as suggested under the proposed law - by requisitioning an EOGM and appointing a Sales Committee - with all the requisite form but totally lacking in substance nonetheless!
It takes a professed 5-year period for the Gahmen to observe and decide whether a person (whom they have known for some time, mind you) is indeed of ministerial calibre and fit to govern. So how can it take less than 10 minutes for you to decide and appoint to the Sales Committee an owner whom you have never seen in your life (because he has just bought a unit in your estate or he has been an Investor-Owner all these years and therefore never seen in the estate) or with whom you have a relationship ranging from the "I-know-of-you-glazed look" type or the "you-nod-I-nod-back" kind to the "hi-bye" category whenever you bump into her in the car park (even though all of you have been living in the same estate for the past 30 years)?
What are the credentials of these people? Do they have the knowledge, skills and aptitude to assess the capability of the marketing agent and the lawyer or these experts' advice or recommendations about the methodology to derive fair value for the Reserve Price, the apportionment method, range of possibilities for the terms and conditions of sale, etc? Does the Sales Committee know what to expect of these experts in terms of reports, performance standards, etc? What is the basis of the Sales Committee's appointment of the selected property marketing agent and lawyer if they didn't even attempt to get tenders and presentations from competing marketing agents, valuers, quantity surveyors and law firms?
Even before buying a LCD TV, you'd check and shop around, don't you? Not just on the brands but also the sizes, the features, the prices, the product reviews, the after-sales service ... all these for a $3,000 consummable! The process of evaluation, expectations and performance measurement is no less rigorous before you employ a manager for your company or a maid for your home. Your CEO or your spouse would expect you to exercise all that "DUE DILIGENCE" and "PROPER MANAGEMENT" for employing a manager or a maid, respectively, right???
So why should we Owners be ANY LESS RIGOROUS in our expectations of the Sales Committee? Are members of the Sales Committee of impeccable character? They are making decisions that impact other people's lives and assets involving millions and near billions of dollars!!! "Who" are they? I mean really "who" and not what are their names???
6. To add salt to the wound - The LAWYERS who are paid by you to represent your interests deem it fit to provide in the collective sales agreement (CSA) to empower the Sales Committee to (i) decide on the Reserve Price, (ii) provide for a BLANK CHEQUE to themselves (ie, this motley group of Sale Committee members) to award the sale to the Developer-Buyer without the need to consult the consenters regardless of the ever-changing market conditions and the time lag between the fixing of Reserve Price and the sale, (iii) select an apportionment method that would benefit the majority at the expense of the minority despite being aware that the dice is pre-loaded by ownership profile and unit-size composition, (iv) allow the law firm to quietly keep the interest accruing from the deposit placed by the Developer-Buyer (usually about 10% of the base amount that ranges from tens to hundreds of millions of dollars) for periods of up to 9-18 months which are held in trust for you or (v) give away the sinking fund that belongs to you (without so much as a caution that in the event that it is silent in the CSA, the sinking fund goes to the Developer-Buyer on the fallacious basis that the rights to the sinking fund accrues to the new buyer of an individual unit in the ordinary course because the new individual owner will continue to contribute to the ongoing maintenance and any future upgrading of the estate - all of which are inapplicable to a Developer-Buyer in an en bloc sale of course but conveniently slicked-over), etc.
Then the lawyers brazenly spice up their CSA with all kinds of deeming and ratification clauses to exonerate any errors, omissions, irregularities and even extend penalties, claims and obligations to parties who are NOT signatories to the CSA. Whilst such clauses are NOT likely to be enforceable against the NON-signatories, it is enough to intimidate the ordinary man-in-the-street into compliant silence and shift the burden of proof to him! And these are "professionals" who are the leading lights in our society, fulfilling their legal duty as a shining example to others?
Despite the fact that it is a "collective sale" and despite the statutory provisions of the law (some of which are very precise even today), the lawyers will draft one-on-one "private treaties" to contract-out of statute, ranging from the fully-opaque (replete with gag orders) to the half-opaque (you know some but not all).
Is transparency the ONLY issue? Even with full transparency, is it nonetheless THE TAIL WAGGING THE DOG??? Why even have the legal provision of a specially defined "financial loss" in the statute if the apportionment could be re-jigged by the Sales Committee with or without specific reaffirmation by the consenting majority and applied across-the-board to EVEN THE DISSENTING MINORITY, for goodness sake???
Do the lawyers even know if they (and/or their counterparts in another law firm) are doing the sale-and-purchase transactions of individual units in an en bloc estate where there is some tenuous shady connection between the new buyer and the marketing agent/Developer-Buyer in order to tip the en bloc trigger, innocently enough perhaps? Do they even want to know?
Can you BLAME THE LAWYERS when they do NOT get paid unless the collective sale goes through?
7. To go for the deadly kill quickly - The PROPERTY MARKETING AGENT gives you data which is applicable only for that week or month. Sometimes, they update the Sales Committee (but invariably never the Owners) of the constantly changing market. They ask you (a layperson) to name a price and then work backwards to compute the Reserve Price. If that's the acceptable way to determine the Reserve Price, hey, you and I could be property marketing agents OVERNIGHT, eh? They don't even bother to do a proper valuation at the outset and it makes you wonder (if you have a mind) on what basis do they establish the fair value as a starting point. The marketing agent knows how the Developers-Buyers derive their offers but they typically don't show you the workings of the Present Value of Residual Land Value. Nor do they do sensitivity analysis to show you comparisons of the collective sale price you will be getting relative to the purchase price of the replacement unit on your present land in the event that the market goes up/down by a projected percentage range - lest you realize only too painfully that you are being sold down the river.
We've heard of family-run businesses that keep TWO SETS OF BOOKS - one for themselves and one for the tax man, right? You know what??? Marketing agents routinely do this too? Did you know that for the SAME condo estate, marketing agents SIMULTANEOUSLY give ONE SET of figures under an En Bloc Sale Proposal to the Sales Committee/Owners and ANOTHER SET of figures under an Investment Proposal to Potential Developer-Buyers???
Marketing agents prepare these Investment Proposals as part of their STANDARD marketing pitch ... that's where all the juicy bits come in about development baseline, bonus GFA, free GFA, architectural design ingenuity to maximise these, Outline Planning Permit, projected launch prices, tinkering with Land Holding Costs, Construction Costs ... to convince Developer-Buyers how obscene the profit potential could get in the best-case/worst-case scenarios!!! Developer-Buyers also re-slice these figures to cross-check the marketing agent's Investment Proposal numbers before they clamour on board.
Let's GET REAL here, man! If you are the marketing agent, who would you suck up to? How many en bloc sales and property sale/purchase deals does a marketing agent get from an owner DURING THE OWNER'S LIFETIME? How many en bloc purchases and new property launches does a marketing agent get from a developer IN A GOOD YEAR? Of course, these Investment Proposals are hidden from the Sales Committee/Owners even though the Owners are paying commission to the marketing agent as they are being led to slaughter! In the bloody en bloc aftermath, we Owners even console ourselves that it was "market movement" or "other people's good luck" or "our own bad luck" that the new unit is now being soft-launched at three times the collective sales price that we finally collected three-six months ago! What pathetic Ostriches we are!!! [In this blog, we have Chickens, Monkeys, Snakes, Crocodiles, Joker and now Ostriches!]
Singapore is in the throes of A REMAKING! Therefore, so too are our residential enclaves. When you sell Farrer Court, Gillman Heights, Furama Towers. Gilstead Court, Minton Rise, Bayshore View, Dairy Farm Estate, you may not realise it but you are in fact selling the "upcoming wannabes" of Sentosa Cove or Marq-on-the-Hill ... because that is what will be plonked on your old land! Holland V will be anything but a village. Leonie Hill will be anything but a nonentity! For some of these redevelopments, when you visit your old estate 2-3 years from now, your jaws will drop at the EXTREME MAKEOVER! You are selling FUTURE VALUE at PRESENT PRICE based on PAST ASSUMPTIONS! What a way to go, eh?
The marketing agent won't engage a quantity surveyor to establish the fair and equitable basis for apportionment and instead opt for the line of least resistance. They don't do a forecast of the likely cost of equivalent replacement units in 9-18 months' time although they are keenly aware that you won't be collecting the money until then to commit to a replacement unit.
These marketing agents could do things in reverse and get an Expression of Interest even without the requisite consensus in the hope that the expressed "interest" by the market suitors will seduce you - hook, line and sinker. They could do step 4 before step 1 because they would suss-out potential buyers or barge into your estate without being approached by any of the legal Owners (they may well have been approached by soon-to-be Owners who have the same rights as a passerby off the street!) to do a presentation or they submit their detailed proposals via mail drops or do cold calls by knocking door-to-door. They operate on the basis of getting the requisite majority (as opposed to achieving as high a consenting percentage as possible even though the dissenting owners are also saddled with paying their commission - this is truly Uniquely Singapore: To pay for what you do NOT want to buy)!
The marketing agents compete with each other to secure the exclusive marketing rights by offering their services "free" to the Owners - but there's no free lunch in this world of course, and they merely collect their commission from the Developer-Buyer who naturally discounts it from the purchase price. Or they offer half-price because they will be collecting the other half from the Developer-Buyer. In the midst of all this, you wonder where the marketing agent's loyalties lie or to whom do they owe their fiduciary duty? Perhaps the Sales Committee thought they were so, so clever when they got it free or at half price from the marketing agent and it didn't occur to them that they may be setting up themselves and all other owners to be shot in the foot eventually. See, that's what I mean by "Sales Committee incompetence" - Yeh, right ... Ignorance is Bliss! There is COLD COMFORT IN COMMON MISERY if the tune is to the millions of dollars in commission or less-than-highest-available sales price!
The marketing agent typically recommends a Reserve Price that they think would be palatable to induce the requisite majority but then treat that as the maximum price (instead of the minimum price as it was intended to be because the latter basis would entail a lot more work from them, having to go back to earlier offerors to outbid the latest highest offer, possibly raising the ire of the Developer-Buyers if competitive counter-offers keep bobbing-up).
Can you BLAME THE PROPERTY MARKETING AGENTS when they - like the lawyers - do NOT get paid unless the collective sale goes through? In fact, they incur much higher out-of-pocket costs than the lawyers if the property agents placed advertisements in the press for tenders or expressions of interest.
In the inherent nature of an agency, a broker invariably contends with the need to buy at the lowest price that the Developer-Buyer wants versus the need to sell at the highest price that the Selling Owners want. Nothing wrong with this ... it has been like that since civilisation started mercantile trade! This is perfectly ok in an individual sale because the seller decides at will and the transaction is almost immediate with a very short option period. But it is VASTLY DIFFERENT when it involves a collective sale where the majority is effectively forcing the minority to sell against their will AND the process can take anything from 6 to 24 months from the time you agree to the idea of a collective sale to the time you are bound to the sale (not taking into account the time when you will actually collect the sales proceeds).
8. To sew it up all are the DEVELOPER-BUYERS of course. It's all about business and supply/demand - as it should be. Nobody will deny that of them. So what's easy to market? What would give the most upside profit potential? Prime or popular residential enclaves make good predatory targets!!! Yes, the "chase" is much shorter for Government Land Sales but the supply in choice locations is much more limited. Whatever premium Developer-Buyers pay for an en bloc, they are expecting to sell at much more than the purchase price - of course, it may go awry but that's an inherent business risk in their line. The point - lest we forget - is that developers buy our PRESENT homes in order to unlock the FUTURE value of our land for themselves! Shouldn't they invoke some social conscience and bear some corporate responsibility of at least GRACIOUSLY according a 1-4-1 exchange "option" to Owner-Occupiers with only one residential property who would not be able to afford a replacement unit in that SAME vicinity with the collective sales proceeds? Would a 1-4-1 exchange option deprive Developer-Buyers of 50% profit potential when home owners are unlocking 100% land value for them? So, ONE-WAY TRAFFIC is ok, huh? All the hype these realty companies lend to sustainable construction, corporate citizenship and the blah and yet they don't bat their corporate eye-lid in demolishing a 4-year old apartment block (that's the latest record to date) from an en bloc!
9. As for the riff-raff scum of our society - the EN BLOC FLIPPERS, PROPERTY SPECULATORS and PROPERTY OPTION TRADERS - they are NOT even worth the dignity of any comments! So there! The Pariah can also get "pariac" (I think I may have just cooked up a new word!). There is Heaven and Earth ... and Hell! All in good time of course!
PART B: The powers that be ... munching on incomplete crunched numbers
1. So, as we turn 42 years old as a nation amidst all that razzmatazz, (i) having acknowledged that the present law has some gaps which have been exploited and is continuing to be even more blatantly exploited to beat the new law, (ii) knowing that the market is in a constant state of flux, and (iii) upholding the principle that the law must be sacrosanct and not to be made a mockery of, is our Ministry of Law so HELPLESS?
2. We all recognize that legislative review must necessarily go through due process in order to be robust, comprehensive, relevant and effective. All this takes time - as it should be.
3. Just as The Monetary Authority of Singapore had to take time to ensure that the Financial Advisers Act is properly crafted as a new law, it didn't mean that the MAS would wait-and-see what the purveyors of various financial products were doing in the market in the meantime! The MAS would issue Practice Notes to effectively bind the banks into "managing these purveyors". Likewise, when certain trends or questionable practices rear their ugly heads in the market, the MAS would step in nimbly to "control" risks and preempt possible unfavourable consequences.
4. So back to the issue of HELPLESSNESS QUOTIENT. Nah, I don't believe for a minute that MinLaw is helpless to help us (the hapless minority) by issuing circulars and policy guidelines and working with The Strata Titles Boards, The Singapore Institute of Surveyors and Valuers (SISV), the Association of Singapore Real Estate Agents (ASREA), the Real Estate Developers' Association of Singapore (REDAS) and the Law Society to direct current practices to some semblance of what is to come. Are we "lesser equals" if I may coin an oxymoron?
5. Maybe MinLaw doesn't see it as an issue for now for various reasons ... maybe the statistics don't show it (as yet)! As we all know, the law is only worth the piece of paper it is printed on if it is not effectively enforced. Likewise, statistics are only as good as the underlying assumptions.
5.1 I read in recent press reports that URA said sub-sales are only 9.7% of total sales currently (compared with 28% in 1996 which was the last property speculative bout). DRUM ROLL PLEASE ... note URA's 1996 benchmark reference! But also note the changes post-1996! Surely, URA is NOT transfixed in a time-warp, is it now???
5.2 Even the CPF statistic in 2006 that "only 3% of members using CPF to finance properties have two or more properties" is misleading because this is sliced based on the parameters that CPF funds were used by the same CPF member for both/ multiple properties. So if Mr and Mrs A bought Property A using CPF funds, and Mrs A uses cash to partner with daughter Ms A who then uses CPF to buy Property B, this is NOT caught by CPF's statistic. Voila!
5.3 Since July 2005, CPF allows non-related singles to use CPF to buy residential properties so long as it is their "only residential property". Only imagination limits our "swinging bachelors and bacherlorettes" on how to play this game! Even those off-the-shelf and tied-up by marital knots can get into the game if you know how.
5.4 Deferred Payment Scheme (DPS), I believe, was not available in the last speculative boom of 1996. DPS came into being in late 2001 for original purchasers and extended in early 2002 to sub-sale purchasers at developer's discretion. The true extent of the speculative element for projects with DPS option manifests itself more evidently ONLY nearing issuance of Temporary Occupation Permit (TOP, ie, when the building is ready for residents to move-in). As (a) property construction suffered the doldrums during the Asian financial crisis followed by the subsequent regional economic crisis and (b) ongoing construction activities are all at fairly early stages of completion, is the full play of speculation evident from CURRENT sub-sale statistics? For a bullish speculator, is it that stretching to book two or three units at a soft launch of residential projects with DPS option???
5.5 URA is playing with the old speculation parameters and that's why they are tracking sub-sale numbers. In typical Darwinian evolution, the party animal may have already morphed ... instead of looking at SUB-SALE NUMBERS (sub-sale refers to resale of units that are still under construction - ie, pre-TOP), URA should perhaps ALSO zoom-in on RESALE NUMBERS (resale refers to resale of units that are already fully completed - ie, post-TOP) because of the even more pronounced en bloc frenzy in 2006/07 (compared to the 1999/2000 round).
5.6 URA has come out to say publicly that URA is not tracking multiple unit purchases. Tsk, tsk ... so does URA really have their finger on the pulse if they are pressing only on one vein when URA knows that there is more than one vein out there? Here it could get tricky, depending on how robust is the database structure of the Singapore Land Authority for sub-sales AND resales in tracking, firstly, the various permutations of purchasers and, secondly, the purchasers vis-a-vis the CPF contributors as the two may not be identical. That's why statistics sometimes lie! Such multiple unit purchases - whether under Deferred Payment Scheme or "en bloc potential" type or "vote-buying to tip majority balance" or "property option trading" - are coincidentally facilitated in this millennium by the so-called HAPPY CONFLUENCE of new factors (CPF available for non-related singles, DPS, lag time to TOP post-crises, unprecedented record-breaking hikes in enbloc offers) - ALL of which were NON-EXISTENT or ABSENT in 1996!!!
PART C: The "system" ... PM Lee's 2007 National Day speech
Ahh ... "Justice" - or so we pledge as a nation! Is justice Black-OR-White? Or is it Black-AND-White? As an aside ... little wonder that our lawyers are always garbed in Black-and-White. Maybe the dress code for minority dissenters should be varying shades of Essential Grey when you head down to the Strata Titles Boards! Just to make a point, you know what I mean, eh?
1. Can we have real justice in a loose legislative framework of a self-appointed unregulated Sales Committee aided by a property marketing agent and a lawyer (both of whom will NOT get paid unless the en bloc deal goes through) and further underpinned by Developer-Buyers' voracious hunger for prime/popular locations that can only be wrested from existing home owners through en bloc sales? Geez, can any one ask for more???
In such environment, there is precious little transparency and information is kept very close to the chest and the requirement for a "committee" structure necessarily descends to a "Committee of One" if anything is to get going! And yet the onus of proof is now laid squarely on the shoulders of the minority dissenters - how to prove "kelong", you tell me. ["Kelong" is a Malay word for an ethnic fishing contraption in this part of the world - it is most apt in this context because (i) en bloc business can be downright fishy and (ii) Singapore traces her origins to a mere fishing village; this word is also the Singaporean patois for "rigging" a match.]
2. Justice is not free and it doesn't come cheap either! If the property marketing agent who gets paid a whopping commission that could run into hundreds of thousands or millions of dollars is NOT required to procure a valuation report at the outset but after the fact when everything is almost fait accompli, then why does the Strata Titles Boards require the minority dissenters to produce a valuation report (which also doesn't come cheap) as a basis to even mount a challenge? More so if your minority is a group with a grand total of 4 or even a lone maverick!
Is it now a numbers game too? The number may be small but that doesn't detract from the validity of the minority's concerns. If you don't OR can't ask the question, you won't ever get an answer! Then what? Lump it? In my previous blog, I said "Justice Delayed is Justice Denied"! Now, I add to say "Justice Hurried is Justice Buried"!
3. Who sues ... who to sue? To be or not to be, eh? Where the Developer-Buyer has very deep pockets, it's fair game. Where the consenting majority has overwhelming numbers as opposed to the paltry number of dissentlng minority, it's also fair game. Let's scare the chickens to frighten away the monkeys. Let's see who blinks first? Remember, this is THE JUNGLE!
Could the Developer-Buyer sue the consenting majority? What about the consenting majority counter-suing the Sales Committee members? Even within the Sales Committee itself, could the vote-dissenters sue the vote-consenters for a deciding resolution that went awry? Could the Sales Committee members counter-claim against the lawyers and the property marketing agent for failing to do their job properly and comply with the technical requirements of a collective sale?
Could the dissenting minority sue the consenting majority for appointing or agreeing to the appointment of an incompetent and/or negligent Sales Committee, and also sue the the Sales Committee for not tendering for the services of an effective property marketing agent and lawyer, for not substantiating upfront an objective basis for setting the Reserve Price or the apportionment method, for willy-nilly saying "how high" when the property marketing agent "recommended" that they "jump" instead of asking why, how and what? Is this GOOD FAITH as required under the law? It smacks more of BLIND FAITH!
This is NOT about being unduly fractious or litigious! When the Sales Committee takes on certain RIGHTS, it also takes on corresponding OBLIGATIONS. This is about EQUITY. As a parent, you have certain rights over your child but also certain obligations towards the same child. As a vendor of goods/services, it goes the same way vis-a-vis the customer - basically, you can't have your cake and eat it too, eh?
Could a government body be challenged for not procuring an independent objective basis before endorsing/imposing the majority's will on the minority or for failing to probe if there is any possibility of "kelong" (Singaporean patois for "rigging", usually of a match) or for not getting statutory declarations from the relevant parties to preempt the statutory provision from being circumvented?
You must have heard of this term "money politics". That's politics - and even then, it's not kosher - at least, not so rampantly in Singapore for now! Surely, we CANNOT, and MUST NOT, have "money justice"?
My dear blog readers, now do you see why I said at the beginning why en bloc sales are a "microcosm of our societal values"?
"This is my country. That was my home." - so goes the title of my poem on this blog. Somehow, the concluding words of "happiness, prosperity and progress for our nation" in our National Pledge ring more hollow this year than in previous years!
PM Lee said in his 2007 National Day speech: “I know many older Singaporeans worry about whether they can make ends meet. We are making changes to help you to work longer, earn more and build your retirement savings. We will enhance the value of your HDB homes, which are a nest-egg for old age. We will improve the CPF scheme, so you can enjoy a steady income and peace of mind in your golden years”. PM Lee also said that the Gahmen “cannot solve all the problems alone” and that "everyone must play a part ... we each must take responsibility for ourselves, make the effort to do well, and provide for our families and our old age ...”.
Yes, PM Lee is spot-on in putting his finger on the worries of "older Singaporeans" but these similar worries hold true even for the "not-so-old but not-that-young" Singaporeans too when both of these groups continually assess their retirement savings. Whilst PM Lee's message is more specifically targetted at the bottom 10-20% income-earners, these nagging worries apply equally to the middle and upper-middle class who form the 70% bulk.
In addition to PM Lee's assurance of the Gahmen's efforts to "ENHANCE" the value of HDB homes (public flats), will the Gahmen likewise allow the owners of HUDC/executive condos/ private apartments to "RETAIN" the value of their homes instead of continuing to let the market blatantly exploit this legislative-review lag time so as to unlock the value of our homes for the corporate Developer-Buyers??? All the more so when this unconscionable exploitation is facilitated by the laws passed by this same Gahmen in 1999!!!
The so-called "WINDFALL en bloc profit" will NOT enable us to get a new REPLACEMENT unit around the SAME VICINITY because the collective sales proceeds are typically 70-100% BELOW the replacement cost! [To get a replacement unit of equivalent age in the same vicinity is NOT VIABLE because either (a) all old units in the entire district are also under imminent en bloc threat or (b) there simply aren't any old units of equivalent age left standing any more!]
Already, so many of us have lost or will be losing our homes ... and are now or will soon become Squatters, Refugees, Downgraders and Downsizers. How many more CASUALTIES of Squatters, Refugees, Downgraders and Downsizers must we Singaporeans suffer before this Gahmen will act (especially since the Gahmen prides itself for being on-the-ball at all times)???
The Pariah is one sad Singaporean in 2007!
09 August 2007
10 July 2007
The Holey Trinity ... The show must go on!
Nope, you didn't read it wrong nor did I type it wrong ...
'tis The Holey Trinity and The Show Must Go On ... come what may!
[The Show Must Go On - Do you know who said this? No, my friend, Shakespeare didn't say this. Queen sang it. Not dear old Queen Lizzie, but Queen the rock band - they are both of English pedigree no less! For those of you who have been following this blog, you will have noticed that by now I have moved from classical Shakespeare to rock Queen ... that's Progress, eh?]
The Law says 80% (90%) majority consent. The Law also says No En Bloc if there is "financial loss" or if the "proceeds of sale are insufficient to redeem any mortgage or charge" or if there is lack of "good faith" based on specified factors. Let's call these Statutory Requirements.
Let's also ask some BURNING QUESTIONS:
- So is it ok to contract-out of such Statutory Requirements?
- If the Law says "XXX", but if we can contract-out of the law to say "YYY", does that make a mockery out of this law and good governance?
- If the Law says No En Bloc if there is "financial loss": Piece of cake, man ... if we can get contributions or top-ups to make good such "financial loss" ... WHOOSH - Abracadabra, issue became non-issue! Magical!
- If the Law says No En Bloc if you can't muster 80% (90%) share-value consent: Hmmm ... that's just a matter of "sesame seeds and green beans" as the Chinese would say (I'd have you know that these grains are itsy-bitsy teeny dots) ... if we are just short by a few votes, let's tip the balance from 75% to 80% by sussing-out what these Maybe'ers (and possibly Borderline Consenters or Borderline Dissenters) want. If it's just more $$$ and the like (so long as it is not the moon plus the stars with a dwarf planet thrown in as bonus), then we too can get contributions or top-ups or make special arrangements to meet the demands of these Maybe'ers and Borderliners ... To spice-up the game, let's play them off against one another and have some back-ups - if we need 5 more owners to vote yes, then we dangle the carrot to 7 owners and tell them that only the first 5 will qualify and watch them chase their own tails! And before you know it, TING - Jackpot, we've hit the lucky number of 80! So lucky! Ahh, but Lady Luck is known to be fickle and maybe vote-buying will be banned in future?
- So what's the difference between those cases of "Financial Loss" versus "Maybe'ers and Borderliners"? Once we bring it down to the baseline (indeed, en blocs can get very base) - Both categories involve a "SHORTFALL" - be it in dollar amount or numerical count! And both categories are essentially SWING VOTERS!
- Sure, the "Financial Loss" cases have a legal basis to scuttle the en bloc deal. But that doesn't necessarily mean the demands of the Maybe'ers and Borderliners are without validity or justification. Maybe they bought high at $1mn using hard cash and they are getting $1mn + $1 from the en bloc? Or maybe they have just completed their renovation overhaul with Swavaroski crystal-encrusted toilet bowls; surely you don't expect them to carry their toilet bowls when they relocate - but the proposed law to compensate for recent renovation is so measly that it's even more embarrassing than to lug your toilet bowl along! Or maybe they are just special people with extra-special monetary needs. "Greed is Good" - haven't you heard? Man, you do need to make a trip to Hollywood!
- Where there's a "SHORTFALL" in dollars - who should contribute towards this "SHORTFALL"? The Developer-Buyer (why not, if they die-die must buy this plot of land)? The marketing agent (after all, as mentioned below, they have the most at stake if the deal falls through)? The Sales Committee (since they are the most keen; otherwise, who in their right mind would undertake this thankless task)? The Consenters? Everybody (ie, even the Dissenters - just to rub salt into their wound)?
- This business of "contributions" to make good the
"SHORTFALL" in dollar amount which can also magically cure the "SHORTFALL" in number count is a grey area but maybe it's ok if we put down these contributions in black-and-white ... spell it out very clearly, get the good lawyer to craft an air-tight gag condition (cannot "kiss-and-tell") and the parties concerned sign it as a Private Treaty separate from the Collective Sale Agreement. We all know the meaning of "private" of course. But other than the direct beneficiaries of such Private Treaty, what is not too clear is who are "the parties concerned" - the self-appointed unregulated Sales Committee (all members or just the members with > 50% vote), the marketing agent, the Developer-Buyer, the Majority Owners, the Consenting Owners, all Owners ... any one else? Maybe "private" Private Treaty is like a bad dream?
- Ahhh, black-and-white mixed together is too grey for comfort ... maybe it's not so right because it is a Collective Sale after all and we also know the meaning of "collective" of course ... spell it out very clearly, but this time - it's "show-and-tell" and the parties concerned still sign it as a Private Treaty on top of the Collective Sale Agreement. You may know about it (but perhaps not all the fine details because they are still kind of "private") but whether you agree to it or not (explicitly or impliedly) is another matter. If you happen to be in the Minority Dissent group, your agreement is irrelevant although you are probably caught in this web - too bad!
- Hey, now we are less grey and we are more "transparent"! That's the buzz-word ... "Transparency"! Maybe that's why these new apartments at soft launches have all-glass facades everywhere - wonder if it's the spillover "transparency" effects from en bloc sales that infected the Developer-Buyers during redevelopment? But did you know that these days all you need to do is to flip a switch to fog-up the entire curtain of clear glass? Nothing steamy, of course, this is Singapore! Indeed, it's transparent but you can see only when we want to let you see. I'm talking about the glass of course - what were you thinking??? Even "public" Private Treaty is questionable unless we can get another round of 80% (90%) endorsement and merge it all into the CSA itself so that all of us can see it at all times perhaps?
- Have you studied the en bloc equation closely? Sorry, please go back one step - How many equations are there to start with? As it now stands, the Sales Committee (in future, likely the Majority Owners) get to pick and choose which equation (Apportionment Method) to use - depending on nothing more than their morals and scruples as long as it is "Fair and Equitable"! Great - "Fair and Equitable"! But to whom, may I ask? One man's meat is another man's poison, eh? It could based on share values only, strata title area only, market valuation, a hybrid combination of 50:50 or 60:40, etc. And what else is variable? The Reserve Price, of course, which in turn determines the number of "Financial Loss" cases and the quantum of each such case. What are fixed? Number of units, plot size, strata title areas, share values.
- Now, you can see why all Hell can break loose? Firstly, shouldn't there be only one equation based on mathematics and facts (not on anybody's discretion and scruples)? Secondly, wouldn't it be prudent to allow only one variable - ie, the Reserve Price? Thirdly, since it is a sale on a "collective" basis, shouldn't the pay-out be on identical basis (ie, the amounts can vary but the rate must be the same)? Except possibly where the "Financial Loss" cases are necessarily made good by the Developer-Buyer and subject to all of the additional safeguards suggested above because it is still contracting-out of the Statutory Requirements?
- Also, have you played this game where you are asked to spot the differences between two pictures:
Picture A - A Collective Sale based on 80% (90%) majority consent to one Developer-Buyer (or a consortium of Developer-Buyers) at/above the Reserve Price on one Completion Date, with each Owner sharing in the collective sale proceeds at an identical rate (ie, the rate must be identical but the amounts would vary, depending on strata title area, share value, market value, etc);
versus
Picture B - A series of Individual Sales of 100% of the units to one Developer-Buyer (or a consortium of Developer-Buyers) for a Cumulative Sum at about the same time or over a short time-span, with each Owner receiving their own sale proceeds at varying rates and amounts?
So, Collective Sale Agreement + private/public Private Treaty = Picture A or Picture B??? Rough, eh? When the going gets rough, the tough gets going! Yeh, keep scratching your head! You won't find the answer in this blog.
- What other unholy alliances could Developer-Buyers form? Proxies, married deals, upfront fees, call/put options ... only Imagination limits you, nothing else! Least of all, the Law even though the relationship of the Developer-Buyer to any of the Owners is one of the specific factors taken into account in establishing "good faith" in an en bloc sale. To draw an analogy - you can prove bigamy only if the subsequent marriage is registered and you also know that it is much harder to prove adultery and cohabitation if the parties involved are careful and smart and don't want you to ever find out, correct? How do you prove "kelong" and that the footballers could have played better than they did but didn't because they were paid NOT to score at that crucial match? Real estate in Singapore has become a trading commodity with speculative profiteering potential because our en bloc laws in fact facilitate it.
- You can buy a unit today for $1.5mn because it has the much-prized X Factor (ie, "en bloc potential"). Before the ink even dries on your sale and purchase agreement, you can initiate a fresh round of en bloc and vote yes-yes-yes. Never mind, the technicalities that the last en bloc round has just failed but the CSA is legally subsisting since the law accords 12 months to gather enough signatures and another 12 months to find a buyer and apply for Strata Title Boards' collective sales order. If you could force through another en bloc deal within, say, two months after your new purchase and pocket a $300k profit, you'd have made a return of 120% per annum - you've beaten Warren Buffett! Why you so clever, huh? But I thought I Not Stupid 2, leh? So what happened? Maybe unit owners of less than five year legal ownership status should be disqualified from en bloc vote (but they are still free to sell their units individually of course - unlike the HDB public flats with a Minimum Occupation Period ranging from 2.5 to 5 years before you can resell, depending on whether you enjoyed any subsidy/grant)?
- Who does the marketing agent work for in a collective sale? Is it just the Sales Committee or all the Owners (including Dissenters)? Commercially, marketing agents also need to assiduously cultivate and foster the goodwill and trust of the Developer-Buyers. Usually, Sellers (ie, Owners) want to get more $$$. Invariably, Buyers (ie, Developers) want to pay less $$$. Naturally divergent needs! Hence, the lot of the marketing agent is not enviable. If the en bloc deal fails because of "Financial Loss" cases or less than 80% (90%) consent, the marketing agent gets one zero - Nothing! In fact, in the case of failure, it's worse than zero because the marketing agent would have incurred costs and labour. If the marketing agent can structure a deal such that the parties contract-out of the Statutory Requirements, they get a minimum of 5 zeroes after the first digit - Wow! By now, you can tell which way the wind is blowing the poor-rich marketing agent towards, right? Maybe the marketing agent should be paid regardless of the en bloc end-result? Who should pay - the Sales Committee members and the Consenters of course! Doesn't it blow your mind that at present the Dissenters have to pay the marketing agent when the Dissenters resent being forced to sell from the word "go"?
- Who does the lawyer work for in a collective sale? Is it just the Sales Committee or all the Owners (including Dissenters)? Realistically, lawyers also need the goodwill and trust of the marketing agents because quite often they are brought into the en bloc picture by no other than the marketing agent. The lot of the lawyer is not much better than the marketing agent if the en bloc deal fails. If the en bloc deal is plain sailing, the lawyer typically gets one zero less than the marketing agent. Doesn't it raise already-arched eyebrows if the marketing agent and the law firm tie-up with each other to offer a bundled package? Does it then translate into the marketing agent effectively appointing the law firm to act for the Owners who are paying the legal fees (whether as a package price or as a separate bill)? As the legal documentation is so crucial in setting out the rights and obligations of the Owners (Consenters and Dissenters), isn't it odd that - most times - even the Sales Committee members (much less the Owners) are not given a choice of law firms? Maybe in future when the Sales Committee is to be appointed at an EOGM, the marketing agent should invite more than one law firm to present their credentials and to hear first-hand the key concerns and issues raised by the attendees at the meeting?
- Who is structuring and who is drafting these Private Treaties to contract-out of Statutory Requirements - be it private "no-kissing-and-no-telling" or public "showing-and-telling"? Who would know if there are any remote unholy alliances? Perhaps, blasphemy needs black-and-white documentation even more! In this day and age, when even the holy can sometimes fail you, can you trust the unholy or, for that matter, the holey? Maybe we can get signed declarations from the marketing agent (signed by a representative of that company who is an accredited member of The Singapore Institute of Surveyors and Valuers) and the two lawyers representing the Developer-Buyer and the Owners that - to the best of their knowledge - there are no Private Treaties (private or public) or brokered deals that supplement, complement or facilitate the CSA.
En bloc deals are certainly not made in Heaven when it involves The Holey Trinity of Black, White and Essential Grey!
[PS: I was tickled to read in Today newspaper (18 July 2007 edition) that when our local indie film-maker, Ms Tan Pin Pin, was asked what were some of the new perspectives she gained after her studies in England, she said: "... the idea that public debate doesn’t cause a country to just collapse!"
'tis The Holey Trinity and The Show Must Go On ... come what may!
[The Show Must Go On - Do you know who said this? No, my friend, Shakespeare didn't say this. Queen sang it. Not dear old Queen Lizzie, but Queen the rock band - they are both of English pedigree no less! For those of you who have been following this blog, you will have noticed that by now I have moved from classical Shakespeare to rock Queen ... that's Progress, eh?]
The Law says 80% (90%) majority consent. The Law also says No En Bloc if there is "financial loss" or if the "proceeds of sale are insufficient to redeem any mortgage or charge" or if there is lack of "good faith" based on specified factors. Let's call these Statutory Requirements.
Let's also ask some BURNING QUESTIONS:
- So is it ok to contract-out of such Statutory Requirements?
- If the Law says "XXX", but if we can contract-out of the law to say "YYY", does that make a mockery out of this law and good governance?
- If the Law says No En Bloc if there is "financial loss": Piece of cake, man ... if we can get contributions or top-ups to make good such "financial loss" ... WHOOSH - Abracadabra, issue became non-issue! Magical!
- If the Law says No En Bloc if you can't muster 80% (90%) share-value consent: Hmmm ... that's just a matter of "sesame seeds and green beans" as the Chinese would say (I'd have you know that these grains are itsy-bitsy teeny dots) ... if we are just short by a few votes, let's tip the balance from 75% to 80% by sussing-out what these Maybe'ers (and possibly Borderline Consenters or Borderline Dissenters) want. If it's just more $$$ and the like (so long as it is not the moon plus the stars with a dwarf planet thrown in as bonus), then we too can get contributions or top-ups or make special arrangements to meet the demands of these Maybe'ers and Borderliners ... To spice-up the game, let's play them off against one another and have some back-ups - if we need 5 more owners to vote yes, then we dangle the carrot to 7 owners and tell them that only the first 5 will qualify and watch them chase their own tails! And before you know it, TING - Jackpot, we've hit the lucky number of 80! So lucky! Ahh, but Lady Luck is known to be fickle and maybe vote-buying will be banned in future?
- So what's the difference between those cases of "Financial Loss" versus "Maybe'ers and Borderliners"? Once we bring it down to the baseline (indeed, en blocs can get very base) - Both categories involve a "SHORTFALL" - be it in dollar amount or numerical count! And both categories are essentially SWING VOTERS!
- Sure, the "Financial Loss" cases have a legal basis to scuttle the en bloc deal. But that doesn't necessarily mean the demands of the Maybe'ers and Borderliners are without validity or justification. Maybe they bought high at $1mn using hard cash and they are getting $1mn + $1 from the en bloc? Or maybe they have just completed their renovation overhaul with Swavaroski crystal-encrusted toilet bowls; surely you don't expect them to carry their toilet bowls when they relocate - but the proposed law to compensate for recent renovation is so measly that it's even more embarrassing than to lug your toilet bowl along! Or maybe they are just special people with extra-special monetary needs. "Greed is Good" - haven't you heard? Man, you do need to make a trip to Hollywood!
- Where there's a "SHORTFALL" in dollars - who should contribute towards this "SHORTFALL"? The Developer-Buyer (why not, if they die-die must buy this plot of land)? The marketing agent (after all, as mentioned below, they have the most at stake if the deal falls through)? The Sales Committee (since they are the most keen; otherwise, who in their right mind would undertake this thankless task)? The Consenters? Everybody (ie, even the Dissenters - just to rub salt into their wound)?
- This business of "contributions" to make good the
"SHORTFALL" in dollar amount which can also magically cure the "SHORTFALL" in number count is a grey area but maybe it's ok if we put down these contributions in black-and-white ... spell it out very clearly, get the good lawyer to craft an air-tight gag condition (cannot "kiss-and-tell") and the parties concerned sign it as a Private Treaty separate from the Collective Sale Agreement. We all know the meaning of "private" of course. But other than the direct beneficiaries of such Private Treaty, what is not too clear is who are "the parties concerned" - the self-appointed unregulated Sales Committee (all members or just the members with > 50% vote), the marketing agent, the Developer-Buyer, the Majority Owners, the Consenting Owners, all Owners ... any one else? Maybe "private" Private Treaty is like a bad dream?
- Ahhh, black-and-white mixed together is too grey for comfort ... maybe it's not so right because it is a Collective Sale after all and we also know the meaning of "collective" of course ... spell it out very clearly, but this time - it's "show-and-tell" and the parties concerned still sign it as a Private Treaty on top of the Collective Sale Agreement. You may know about it (but perhaps not all the fine details because they are still kind of "private") but whether you agree to it or not (explicitly or impliedly) is another matter. If you happen to be in the Minority Dissent group, your agreement is irrelevant although you are probably caught in this web - too bad!
- Hey, now we are less grey and we are more "transparent"! That's the buzz-word ... "Transparency"! Maybe that's why these new apartments at soft launches have all-glass facades everywhere - wonder if it's the spillover "transparency" effects from en bloc sales that infected the Developer-Buyers during redevelopment? But did you know that these days all you need to do is to flip a switch to fog-up the entire curtain of clear glass? Nothing steamy, of course, this is Singapore! Indeed, it's transparent but you can see only when we want to let you see. I'm talking about the glass of course - what were you thinking??? Even "public" Private Treaty is questionable unless we can get another round of 80% (90%) endorsement and merge it all into the CSA itself so that all of us can see it at all times perhaps?
- Have you studied the en bloc equation closely? Sorry, please go back one step - How many equations are there to start with? As it now stands, the Sales Committee (in future, likely the Majority Owners) get to pick and choose which equation (Apportionment Method) to use - depending on nothing more than their morals and scruples as long as it is "Fair and Equitable"! Great - "Fair and Equitable"! But to whom, may I ask? One man's meat is another man's poison, eh? It could based on share values only, strata title area only, market valuation, a hybrid combination of 50:50 or 60:40, etc. And what else is variable? The Reserve Price, of course, which in turn determines the number of "Financial Loss" cases and the quantum of each such case. What are fixed? Number of units, plot size, strata title areas, share values.
- Now, you can see why all Hell can break loose? Firstly, shouldn't there be only one equation based on mathematics and facts (not on anybody's discretion and scruples)? Secondly, wouldn't it be prudent to allow only one variable - ie, the Reserve Price? Thirdly, since it is a sale on a "collective" basis, shouldn't the pay-out be on identical basis (ie, the amounts can vary but the rate must be the same)? Except possibly where the "Financial Loss" cases are necessarily made good by the Developer-Buyer and subject to all of the additional safeguards suggested above because it is still contracting-out of the Statutory Requirements?
- Also, have you played this game where you are asked to spot the differences between two pictures:
Picture A - A Collective Sale based on 80% (90%) majority consent to one Developer-Buyer (or a consortium of Developer-Buyers) at/above the Reserve Price on one Completion Date, with each Owner sharing in the collective sale proceeds at an identical rate (ie, the rate must be identical but the amounts would vary, depending on strata title area, share value, market value, etc);
versus
Picture B - A series of Individual Sales of 100% of the units to one Developer-Buyer (or a consortium of Developer-Buyers) for a Cumulative Sum at about the same time or over a short time-span, with each Owner receiving their own sale proceeds at varying rates and amounts?
So, Collective Sale Agreement + private/public Private Treaty = Picture A or Picture B??? Rough, eh? When the going gets rough, the tough gets going! Yeh, keep scratching your head! You won't find the answer in this blog.
- What other unholy alliances could Developer-Buyers form? Proxies, married deals, upfront fees, call/put options ... only Imagination limits you, nothing else! Least of all, the Law even though the relationship of the Developer-Buyer to any of the Owners is one of the specific factors taken into account in establishing "good faith" in an en bloc sale. To draw an analogy - you can prove bigamy only if the subsequent marriage is registered and you also know that it is much harder to prove adultery and cohabitation if the parties involved are careful and smart and don't want you to ever find out, correct? How do you prove "kelong" and that the footballers could have played better than they did but didn't because they were paid NOT to score at that crucial match? Real estate in Singapore has become a trading commodity with speculative profiteering potential because our en bloc laws in fact facilitate it.
- You can buy a unit today for $1.5mn because it has the much-prized X Factor (ie, "en bloc potential"). Before the ink even dries on your sale and purchase agreement, you can initiate a fresh round of en bloc and vote yes-yes-yes. Never mind, the technicalities that the last en bloc round has just failed but the CSA is legally subsisting since the law accords 12 months to gather enough signatures and another 12 months to find a buyer and apply for Strata Title Boards' collective sales order. If you could force through another en bloc deal within, say, two months after your new purchase and pocket a $300k profit, you'd have made a return of 120% per annum - you've beaten Warren Buffett! Why you so clever, huh? But I thought I Not Stupid 2, leh? So what happened? Maybe unit owners of less than five year legal ownership status should be disqualified from en bloc vote (but they are still free to sell their units individually of course - unlike the HDB public flats with a Minimum Occupation Period ranging from 2.5 to 5 years before you can resell, depending on whether you enjoyed any subsidy/grant)?
- Who does the marketing agent work for in a collective sale? Is it just the Sales Committee or all the Owners (including Dissenters)? Commercially, marketing agents also need to assiduously cultivate and foster the goodwill and trust of the Developer-Buyers. Usually, Sellers (ie, Owners) want to get more $$$. Invariably, Buyers (ie, Developers) want to pay less $$$. Naturally divergent needs! Hence, the lot of the marketing agent is not enviable. If the en bloc deal fails because of "Financial Loss" cases or less than 80% (90%) consent, the marketing agent gets one zero - Nothing! In fact, in the case of failure, it's worse than zero because the marketing agent would have incurred costs and labour. If the marketing agent can structure a deal such that the parties contract-out of the Statutory Requirements, they get a minimum of 5 zeroes after the first digit - Wow! By now, you can tell which way the wind is blowing the poor-rich marketing agent towards, right? Maybe the marketing agent should be paid regardless of the en bloc end-result? Who should pay - the Sales Committee members and the Consenters of course! Doesn't it blow your mind that at present the Dissenters have to pay the marketing agent when the Dissenters resent being forced to sell from the word "go"?
- Who does the lawyer work for in a collective sale? Is it just the Sales Committee or all the Owners (including Dissenters)? Realistically, lawyers also need the goodwill and trust of the marketing agents because quite often they are brought into the en bloc picture by no other than the marketing agent. The lot of the lawyer is not much better than the marketing agent if the en bloc deal fails. If the en bloc deal is plain sailing, the lawyer typically gets one zero less than the marketing agent. Doesn't it raise already-arched eyebrows if the marketing agent and the law firm tie-up with each other to offer a bundled package? Does it then translate into the marketing agent effectively appointing the law firm to act for the Owners who are paying the legal fees (whether as a package price or as a separate bill)? As the legal documentation is so crucial in setting out the rights and obligations of the Owners (Consenters and Dissenters), isn't it odd that - most times - even the Sales Committee members (much less the Owners) are not given a choice of law firms? Maybe in future when the Sales Committee is to be appointed at an EOGM, the marketing agent should invite more than one law firm to present their credentials and to hear first-hand the key concerns and issues raised by the attendees at the meeting?
- Who is structuring and who is drafting these Private Treaties to contract-out of Statutory Requirements - be it private "no-kissing-and-no-telling" or public "showing-and-telling"? Who would know if there are any remote unholy alliances? Perhaps, blasphemy needs black-and-white documentation even more! In this day and age, when even the holy can sometimes fail you, can you trust the unholy or, for that matter, the holey? Maybe we can get signed declarations from the marketing agent (signed by a representative of that company who is an accredited member of The Singapore Institute of Surveyors and Valuers) and the two lawyers representing the Developer-Buyer and the Owners that - to the best of their knowledge - there are no Private Treaties (private or public) or brokered deals that supplement, complement or facilitate the CSA.
En bloc deals are certainly not made in Heaven when it involves The Holey Trinity of Black, White and Essential Grey!
[PS: I was tickled to read in Today newspaper (18 July 2007 edition) that when our local indie film-maker, Ms Tan Pin Pin, was asked what were some of the new perspectives she gained after her studies in England, she said: "... the idea that public debate doesn’t cause a country to just collapse!"
29 May 2007
In between ... evolving a "Bagel Class" of Singaporeans
Update on 7 Jun 2007:
As Shakespeare said: "Life is a stage ...".
From the time the Ministry of Law announced in March 2007 about the upcoming legislative review of the Land Titles (Strata) Act and the commencement of MinLaw's Public Consultation in April 2007, it was interesting to observe various en bloc happenings and the evolution of "The Bagel Class" of Singaporeans:
ACT 1 - Super-duper rush by various Sales Committees in a last-pitch push of hasty deals as if Apocalypse Now + Armageddon combined will soon be descending upon us!
ACT 2 - Vibrant cyber chatter even in official REACH Forum and AsiaOne Forum, fostering valiant active citizenry efforts by Owner-Occupiers who are facing or are being threatened with enforced en bloc sales in various parts of Singapore [do scroll down and click on the links to their blogs that I have created on the right-hand side of this blog-page].
ACT 3 - Journalistic integrity courageously manifested by the Today newspaper who took the lead to give voice to the Dissenters as part of balanced reporting to counter the hyped-up rah-rah of en bloc windfall! [Look out for The Straits Times' article (finally) on en bloc dissent tomorrow, 30 May, and followed up with another ST special report on 16 June 2007.]
ACT 4 - Anarchy finally hit Singapore with the latest fiasco of Watten Estate having two Sales Committees, each with their own marketing agent and lawyer - a scoop reported by The New Paper!
ACT 5 - PAP's INconsistency in fostering a "sense of community" as part of our nationhood in HDB estates versus private residential estates. Are Singaporean owners of private residential apartments 2nd class citizens in a way?
Compare this SCENE (i): At the completion of HDB Selective En Bloc Scheme (Sers) for Sembawang, Minister Khaw Boon Wan said that it is important "to try to keep the community intact" and "ensure that even as we modernise, we make sure that we don't unsettle the population" (Today, 4 June 2007).
Contrast this SCENE (ii): At the parliamentary sitting on 22 May 2007, Opposition MP Mr Chiam See Tong asked if the Gahmen could incorporate a provision into the law to enable SOME owners to exchange one-for-one in the same en bloc site. However, Senior Minister for State (Ministry of Law) Ass Prof Ho Peng Kee replied that "this is one area where we should leave it to the owners to decide, because not ALL owners may want a replacement flat. Different people have different considerations. But I know on the ground that owners who want a replacement, in fact, negotiate with the developers who are buying the property. This has happened in some of the developments. So, let the owners negotiate with the developers and get a deal that suits them".
Perhaps the good Senior Minister for State couldn't follow the thrust of Opposition MP's question which suggests a mandatory "OPTION" for SOME (not ALL) owners to select, knowing that their selection would then have the full force of legal protection to cap their multitude of key exchange risks. This is NOT (i) mandating it for ALL owners or (ii) leaving owners (especially Owner-Occupiers) in a lurch in a dog-eat-dog market infested by Developers who must account $$$ bottomline to shareholders and Investor-Owners who see quick $$$ or (iii) saddling en bloc exchange owners with very serious risks if the Developer-Buyer fails.
Ahhh ... maybe the good minister is NOT close enough to the ground to realise that exchange negotiation is either NOT on a level playing field OR NOT even entertained by the Buyer-Developer/Sales Committee/Majority Owners (A) if the 80% (90%) consent is likely to be hit or (B) if distribution of collective sales proceeds is to the obvious advantage of Majority Owners who reckon that the Developer-Buyer would reduce the price for the cash option if an exchange option is bundled with the en bloc deal or (C) if incremental development/profit potential is limited in certain sites due to small size land plots, new building height restrictions which may be lowered by the planning authorities or already maxed-out Gross Plot Ratio or additional pay-outs arising from Development Charge/development baseline issues, land premium for lease top-ups, etc. In the face of all these risks and challenges that seem to be blithely ignored by the Ministry of Law in giving this type of reply, surely the PAP must realise that it will be that much harder to move back to the same community space after an en bloc and thus preserve that "sense of community".
ACT 6 - Deja vu all over again when former NMP, Mr Shriniwas Rai, suggested in ST Forum that yet another Select Committee be formed to review the findings of MinLaw’s Public Consultation - Geez!
JUSTICE DELAYED IS JUSTICE DENIED.
In 1998/1999, NMP Shriniwas Rai spoke in support of this law and the present law came into being only after going through a time-consuming Select Committee process. Nonetheless, we ended up with the present law that has facilitated outright exploitation and unscrupulous behaviour.
INTERMISSION (go grab a coffee or a whiskey!) ...
I’d urge MinLaw to expedite review of the present law and gazette it as soon as possible to address the woes of the evolving "Bagel Class" of Singaporeans and prevent further anarchy and stop the blatant exploitation/short-change running into possibly six figures!!! SEE THE 30 MAY 2007 UPDATE IN MY OTHER COMMENTS UNDER "SHARE VALUES; SALES COMMITTEE".
Previously, the Government concocted HUDC and Executive Condominiums to cater for the “Sandwich Class” of Singaporeans who did not qualify for HDB flats but who could not afford private property.
Now, we have a “Bagel Class” of Singaporeans because collective sales of private property with freehold air-space entitlement based on 80% (or 90%) consensus are forcing dissenters to sell and consequently become a Squatter, Refugee, Downgrader or Downsizer. Like a bagel sliced along the circumference with a hole in the centre on both halves, Singaporeans are whacked with two holes:
1st Hole: Singaporeans are pushed out by foreigners (the really rich ones, not the so-called "foreign talent" employed on local terms) from the prime/central districts to the suburbs.
2nd Hole: Otherwise, Singaporeans have to make a yet bigger hole in our CPF/private savings to buy an equivalent replacement (ie, private strata-title property) where the price of disposal and the time of liquidation are both beyond the control of the CPF member (this makes it a Uniquely Singapore asset class!).
Can (and will) the Government redress the needs of this "Bagel Class" of Singaporeans in 2007 following the 1999 amendment of the Land Titles (Strata) Act? Following on from the predicament of the "Bagel Class" in the prime residential districts, the "Sandwich Class" of HUDCers/Exec Condoers is also finding out that they now need to revert to the "Roti Kaya Class"(bread with coconut jam) of HDBers where the heartlander ground is kept necessarily sweet but chocked-a-block with saturated fat from the very "shiok" (yummy) coconut milk that is not very good for the Heart! A happy "Roti Kahwin" (bread with a marriage fusion of butter + coconut jam) it does not make when the ex-HUDCers/Exec Condoers start competing with the Real McCoy Heartlanders for HDB public flats! Errr ... The Government Governs!
ACT 7 - Yeehah ... in gallops the dark horse with a cart trailing behind when during an interview about en bloc sales (Sunday Times, 17 June 2007), Minister for National Development Mah Bow Tan advocated that Singaporeans should downgrade. He said: "If you can't buy an executive flat, buy a 5-room. If you can't afford central area, go to the suburbs. If you can't afford Tampines, go to Woodlands or Yishun." Ahem ... I thought the Gahmen has been goading us Singaporeans to be No. 1 in this and that, feeding into our aspirations of Up, Up and Away ...
Minister Mah did not say what happens if you can't afford Woodlands or Yishun. However, Minister for Health Khaw Boon Wan did say on Channel News Asia on 17 April 2006 (14 months ago to the day): "My personal view is, our land is expensive. But we have nearby neighbours in Johore, Batam and Bintan. The elderly want to reach their doctors within half to one hour. So retirement villages in neighbouring countries is possible, barring the cross-border hassle. It is best to find cheap land on short leases." ... now, I'm beginning to see where the "Up, Up and Away" is leading us to - 7th Heaven no doubt!
Tsk, tsk ... except that there are some knotty kinks in this scene:
(a) To live outside of Woodlands or Yishun in a retirement home in Johore, Batam and Bintan, you first have to be "retired".
(b) You may still be of active working age at the point of a successful en bloc - So how? UPGRADE your skills but DOWNGRADE your lifestyle??? Kind of sucks, doesn't it?
(c) You may already be of retirement age at the point of a successful en bloc except that they keep pushing official retirement to a later age and even if you are so "heng" (Chinese dialect for "lucky") to hit that magic number, you need to keep working to qualify for more of the "national goodies" that they strategically time in handing-out - Then how? Work till you drop dead, ugh? And if you must get sick before dropping dead, don't stay too sick for too long ... you know lah, your en bloc windfall Fixed Deposit won't last forever and now that you are left with a flat in Woodlands or Yishun (as helpfully suggested by Minister Mah), it ain't gonna worth much!
(d) Oooops ... after galloping a few rounds, Minister Mah FAILED to notice why the cart is now suddenly before the "Ma" (Mandarin for "horse") - If they didn't force you into an en bloc in the first place, you wouldn't be in this unenviable position of not being able to afford "an executive flat, or in central area, or in Tampines" as mentioned by Minister Mah after putting the much-vaunted en bloc windfall in the cart - Neigh, neigh ... that's why horses say "Nay" although one may say "Aye"!
(e) Hey ... wait, our dear Minister did explain (quite rightly too) that "the fundamental reason behind an en bloc redevelopment is really to make sure that older parts of Singapore have a chance to be rejuvenated and redevelop themselves" and "if we don't have this, we are going to have a static situation where things are going to run down and there is no opportunity for people to naturally redevelop". [APPLAUSE please for Minister Mah who should take a Bow ...]. People, that's why we do en blocs - NOT for your own windfall at the expense of others but for the country ... Yeh! See, I told you so - SEE MY OTHER COMMENTS UNDER "MAJORITY versus MINORITY versus INDIVIDUAL" IN THIS BLOG-SITE. EXCEPT that our dear Minister also solemnly pronounced that "these people" in the central area "can take care of themselves". Excuse me, sir ... "these people" are also "your people" and they were also forced to sacrifice their homes FOR THE COUNTRY for, say, a grand sum of $2mn (increased to $2.5mn in July 2007) only to pay a more princely ransom of $3.75mn (increased to $4.5mn in July 2007) in replacement! Unless you are of ministerial calibre, I dare say that not many of "these people" earn $1.75mn (differential widened to $2mn in July 2007) in a year (or even five years) - in reality, "these people" are not that bright (and understandably, therefore, not that well-paid) to fork out a huge premium for "freehold air space" in the first place!
(f) Errr ... except that what does our dear Minister mean by "older parts of Singapore"? How "old" is old when the present law allows en bloc from Day 1 of Temporary Occupation Permit based on 90% consent which drops to 80% when the estate is 10 years old??? I may be wrong but I reckon there's a Bell Curve to the age profile of our en bloc blocks - after discounting the extreme ends of the Bell Curve, I guestimate that the likely age of apartments in this 2006-07 en bloc frenzy is in the range of 15-25 years. In this age of throw-away consumerism (never mind about the irksome issue of environmental sustainability), perhaps "15-25 years old" is terribly old for a building, eh?
SAGA TO BE CONTINUED ... The FINALE is "akan datang" (coming soon) when the legislative amendment is finally gazetted as law (process is likely to start in Sep, go through three parliamentary readings, home run by Dec perhaps)? Will it be a limp squid? Will good triumph over evil? Will the hero get the girl? Will those wailing now go home with less tears? Will those guffawing now go home more sobered?
After the curtain falls, will we move together as a more inclusive people? Or do we each go off in splinter directions, our disillusion reinforced that we are truly staying at "Hotel Singapore Inc", forever in transit as "A Nation of Immigrants, Migrants and Emigrants" except that we are now into the Third Wing?
[Immigrants as we continue to harbour the mindset of our Ancient Immigrant Forefathers.]
[Migrants as we now live amongst New Migrant Neighbours who do NOT share our Modern Singapore History, distinctly choosing to retain their native citizenship even after milking the perks of Singapore PR status for decades (our Ministry of Home Affairs hasn't caught on to the idea that Permanent Residence could potentially embed an expiry - no doubt, giving up one's native citizenship is a momentous decision but surely one needs to "commit" at some point after sponging on PR benefits and tasting for 7 years what life in Singapore is really like - I'm suggesting 7 years because of the "7-year Itch Syndrome" - shouldn't we separate wheat from chaff with an oxymoron "Temporary Permanent Resident" or would the Truth cut too deep for this Gahmen to publicly acknowledge that pathetically few PRs take up citizenship?).]
[Emigrants as we are losing Old Emigrant Friends who are increasingly moving to other shores not necessarily greener but definitely more edgy or gracious than ours.]
Without diminishing the other hard-nosed and technical issues raised in this blog ... May I also ask if there are still some things left in this world that money can't buy? Have we hit the stage where we know the Price of Everything but the Value of None? Sigh ...
As Shakespeare said: "Life is a stage ...".
From the time the Ministry of Law announced in March 2007 about the upcoming legislative review of the Land Titles (Strata) Act and the commencement of MinLaw's Public Consultation in April 2007, it was interesting to observe various en bloc happenings and the evolution of "The Bagel Class" of Singaporeans:
ACT 1 - Super-duper rush by various Sales Committees in a last-pitch push of hasty deals as if Apocalypse Now + Armageddon combined will soon be descending upon us!
ACT 2 - Vibrant cyber chatter even in official REACH Forum and AsiaOne Forum, fostering valiant active citizenry efforts by Owner-Occupiers who are facing or are being threatened with enforced en bloc sales in various parts of Singapore [do scroll down and click on the links to their blogs that I have created on the right-hand side of this blog-page].
ACT 3 - Journalistic integrity courageously manifested by the Today newspaper who took the lead to give voice to the Dissenters as part of balanced reporting to counter the hyped-up rah-rah of en bloc windfall! [Look out for The Straits Times' article (finally) on en bloc dissent tomorrow, 30 May, and followed up with another ST special report on 16 June 2007.]
ACT 4 - Anarchy finally hit Singapore with the latest fiasco of Watten Estate having two Sales Committees, each with their own marketing agent and lawyer - a scoop reported by The New Paper!
ACT 5 - PAP's INconsistency in fostering a "sense of community" as part of our nationhood in HDB estates versus private residential estates. Are Singaporean owners of private residential apartments 2nd class citizens in a way?
Compare this SCENE (i): At the completion of HDB Selective En Bloc Scheme (Sers) for Sembawang, Minister Khaw Boon Wan said that it is important "to try to keep the community intact" and "ensure that even as we modernise, we make sure that we don't unsettle the population" (Today, 4 June 2007).
Contrast this SCENE (ii): At the parliamentary sitting on 22 May 2007, Opposition MP Mr Chiam See Tong asked if the Gahmen could incorporate a provision into the law to enable SOME owners to exchange one-for-one in the same en bloc site. However, Senior Minister for State (Ministry of Law) Ass Prof Ho Peng Kee replied that "this is one area where we should leave it to the owners to decide, because not ALL owners may want a replacement flat. Different people have different considerations. But I know on the ground that owners who want a replacement, in fact, negotiate with the developers who are buying the property. This has happened in some of the developments. So, let the owners negotiate with the developers and get a deal that suits them".
Perhaps the good Senior Minister for State couldn't follow the thrust of Opposition MP's question which suggests a mandatory "OPTION" for SOME (not ALL) owners to select, knowing that their selection would then have the full force of legal protection to cap their multitude of key exchange risks. This is NOT (i) mandating it for ALL owners or (ii) leaving owners (especially Owner-Occupiers) in a lurch in a dog-eat-dog market infested by Developers who must account $$$ bottomline to shareholders and Investor-Owners who see quick $$$ or (iii) saddling en bloc exchange owners with very serious risks if the Developer-Buyer fails.
Ahhh ... maybe the good minister is NOT close enough to the ground to realise that exchange negotiation is either NOT on a level playing field OR NOT even entertained by the Buyer-Developer/Sales Committee/Majority Owners (A) if the 80% (90%) consent is likely to be hit or (B) if distribution of collective sales proceeds is to the obvious advantage of Majority Owners who reckon that the Developer-Buyer would reduce the price for the cash option if an exchange option is bundled with the en bloc deal or (C) if incremental development/profit potential is limited in certain sites due to small size land plots, new building height restrictions which may be lowered by the planning authorities or already maxed-out Gross Plot Ratio or additional pay-outs arising from Development Charge/development baseline issues, land premium for lease top-ups, etc. In the face of all these risks and challenges that seem to be blithely ignored by the Ministry of Law in giving this type of reply, surely the PAP must realise that it will be that much harder to move back to the same community space after an en bloc and thus preserve that "sense of community".
ACT 6 - Deja vu all over again when former NMP, Mr Shriniwas Rai, suggested in ST Forum that yet another Select Committee be formed to review the findings of MinLaw’s Public Consultation - Geez!
JUSTICE DELAYED IS JUSTICE DENIED.
In 1998/1999, NMP Shriniwas Rai spoke in support of this law and the present law came into being only after going through a time-consuming Select Committee process. Nonetheless, we ended up with the present law that has facilitated outright exploitation and unscrupulous behaviour.
INTERMISSION (go grab a coffee or a whiskey!) ...
I’d urge MinLaw to expedite review of the present law and gazette it as soon as possible to address the woes of the evolving "Bagel Class" of Singaporeans and prevent further anarchy and stop the blatant exploitation/short-change running into possibly six figures!!! SEE THE 30 MAY 2007 UPDATE IN MY OTHER COMMENTS UNDER "SHARE VALUES; SALES COMMITTEE".
Previously, the Government concocted HUDC and Executive Condominiums to cater for the “Sandwich Class” of Singaporeans who did not qualify for HDB flats but who could not afford private property.
Now, we have a “Bagel Class” of Singaporeans because collective sales of private property with freehold air-space entitlement based on 80% (or 90%) consensus are forcing dissenters to sell and consequently become a Squatter, Refugee, Downgrader or Downsizer. Like a bagel sliced along the circumference with a hole in the centre on both halves, Singaporeans are whacked with two holes:
1st Hole: Singaporeans are pushed out by foreigners (the really rich ones, not the so-called "foreign talent" employed on local terms) from the prime/central districts to the suburbs.
2nd Hole: Otherwise, Singaporeans have to make a yet bigger hole in our CPF/private savings to buy an equivalent replacement (ie, private strata-title property) where the price of disposal and the time of liquidation are both beyond the control of the CPF member (this makes it a Uniquely Singapore asset class!).
Can (and will) the Government redress the needs of this "Bagel Class" of Singaporeans in 2007 following the 1999 amendment of the Land Titles (Strata) Act? Following on from the predicament of the "Bagel Class" in the prime residential districts, the "Sandwich Class" of HUDCers/Exec Condoers is also finding out that they now need to revert to the "Roti Kaya Class"(bread with coconut jam) of HDBers where the heartlander ground is kept necessarily sweet but chocked-a-block with saturated fat from the very "shiok" (yummy) coconut milk that is not very good for the Heart! A happy "Roti Kahwin" (bread with a marriage fusion of butter + coconut jam) it does not make when the ex-HUDCers/Exec Condoers start competing with the Real McCoy Heartlanders for HDB public flats! Errr ... The Government Governs!
ACT 7 - Yeehah ... in gallops the dark horse with a cart trailing behind when during an interview about en bloc sales (Sunday Times, 17 June 2007), Minister for National Development Mah Bow Tan advocated that Singaporeans should downgrade. He said: "If you can't buy an executive flat, buy a 5-room. If you can't afford central area, go to the suburbs. If you can't afford Tampines, go to Woodlands or Yishun." Ahem ... I thought the Gahmen has been goading us Singaporeans to be No. 1 in this and that, feeding into our aspirations of Up, Up and Away ...
Minister Mah did not say what happens if you can't afford Woodlands or Yishun. However, Minister for Health Khaw Boon Wan did say on Channel News Asia on 17 April 2006 (14 months ago to the day): "My personal view is, our land is expensive. But we have nearby neighbours in Johore, Batam and Bintan. The elderly want to reach their doctors within half to one hour. So retirement villages in neighbouring countries is possible, barring the cross-border hassle. It is best to find cheap land on short leases." ... now, I'm beginning to see where the "Up, Up and Away" is leading us to - 7th Heaven no doubt!
Tsk, tsk ... except that there are some knotty kinks in this scene:
(a) To live outside of Woodlands or Yishun in a retirement home in Johore, Batam and Bintan, you first have to be "retired".
(b) You may still be of active working age at the point of a successful en bloc - So how? UPGRADE your skills but DOWNGRADE your lifestyle??? Kind of sucks, doesn't it?
(c) You may already be of retirement age at the point of a successful en bloc except that they keep pushing official retirement to a later age and even if you are so "heng" (Chinese dialect for "lucky") to hit that magic number, you need to keep working to qualify for more of the "national goodies" that they strategically time in handing-out - Then how? Work till you drop dead, ugh? And if you must get sick before dropping dead, don't stay too sick for too long ... you know lah, your en bloc windfall Fixed Deposit won't last forever and now that you are left with a flat in Woodlands or Yishun (as helpfully suggested by Minister Mah), it ain't gonna worth much!
(d) Oooops ... after galloping a few rounds, Minister Mah FAILED to notice why the cart is now suddenly before the "Ma" (Mandarin for "horse") - If they didn't force you into an en bloc in the first place, you wouldn't be in this unenviable position of not being able to afford "an executive flat, or in central area, or in Tampines" as mentioned by Minister Mah after putting the much-vaunted en bloc windfall in the cart - Neigh, neigh ... that's why horses say "Nay" although one may say "Aye"!
(e) Hey ... wait, our dear Minister did explain (quite rightly too) that "the fundamental reason behind an en bloc redevelopment is really to make sure that older parts of Singapore have a chance to be rejuvenated and redevelop themselves" and "if we don't have this, we are going to have a static situation where things are going to run down and there is no opportunity for people to naturally redevelop". [APPLAUSE please for Minister Mah who should take a Bow ...]. People, that's why we do en blocs - NOT for your own windfall at the expense of others but for the country ... Yeh! See, I told you so - SEE MY OTHER COMMENTS UNDER "MAJORITY versus MINORITY versus INDIVIDUAL" IN THIS BLOG-SITE. EXCEPT that our dear Minister also solemnly pronounced that "these people" in the central area "can take care of themselves". Excuse me, sir ... "these people" are also "your people" and they were also forced to sacrifice their homes FOR THE COUNTRY for, say, a grand sum of $2mn (increased to $2.5mn in July 2007) only to pay a more princely ransom of $3.75mn (increased to $4.5mn in July 2007) in replacement! Unless you are of ministerial calibre, I dare say that not many of "these people" earn $1.75mn (differential widened to $2mn in July 2007) in a year (or even five years) - in reality, "these people" are not that bright (and understandably, therefore, not that well-paid) to fork out a huge premium for "freehold air space" in the first place!
(f) Errr ... except that what does our dear Minister mean by "older parts of Singapore"? How "old" is old when the present law allows en bloc from Day 1 of Temporary Occupation Permit based on 90% consent which drops to 80% when the estate is 10 years old??? I may be wrong but I reckon there's a Bell Curve to the age profile of our en bloc blocks - after discounting the extreme ends of the Bell Curve, I guestimate that the likely age of apartments in this 2006-07 en bloc frenzy is in the range of 15-25 years. In this age of throw-away consumerism (never mind about the irksome issue of environmental sustainability), perhaps "15-25 years old" is terribly old for a building, eh?
SAGA TO BE CONTINUED ... The FINALE is "akan datang" (coming soon) when the legislative amendment is finally gazetted as law (process is likely to start in Sep, go through three parliamentary readings, home run by Dec perhaps)? Will it be a limp squid? Will good triumph over evil? Will the hero get the girl? Will those wailing now go home with less tears? Will those guffawing now go home more sobered?
After the curtain falls, will we move together as a more inclusive people? Or do we each go off in splinter directions, our disillusion reinforced that we are truly staying at "Hotel Singapore Inc", forever in transit as "A Nation of Immigrants, Migrants and Emigrants" except that we are now into the Third Wing?
[Immigrants as we continue to harbour the mindset of our Ancient Immigrant Forefathers.]
[Migrants as we now live amongst New Migrant Neighbours who do NOT share our Modern Singapore History, distinctly choosing to retain their native citizenship even after milking the perks of Singapore PR status for decades (our Ministry of Home Affairs hasn't caught on to the idea that Permanent Residence could potentially embed an expiry - no doubt, giving up one's native citizenship is a momentous decision but surely one needs to "commit" at some point after sponging on PR benefits and tasting for 7 years what life in Singapore is really like - I'm suggesting 7 years because of the "7-year Itch Syndrome" - shouldn't we separate wheat from chaff with an oxymoron "Temporary Permanent Resident" or would the Truth cut too deep for this Gahmen to publicly acknowledge that pathetically few PRs take up citizenship?).]
[Emigrants as we are losing Old Emigrant Friends who are increasingly moving to other shores not necessarily greener but definitely more edgy or gracious than ours.]
Without diminishing the other hard-nosed and technical issues raised in this blog ... May I also ask if there are still some things left in this world that money can't buy? Have we hit the stage where we know the Price of Everything but the Value of None? Sigh ...
26 April 2007
Sustainable DE-Construction and Sustainable Living
GENTLE REMINDER: The Ministry of Law's Public Consultation on the forthcoming legislative review of this law is ENDING SOON (Closing Date: 12 May 2007).
Pls, pls, pls do your part and e-mail your views to:
MLAW_enbloc@mlaw.gov.sg
___________________________________________________
With the Gahmen's latest buzzword being "Sustainable Construction" following Indonesia's sand ban and granite chip control, I have coined the flip-side of:
"Sustainable DE-Construction" and
"Sustainable Living".
PLS SEE THE UPDATE IN MY OTHER COMMENTS UNDER "30-YEAR EN BLOC TIME-BAR" IN THIS BLOG-SITE.
Pls, pls, pls do your part and e-mail your views to:
MLAW_enbloc@mlaw.gov.sg
___________________________________________________
With the Gahmen's latest buzzword being "Sustainable Construction" following Indonesia's sand ban and granite chip control, I have coined the flip-side of:
"Sustainable DE-Construction" and
"Sustainable Living".
PLS SEE THE UPDATE IN MY OTHER COMMENTS UNDER "30-YEAR EN BLOC TIME-BAR" IN THIS BLOG-SITE.
17 April 2007
What a lawyer specialising in en blocs said ...
The "Today" newspaper, Weekend Edition of 14 April 2007, splashed a front-page article on en bloc sales. In this "Today" news article, a pre-eminent lawyer, Dr SK Phang, who specialises in en bloc / collective sales (in fact, Dr Phang is the pioneer in this arena), was quoted as saying that "a bona fide home owner should be offered an exchange ...".
Yeh!!! I'm so, so heartened ... perhaps, civil society in Singapore is not quite dead after all. you think?
This blog-site sets out my entire wish-list. I know Santa won't come to town until December (even then, this is far from the Land of Oz)! So if I could gleefully rub Aladdin's lamp ... perhaps the 108 Heroes from The Water Margin would wrangle from the Ministry of Law just Three Die-Die-Must-Get Wishes:
1. An additional option (the other option is still cash) for one-for-one "exchange" unit of same-level and same-size for Owner-Occupiers with ONLY one residential property in Singapore at the point of completion of the collective sale - For details, pls click on the relevant page in this blog-site.
2. Mathematical factual basis for distribution of collective sales proceeds using (i) ratios as a 1st cut and (ii) precise strata-title-area and precise share-values as a 2nd cut - For details, pls click on the relevant page in this blog-site.
3. Scaled time-bar to next collective sale attempt pegged to estate age - For details, pls click on the relevant page in this blog-site.
Are you, the readers of this blog-site, one of the 108 Heroes? Nothing ventured, nothing gained, eh?
Yeh!!! I'm so, so heartened ... perhaps, civil society in Singapore is not quite dead after all. you think?
This blog-site sets out my entire wish-list. I know Santa won't come to town until December (even then, this is far from the Land of Oz)! So if I could gleefully rub Aladdin's lamp ... perhaps the 108 Heroes from The Water Margin would wrangle from the Ministry of Law just Three Die-Die-Must-Get Wishes:
1. An additional option (the other option is still cash) for one-for-one "exchange" unit of same-level and same-size for Owner-Occupiers with ONLY one residential property in Singapore at the point of completion of the collective sale - For details, pls click on the relevant page in this blog-site.
2. Mathematical factual basis for distribution of collective sales proceeds using (i) ratios as a 1st cut and (ii) precise strata-title-area and precise share-values as a 2nd cut - For details, pls click on the relevant page in this blog-site.
3. Scaled time-bar to next collective sale attempt pegged to estate age - For details, pls click on the relevant page in this blog-site.
Are you, the readers of this blog-site, one of the 108 Heroes? Nothing ventured, nothing gained, eh?
02 April 2007
Ministry of Law Public Consultation
Thank you, Dr Minority from www.enblocsingapore.blogspot.com for your comment to my "Message for blog-site visitors". It's an excellent suggestion.
Further to the Minister for Law's parliamentary speech on 2 Mar 2007, the Public Consultation for REVIEW of the present laws on Collective or En Bloc Sales has just started today, 2 Apr 2007 and will end on 12 May 2007.
You could snail-mail or e-mail your suggestions and comments to:
Snail mail:
The Ministry of Law, 100 High Street, The Treasury, #08-02, Singapore 179434, Attn: Mr Gary Goh
E-mail:
MLAW_enbloc@mlaw.gov.sg
Do consider the wide-ranging implications of this law. For most of us, real estate purchase is a chunky investment of our LIFE SAVINGS as it is a HOME for ourselves and our loved ones.
What do your instincts tell you when buildings of 10-20 years age are torn down if en bloc is successful OR estates are left to deteriorate or minimally maintained if en bloc has failed? Is it ok that when you buy, you pay for every sq cm and every share value but when you sell, it is NOT on that same FACTUAL basis? The owners of Paterson Lodge were really smart - they cut a deal with the developer such that they each would get a replacement unit at the same location after redevelopment. This way, they don't need to be a Downgrader or Downsizer or worse still, become Squatter or Refugee!
There are 2 types of Consenters:
1. Investor-Owners: They have more than one property (either because they are so well-off and are able to own multi-properties OR they bought the property speculatively for its en bloc potential OR they had over-committed themselves and are struggling with bank loans because of higher interest rate these days). For this 1st group, the dollar proceeds from the collective sale have a HIGHER time-value because they can take the money and wait out the property cycle to re-invest (if at all) only after the property market slows down/crashes. Moreover, they are NOT losing their homes as they have another roof over their heads.
2. Owner-Occupiers with only 1 property: They are indeed losing the roof over their heads but they are seemingly resigned to their fate of being a Downgrader or Downsizer after the en bloc. OR they are long-time expats/emigrant Singaporeans only waiting to cash-out from the Singapore property market to buy a much cheaper property in their original/new home country, respectively. Generally, in contrast - For this 2nd group, the dollar proceeds from the collective sale have a LOWER time-value because they need to buy a replacement unit in Singapore at the height of a property boom unless they are prepared to be a Squatter or Refugee for the next few years. Not wanting to miss out the current property boom, they consent to the en bloc by cashing-out, thus unlocking the equity in their real estate. They may also be worried about having enough cash to see them through retirement, especially with the escalating Cost of Living as Singapore evolves into a Global City. If you are of this profile, I'd urge A SERIOUS RETHINK - Why???
(a) You had the vision to invest your capital into your present property years ago. Shouldn't you preserve your capital by getting a replacement unit? Real estate is about 3 things only: LOCATION, Location, location. In the process of unlocking the equity in your real estate by taking the cash, do you realise that you are in fact unlocking the land use potential for the happy-happy Developer-buyer?
(b) You take the cash now - fine. But are you an astute investor with a healthy risk appetite and a dose of good luck? If not, by leaving the cash hoard as a Fixed Deposit in a bank or in some conservative investment instrument, do you think that you will get a better rate of return from your Fixed Deposit compared to (i) selling your replacement unit in the open market (if you still prefer cash after redevelopment, say, some 3 years later) OR (ii) moving back to the same vicinity and enjoying the replacement unit until you have an eventual need for the funds, say, some 5-25 years later?
(c) You downgrade, say, from Tanglin area to Seletar area OR from freehold to 30-year lease/HDB. Or you downsize from, say, 180 sq m to 100 sq m. With the passing years, let's say you fall very sick or grow old with chronic illness or your retirement savings have dwindled to a low level. At that future point in time, you may need to liquidate your home to meet medical/long-term care expenses. REGARDLESS of the state of the property market at that future point in time, which asset will have better value appreciation - an apartment in Tanglin or Seletar, a bigger unit or a unit half the size? If the remaining lease is less than 30 years at the time of liquidation, the property is not even marketable.
If you are an Owner-Occupier and you are NOT in dire straits for cashflow now, it makes sound financial sense to gun for a replacement unit based on size (NOT based on value). In a way, you are "cashing-out" too - NOT in DOLLARS but in KIND. Even in an ENFORCED collective sale, I see this as the next best win-win for all: The owner-occupiers with only 1 property get an option to move back to familiar territory if they wish and preserve their capital for eventual liquidation into cash or bequest to a loved one at a time of their choice. The Investor-Owners grab the $$$. The Developer-buyers have a shot at making profit (still profitable - only less so) from redevelopments at prime/popular locations which are much more saleable. The Gahmen achieves the social objectives of intensive land use, urban renewal and a greater semblance at preserving community ties.
This suggestion is valid financially for ALL age groups: To the post-65s (ie, those in their late 30s up to the 40s) because you need to build-up your retirement savings for maximum multiplier effect, to those in their 50s-60s as you may live past 80 and capital preservation and asset value appreciation are therefore key to your financial security, to those in their 70s and beyond if you are NOT needing the cash now and want to bequeath something valuable to your loved ones. There are various intricacies involved in such "exchange" - SEE MY OTHER COMMENTS UNDER "ONE-FOR-ONE EXCHANGE" IN THIS BLOG-SITE.
It is one thing to lament (eg, seeking empathy because you are losing your home). It is yet another thing to do something constructive about your lament (eg, giving MinLaw a suggestion to mandate developers to do an "exchange based on size" for the apartment that you are forced to sell in the en bloc exercise or some other better idea that you could spin off from here). So Stand Up (constructively) for Your Home (even if it is a reconstructed one in the end)!
Further to the Minister for Law's parliamentary speech on 2 Mar 2007, the Public Consultation for REVIEW of the present laws on Collective or En Bloc Sales has just started today, 2 Apr 2007 and will end on 12 May 2007.
You could snail-mail or e-mail your suggestions and comments to:
Snail mail:
The Ministry of Law, 100 High Street, The Treasury, #08-02, Singapore 179434, Attn: Mr Gary Goh
E-mail:
MLAW_enbloc@mlaw.gov.sg
Do consider the wide-ranging implications of this law. For most of us, real estate purchase is a chunky investment of our LIFE SAVINGS as it is a HOME for ourselves and our loved ones.
What do your instincts tell you when buildings of 10-20 years age are torn down if en bloc is successful OR estates are left to deteriorate or minimally maintained if en bloc has failed? Is it ok that when you buy, you pay for every sq cm and every share value but when you sell, it is NOT on that same FACTUAL basis? The owners of Paterson Lodge were really smart - they cut a deal with the developer such that they each would get a replacement unit at the same location after redevelopment. This way, they don't need to be a Downgrader or Downsizer or worse still, become Squatter or Refugee!
There are 2 types of Consenters:
1. Investor-Owners: They have more than one property (either because they are so well-off and are able to own multi-properties OR they bought the property speculatively for its en bloc potential OR they had over-committed themselves and are struggling with bank loans because of higher interest rate these days). For this 1st group, the dollar proceeds from the collective sale have a HIGHER time-value because they can take the money and wait out the property cycle to re-invest (if at all) only after the property market slows down/crashes. Moreover, they are NOT losing their homes as they have another roof over their heads.
2. Owner-Occupiers with only 1 property: They are indeed losing the roof over their heads but they are seemingly resigned to their fate of being a Downgrader or Downsizer after the en bloc. OR they are long-time expats/emigrant Singaporeans only waiting to cash-out from the Singapore property market to buy a much cheaper property in their original/new home country, respectively. Generally, in contrast - For this 2nd group, the dollar proceeds from the collective sale have a LOWER time-value because they need to buy a replacement unit in Singapore at the height of a property boom unless they are prepared to be a Squatter or Refugee for the next few years. Not wanting to miss out the current property boom, they consent to the en bloc by cashing-out, thus unlocking the equity in their real estate. They may also be worried about having enough cash to see them through retirement, especially with the escalating Cost of Living as Singapore evolves into a Global City. If you are of this profile, I'd urge A SERIOUS RETHINK - Why???
(a) You had the vision to invest your capital into your present property years ago. Shouldn't you preserve your capital by getting a replacement unit? Real estate is about 3 things only: LOCATION, Location, location. In the process of unlocking the equity in your real estate by taking the cash, do you realise that you are in fact unlocking the land use potential for the happy-happy Developer-buyer?
(b) You take the cash now - fine. But are you an astute investor with a healthy risk appetite and a dose of good luck? If not, by leaving the cash hoard as a Fixed Deposit in a bank or in some conservative investment instrument, do you think that you will get a better rate of return from your Fixed Deposit compared to (i) selling your replacement unit in the open market (if you still prefer cash after redevelopment, say, some 3 years later) OR (ii) moving back to the same vicinity and enjoying the replacement unit until you have an eventual need for the funds, say, some 5-25 years later?
(c) You downgrade, say, from Tanglin area to Seletar area OR from freehold to 30-year lease/HDB. Or you downsize from, say, 180 sq m to 100 sq m. With the passing years, let's say you fall very sick or grow old with chronic illness or your retirement savings have dwindled to a low level. At that future point in time, you may need to liquidate your home to meet medical/long-term care expenses. REGARDLESS of the state of the property market at that future point in time, which asset will have better value appreciation - an apartment in Tanglin or Seletar, a bigger unit or a unit half the size? If the remaining lease is less than 30 years at the time of liquidation, the property is not even marketable.
If you are an Owner-Occupier and you are NOT in dire straits for cashflow now, it makes sound financial sense to gun for a replacement unit based on size (NOT based on value). In a way, you are "cashing-out" too - NOT in DOLLARS but in KIND. Even in an ENFORCED collective sale, I see this as the next best win-win for all: The owner-occupiers with only 1 property get an option to move back to familiar territory if they wish and preserve their capital for eventual liquidation into cash or bequest to a loved one at a time of their choice. The Investor-Owners grab the $$$. The Developer-buyers have a shot at making profit (still profitable - only less so) from redevelopments at prime/popular locations which are much more saleable. The Gahmen achieves the social objectives of intensive land use, urban renewal and a greater semblance at preserving community ties.
This suggestion is valid financially for ALL age groups: To the post-65s (ie, those in their late 30s up to the 40s) because you need to build-up your retirement savings for maximum multiplier effect, to those in their 50s-60s as you may live past 80 and capital preservation and asset value appreciation are therefore key to your financial security, to those in their 70s and beyond if you are NOT needing the cash now and want to bequeath something valuable to your loved ones. There are various intricacies involved in such "exchange" - SEE MY OTHER COMMENTS UNDER "ONE-FOR-ONE EXCHANGE" IN THIS BLOG-SITE.
It is one thing to lament (eg, seeking empathy because you are losing your home). It is yet another thing to do something constructive about your lament (eg, giving MinLaw a suggestion to mandate developers to do an "exchange based on size" for the apartment that you are forced to sell in the en bloc exercise or some other better idea that you could spin off from here). So Stand Up (constructively) for Your Home (even if it is a reconstructed one in the end)!
28 March 2007
Message for blog-site visitors
Thank you for visiting this blog-site.
En bloc / Collective Sales hits close to home (pun fully intended) for all private property owners.
I have created this blog-site to share my thoughts and whatever little I know about this topic ... some of the inherent gaps and pitfalls that Dissenters to an en bloc / collective sale may want to be mindful of, especially if you are in the midst of one or under imminent threat.
I welcome you to share your views.
If you AGREE with my suggestions or you have BETTER IDEAS, post your comments and share with us your sentiments (your affirmation would also encourage me in this quest and create greater awareness of our common woes).
If you DISAGREE, feel free to post your comments too. We all have different needs and therefore we come from different angles. I trust that we can AGREE TO DISAGREE AMICABLY. No need to be rude or crass and if you must be sarcastic, then at least be witty about it!
We each have varying needs as Tenants, Investor-Owners, Owner-Occupants or merely as Concerned Citizens with a social consciousness. Surely, we can create "space" (pun again fully intended) for each other in a civil society, eh?
En bloc / Collective Sales hits close to home (pun fully intended) for all private property owners.
I have created this blog-site to share my thoughts and whatever little I know about this topic ... some of the inherent gaps and pitfalls that Dissenters to an en bloc / collective sale may want to be mindful of, especially if you are in the midst of one or under imminent threat.
I welcome you to share your views.
If you AGREE with my suggestions or you have BETTER IDEAS, post your comments and share with us your sentiments (your affirmation would also encourage me in this quest and create greater awareness of our common woes).
If you DISAGREE, feel free to post your comments too. We all have different needs and therefore we come from different angles. I trust that we can AGREE TO DISAGREE AMICABLY. No need to be rude or crass and if you must be sarcastic, then at least be witty about it!
We each have varying needs as Tenants, Investor-Owners, Owner-Occupants or merely as Concerned Citizens with a social consciousness. Surely, we can create "space" (pun again fully intended) for each other in a civil society, eh?
27 March 2007
Sales proceeds formula; Distribution
Update on 6 Jan 2007:
As eloquently argued in a Straits Times Forum Letter published on 5 Jan 2008, there is another school of thought that postulates distribution of collective sales proceeds should be based only on area because "condo units are sold by area and not by share value" and "especially when the INTRINSIC VALUE of each square foot is computed as an aggregate of area, premium for high floor level, unit design, open view and so on". The writer went on to say that share value "is a guide for conservancy charges calculation".
Based on the statutes, I believe the Forum letter writer's statement about share value being a guide for conservancy changes calculation is erroneous! The Land Titles (Strata) Act, Section 13(1) states that "... the common property shall be held by the subsidiary proprietors as tenants-in-common proportional to their respective share value and for the same term and tenure as their respective lots are held by them" and "The Registrar on issuing a subsidiary strata certificate of title for a lot shall certify therein the subsidiary proprietor's share in the common property, but no subsidiary strata certificate of title shall be issued for the common property". Similarly, the Building Maintenance and Strata Management Act of 2004, Section 62(1) states that "the share value of a lot as shown in a schedule of strata units shall determine — ... (b) the quantum of the undivided share of the subsidiary proprietor of that lot in the common property comprised in that strata title plan". These statutory provisions underpin my explanation on "share values" in the subject-topic page of this blog.
As for the "INTRINSIC VALUE" mentioned by the Forum letter writer, I believe this "intrinsic value" comprises two elements:
(A) Core Value - based on the strata-title-area of the unit owned by the subsidiary proprietors which is factual and is categorically stated on the title document (ie, the Subsidiary Certificate of Title); and
(B) Consumption Value - based on the state of affairs affecting each unit at the point of purchase and "consumed" (ie, enjoyed) by the occupants during the tenure of their residency at that unit.
The Core Value of strata-title-area MUST necessarily be a key component for apportionment not only because it is factual and objective but because it underpins the very basis of the collective sale in terms of the land footprint.
The Consumption Value is a facetious basis and is worthless because a collective sale results in wholesale demolition/ redevelopment of the estate (unless it is a conservation project involving en bloc A&A (Alteration and Amendment) works). Hence, any open vistas or preferred sun-facings, etc, are no longer relevant in a collective sale. Also, at the point of purchase at, say, the soft launch, the top floor unit at Level 10 may have a great lakeview but at the point of collective sale, that same unit may now be overlooking a neighbouring estate's garbage centre or is now overshadowed by a new condo at an adjoining site of 35 storeys! What is a good design generally at one point in time may be not so great design at the point of collective sale as real estate/demographic trends change over time. The Consumption Value of each unit remains pertinent only in an individual sale-and-purchase (eg, in a resale transaction), but certainly NOT in a collective sale!
IN ADDITION TO THIS BLOG PAGE, SEE MY OTHER COMMENTS on Apportionment Method, Para B-4.3 (scroll to picture of South Korean flag) and Para C-4.2 (scroll to picture of thorny hedgehog) UNDER "AFTER THE 2007 LAW, WHAT'S NEXT" IN THIS BLOG SITE.
____________________________________________________
Update on 13 Jun 2007 and post-Oct 2007:
These days, even the price of condensed milk cannot hold for 12 months. Yet our present en bloc law keeps the Collective Sale Agreement alive on life support for up to 12 months by which time the Reserve Price and condensed milk price would both be totally irrelevant. This is yet another aberration under the law - what can I say???
Add to that 12-month period, the likely ADDITIONAL 6-12 months for completion of the collective sale going through Strata Title Board's approval process if owner consensus did not hit 100%. This means owners could potentially wait for up to 2 years or more before they get the bulk of the collective sales proceeds to commit for a replacement unit. In any case, you should NOT sign the Collective Sale Agreement if you are against such sale - SEE MY OTHER COMMENTS on The Position of the Dissenter UNDER "SHARE VALUES; SALES COMMITTEE" IN THIS BLOG SITE.
As en bloc frenzies typically occur during property market upturns, by the time you (particularly as an Owner-Occupier with only one property to your name) lay your hands on the bulk of the actual collective sales proceeds some 12-42 months (!!!) from the time you were committed to the Reserve Price for such sale (firstly, the collective sale process under the law could take up to 24 months and, secondly, the cash settlement process could take another 6-24 months from the time that the Sales Committee binds you to a sale and purchase transaction with a Developer-Buyer, depending on how smooth or litigious the enforced collective sale process goes so long as you do not have 100%), you don't need a fortune teller to tell you that your sorry future is the stark reality of being a Squatter, Refugee, Downgrader or Downsizer for possibly the rest of your life! ... unless MinLaw changes the present law ...
For Owner-Occupiers with only one property to their name and who therefore need to buy a replacement unit - More surprises are in store as you will soon realize the maze and the web of financing intricacies and hurdles that you have to navigate around/under/over/through. Some hurdles are simply insurmountable because of bridging issues, time lags, banking constraints, CPF operational procedures, etc.
As eloquently argued in a Straits Times Forum Letter published on 5 Jan 2008, there is another school of thought that postulates distribution of collective sales proceeds should be based only on area because "condo units are sold by area and not by share value" and "especially when the INTRINSIC VALUE of each square foot is computed as an aggregate of area, premium for high floor level, unit design, open view and so on". The writer went on to say that share value "is a guide for conservancy charges calculation".
Based on the statutes, I believe the Forum letter writer's statement about share value being a guide for conservancy changes calculation is erroneous! The Land Titles (Strata) Act, Section 13(1) states that "... the common property shall be held by the subsidiary proprietors as tenants-in-common proportional to their respective share value and for the same term and tenure as their respective lots are held by them" and "The Registrar on issuing a subsidiary strata certificate of title for a lot shall certify therein the subsidiary proprietor's share in the common property, but no subsidiary strata certificate of title shall be issued for the common property". Similarly, the Building Maintenance and Strata Management Act of 2004, Section 62(1) states that "the share value of a lot as shown in a schedule of strata units shall determine — ... (b) the quantum of the undivided share of the subsidiary proprietor of that lot in the common property comprised in that strata title plan". These statutory provisions underpin my explanation on "share values" in the subject-topic page of this blog.
As for the "INTRINSIC VALUE" mentioned by the Forum letter writer, I believe this "intrinsic value" comprises two elements:
(A) Core Value - based on the strata-title-area of the unit owned by the subsidiary proprietors which is factual and is categorically stated on the title document (ie, the Subsidiary Certificate of Title); and
(B) Consumption Value - based on the state of affairs affecting each unit at the point of purchase and "consumed" (ie, enjoyed) by the occupants during the tenure of their residency at that unit.
The Core Value of strata-title-area MUST necessarily be a key component for apportionment not only because it is factual and objective but because it underpins the very basis of the collective sale in terms of the land footprint.
The Consumption Value is a facetious basis and is worthless because a collective sale results in wholesale demolition/ redevelopment of the estate (unless it is a conservation project involving en bloc A&A (Alteration and Amendment) works). Hence, any open vistas or preferred sun-facings, etc, are no longer relevant in a collective sale. Also, at the point of purchase at, say, the soft launch, the top floor unit at Level 10 may have a great lakeview but at the point of collective sale, that same unit may now be overlooking a neighbouring estate's garbage centre or is now overshadowed by a new condo at an adjoining site of 35 storeys! What is a good design generally at one point in time may be not so great design at the point of collective sale as real estate/demographic trends change over time. The Consumption Value of each unit remains pertinent only in an individual sale-and-purchase (eg, in a resale transaction), but certainly NOT in a collective sale!
IN ADDITION TO THIS BLOG PAGE, SEE MY OTHER COMMENTS on Apportionment Method, Para B-4.3 (scroll to picture of South Korean flag) and Para C-4.2 (scroll to picture of thorny hedgehog) UNDER "AFTER THE 2007 LAW, WHAT'S NEXT" IN THIS BLOG SITE.
____________________________________________________
Update on 13 Jun 2007 and post-Oct 2007:
These days, even the price of condensed milk cannot hold for 12 months. Yet our present en bloc law keeps the Collective Sale Agreement alive on life support for up to 12 months by which time the Reserve Price and condensed milk price would both be totally irrelevant. This is yet another aberration under the law - what can I say???
Add to that 12-month period, the likely ADDITIONAL 6-12 months for completion of the collective sale going through Strata Title Board's approval process if owner consensus did not hit 100%. This means owners could potentially wait for up to 2 years or more before they get the bulk of the collective sales proceeds to commit for a replacement unit. In any case, you should NOT sign the Collective Sale Agreement if you are against such sale - SEE MY OTHER COMMENTS on The Position of the Dissenter UNDER "SHARE VALUES; SALES COMMITTEE" IN THIS BLOG SITE.
As en bloc frenzies typically occur during property market upturns, by the time you (particularly as an Owner-Occupier with only one property to your name) lay your hands on the bulk of the actual collective sales proceeds some 12-42 months (!!!) from the time you were committed to the Reserve Price for such sale (firstly, the collective sale process under the law could take up to 24 months and, secondly, the cash settlement process could take another 6-24 months from the time that the Sales Committee binds you to a sale and purchase transaction with a Developer-Buyer, depending on how smooth or litigious the enforced collective sale process goes so long as you do not have 100%), you don't need a fortune teller to tell you that your sorry future is the stark reality of being a Squatter, Refugee, Downgrader or Downsizer for possibly the rest of your life! ... unless MinLaw changes the present law ...
For Owner-Occupiers with only one property to their name and who therefore need to buy a replacement unit - More surprises are in store as you will soon realize the maze and the web of financing intricacies and hurdles that you have to navigate around/under/over/through. Some hurdles are simply insurmountable because of bridging issues, time lags, banking constraints, CPF operational procedures, etc.
Sooooo ... unless you happen to have "petty cash" of a million bucks or so ready at hand for the 20% deposit for a new private residential property ... and are quite prepared to possibly end up with two properties if the en bloc should fail for some reason ... you would NOT be able to lock-in your market risk exposure by buying a replacement unit at the time the Sales Committee locked-in the en bloc deal on your behalf with the Developer-Buyer. By the time you lay your trembling hands on the bulk of the collective sales proceeds within the abovementioned 12-42 month window, who knows what the property market will be at that future time??? Que sera, sera, whatever will be, will be - are we some pathetic born losers or what??? Those Owner-Occupiers who happy-happy signed the Collective Sales Agreement WITHOUT sussing-out the ins-and-outs of the financial trail may be in for a rude shock ... by which time, the 5-day "cooling-off period" allowed under the amended law for you to back-out of a signed agreement would have long passed ... and you are stuck, stark naked in the face of a red-hot property market ripe for en bloc orgies!
____________________________________________________
Update on 30 May 2007:
This page should be read in conjunction with MY OTHER COMMENTS UNDER "SHARE VALUES; SALES COMMITTEE".
____________________________________________________
A rocket scientist it does NOT take to derive a mathematical basis of apportionment.
1. Objective versus subjective basis - At the time of purchase, you pay for every sq cm of space. Every month, you pay for every share value as approved by the Commissioner of Buildings (COB). Every cent you pay is based on facts and law – all very objective. Now, based on a collective sale forced down your throat if you are amongst the dissenters, you are obliged to accept the apportionment based solely on share value or some dreamed-up weightage decided by the self-appointed unregulated Sales Committee as at present or possibly by the Majority Owners in future. Suddenly your privately-owned property has been communalized and how much you’d get after the collective sale is now decided subjectively?
2. Mathematical formula for distribution of collective sales proceeds - As Singapore prides herself on transparency and certainty in our laws and policies, I’d like to propose that the Gahmen should mandate a mathematically-based apportionment method involving (A) ratios as a 1st cut and (B) precise strata-title area and share values as a 2nd cut.
Example:
(a) Ratio: A surveyor's report would establish the ratio of common property (say, 10,000 sq m) vis-a-vis aggregate strata-title area of all units in the estate (say, 30,000 sq m) to derive a ratio of, say, 1:3. The total collective sales proceeds (say, $100mn) should then be divided into 4 portions (1 + 3).
(b) Share value: One portion (ie, $25mn) should be divided by the total number of share-values to derive the value of each share-value and each owner should then get the precise dollar amount for each share-value that he holds.
(c) Strata title area: The remaining three portions (ie, $75mn) should likewise be divided by the aggregate strata-title area to derive the value of each strata-title sq m and each owner should then get the precise dollar amount for each sq m that he owns.
Similar ratio principles could be applied to mixed-development estates where market valuation, share values and unit sizes are all factored-in in the apportionment method based on the professional opinions of independent real estate appraisors and quantity surveyors.
3. Owner-occupiers who are time-disadvantaged after heeding Gahmen policies - In Singapore, we already have many forms of affirmative discriminatory policies (eg, household income must be below a certain amount to qualify for HDB public flats, quantum of CPF withdrawals is lower for subsequent property purchases, tax perks for women to have children at a younger age, more Edusave funds, New Shares or Progress Package payments for those who have sacrificed or served our country or who are disadvantaged, such as NSmen, senior citizens, poorer financial status, etc). They serve to temper or balance out inherent inequities in the larger communal interests and to cultivate certain societal mores.
En bloc sales typically escalate only when the property market is bullish and property prices are on the uptrend. Right after a collective sale, these owner-occupiers have to buy a replacement roof at that point in time (unlike investor-owners who can wait out the property boom cycle). Assuming that all units are identical in size and all owners receive an equal amount of collective sales proceeds, it looks fair-and-square on the surface BUT the same dollar amount received by an owner-occupier is of significantly reduced time-value compared to the same dollar amount in the hands of an investor-owner. Hence, owner-occupiers who have only one property are seriously time-disadvantaged even though they have faithfully heeded the policies of our Gahmen and Central Provident Fund (CPF) Board to NOT over-commit in real estate investments. The Gahmen must find some way to redress this inherent inequity in the apportionment or distribution of collective sales proceeds ... just as they have devised so many ingenious ways to re-distribute the puffed-up government coffers after the 7% GST hike to the disadvantaged!
Those of us who heeded Gahmen policies are now being punished ruthlessly in the property market if the en bloc succeeds. If I didn't listen to the Gahmen and went ahead with at least two property purchases, then I need not fret endlessly about this en bloc fever, worrying over something so basic as a decent roof over my head in this so-called First World Global City! Maybe the Gahmen is sending us another message, eh? Without a mandatory unit exchange, the owner-occupiers will end up as Squatter, Refugee, Downgrader, Downsizer. SEE MY OTHER COMMENTS UNDER "ONE-FOR-ONE EXCHANGE" IN THIS BLOG-SITE.
4. Decency in humanity values: Beggar-Thy-Neighbour (BTN)? - In contrast: The investor-owners and other owners who have additional properties or other standby accommodation alternatives are cashing-out their property investment by forcing this group of owner-occupiers to surrender their only roof - all because they want to gain the so-called "premium" from a collective sale. Let's NOT forget that there is nothing to stop these investor-occupiers and other owners from selling their apartments individually if they need the cashflow or want to relocate due to changed family circumstances or other personal reasons. What more when you hear accounts of Management Corporation members who withhold expenditure for essential maintenance, deliberately allowing the estate to deteriorate as part of the pressure tactics, neighbours indulging in rumour-mongering, devising scare tactics a la "Ah Long" style, giving dirty looks or passing spiteful comments in distinctly loud overtones ... [Actually, in our inimitable Hokkien-Malay-English patois, BTN also stands for “Buay Tahan Neighbour” – whichever angle you are coming from … majority consenter or minority dissenter … we just hate each other’s guts in our own neighbourly fashion, don’t we)?
Essentially, it is a "Beggar Thy Neighbour" mentality translated into ugly action - and yet many of us are purportedly of some major religious faith, each striving to live by our declared values - be it Buddhism, Christianity, Islam or Hinduism. At another level of humanity, may I respectfully appeal to each of us that - en bloc fever or not AND regardless of whatever agnostic/ atheistic/ religious belief - this calls for a pause to do some introspective reflection ...
Subscribe to:
Posts (Atom)