STB Amendments

So, the new amendments to the enbloc process are finally here. Unfortunately too late for us.

Having lawyers present to 'clear your doubts' on the matter sounds good, but the crucial problem remains: to look for answers one must first know the questions.

I presume the 'lawyer' that will be present in future enbloc meetings/signings will be none other than the enbloc lawyer. But surely that will defeat the purpose. His clients are the SC and not the majority owners.

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From the Ministry of Law website

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Oral Answer by DPM Prof S Jayakumar to Parliamentary Question on En Bloc Legislation, 27 August 2007 here

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Volume 83
Monday No. 9
27th August, 2007
PARLIAMENTARY DEBATES OFFICIAL REPORT
(Recourse for unhappy residents)

Ms Irene Ng Phek Hoong asked the Deputy Prime Minister and Minister for Law what recourse is available to unhappy residents affected by en bloc sales of their units and who cannot afford to hire legal counsel to pursue their case, especially regarding unscrupulous and intimidating practices.

The Deputy Prime Minister and Minister for Law (Prof. S Jayakumar): Mr Speaker, Sir, currently, the law allows an owner who does not agree to an en bloc sale to file an objection with the Strata Titles Board. There is no fee for filing an objection; and the owner is not required to be represented by a lawyer and he may appear before the Board himself.

Besides this, any owner who at any time feels that he is being harassed or intimidated to consent to an en bloc sale may lodge a Police report.

Let me add, Sir, that my Ministry has completed our review of the en bloc sale legislation and I shall today, after the conclusion of Question Time, introduce the Land Titles (Strata) (Amendment) Bill. The changes to the legislation will be explained in detail by myself during the Second Reading of the Bill at the next sitting of the House. For now, I will just say that in addition to the proposals that we had set out in the public consultation paper and which I mentioned during the Committee of Supply, the Government has also accepted a number of additional changes that will further enhance transparency and procedural clarity, as well as offer better protection to the owners of affected developments. Sir, I believe these changes will go a considerable way to address the unscrupulous and intimidating practices that Ms Ng referred to in her Question.

Ms Irene Ng Phek Hoong (Tampines): Sir, as the Minister has noted, there have been various reports of intimidation in the past by sales committee. Can I ask the Minister whether there are any provisions now or in the new Bill to ensure that the owners can oust the sales committee if the sales committee had been found to be either negligent, under-handed or unfair in its dealings, as well as not representing the interests of the owners but more of the buyers?
The second question is with regard to pending cases, such as Tampines Court which started the en bloc process at the end of 2002, before the property boom. The STB has yet to approve the sale, and the sale and purchase agreement will expire on 24th September, renewable by four months. I believe minority owners are opposing the sale and have filed their objections to STB. Can I ask the Minister, pending the review, how will these owners be affected by the changes that will be coming?

Prof. Jayakumar: I would ask her to be patient as it is just a matter of time before she reads the provisions of the Bill. As a general rule, I hope she will understand that I would like to avoid commenting on specific cases of en bloc sale because I do not have the details and it may not be proper as some of these cases may end up in court. The general rule in legislation is the prospective application. The Bill has certain provisions for transitional and savings provisions. And later if she has a look at these provisions, they provide that the amendments will apply to all developments, except those where 80% or 90% majority, based on share values, have already signed the collective and sale agreements at the time the amendments come into effect. And there are also provisions in the Bill concerning applications made to or pending before a Board at that time the amendments come into effect. So I think she has to study these proposals and I hope she will speak her mind when the Bill is read a Second time.

Pros and Cons to signing now

For those minority owners who are thinking that "it's a done deal, I might as well sign now" - perhaps you should consider the pros and cons to signing first:

Diadvantages of being a majority owner at this point in time:

1. You surrender all rights to your home.
2. You cannot sell your home as a caveat has been served on your property.
3. You do not know what the outcome of Tampines Court STB appeals will be. Look at the mess the majority at Horizon Towers is in!
4. Only majority owners can be sued for breach of contract.
5. Find out for yourselves what the costs are if STB does NOT AGREE to the sale.
6. You may also have to pay the minority lawyer's fee (STB decision).
7. You may pay the minority share of the costs if the STB does NOT AGREE to the sale.

Advantages of being a minority owner:

1. You pay nothing unless the STB AGREES to the sale
2. You can still sell your home, as the caveat served is premature and can be removed (old rules).
3. No one can sue you as you have not signed any legal document.
4. You retain all the rights to your home.
5. You get the same sale price as everyone else if the STB allows the sale.

Disbursement fees

The en bloc lawyer has sent out a letter to the majority owners demanding that they pay $781.25 to them as soon as possible for the purposes of paying for the disbursements to be incurred in the application to the STB.

These are the disbursements listed:

1. Advertisement fee: $200,000
2. Photocopying: 50,000
3. Valuation: 20,000
4. STB filing fee: 5,000
5. Hearing fee(x5): 5,000
6. expert witness': ______

Total: $280,000

$280,00 / 457 majority units = $612.69

So, are there more costs involved?

According to the CSA (draft); the lawyer fee that is charged on completion = $2,380 / unit + disbursements.

The lawyer fee for application to the STB is extra: $30,000 + $5,000 per minority objection, subject to a cap of $50,000.

Whether this is a $50,000 overall fee cap or $80,000 is unclear, but I believe the latter.

As it is certain that at least 40 minority owners are appealing, does this STB lawyer fee have to be paid upfront by the majority along with the hefty disbursements? It seems so.

$280,000 + $80,000 = $360,000

$360,000 / 457 majority units = $787.74

This is closer to the figure if $781.25

The majority should check on this.

HT 1 and 2

The failed Horizon Towers buyers have sent a a letter to lawyers representing the MAJORITY owners who signed the original sales deal..... alleging the sellers are in breach of contract.

I have no idea how this will eventually pan out, the developer went into this sale knowing it was conditional to STB approval. The majority could theoretically sue the Property Agent and Lawyers for negligence for not getting the papers in order.

Stakeholders and interest

Just who is the stakeholder and who keeps the interest on the 10% deposit paid by the buyer?

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Well, the enbloc lawyer is the stakeholder, and that is common practice.

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On the matter of who keeps the substantial interest, well, that is not set in stone. The Law Society's stand on the matter is that the interest on stakeholders funds usually belongs to the stakeholder - but because we are talking hundreds of thousands of dollars, perhaps even millions, this is not automatically the case in enblocs. The enbloc lawyer should canvass the issue with the SC; they can't just quietly pocket the money. I have no doubt that our enbloc lawyer did just that (legally it's called 'excess of caution' I believe), but I take issue with the fact that the SC did not then canvass the views of the owners! The Sale Committee, in their wisdom and without consulting the owners, contractually signed this sum away to the enbloc lawyer. Mind you, when they did this (way back in 2006), they hadn't even been elected / ratified by any of the owners, did they then have the legal right to do so?

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$405,000,000

40,500,000 = 10%

3% interest/yr = $1,215,000

Couple lose fight on collective sale

Couple lose fight on collective sale

July 28, 2007

The couple holding out against the collective sale of Waterfront View lost the fight yesterday when the Strata Titles Board (STB) ruled against them in what is regarded as a landmark decision.
Mr Yeo Loo Keng and his wife Cheryl Lim were the only unit owners – out of 583 – who had fought the sale to the end.

They insisted they would make a loss of $106,244, which was part of their CPF principal amount and accrued interest owed to their CPF accounts.

However, the STB ruled that this was not considered a financial loss, as the CPF Board has said if the net proceeds of the sale after repaying the bank loan are less than the outstanding CPF money owed, the couple do not need to make up this shortfall.

This is believed to be the first time the STB has had to decide if CPF money is considered a financial loss in the sale of residential property.

The STB also said, for the first time, that the conversion fee to a private estate – in this case, $19,535 – is allowed as a loss.

Said Dr Kevin Tan, a member of the Waterfront View sale committee who is also a former law professor: ‘This is a landmark case as important issues were brought up that were never before canvassed in court.’

Lawyer Leong Yung Chang from Veritas Law Corporation, who represented the couple, said the ruling ‘will affect a lot of people in the future’.

A disappointed Mr Yeo said: ‘CPF might say we do not need to make up the shortfall, but it is our money being written off in the end, as I’m being forced to sell.’

He added: ‘Future home owners will have to think very carefully before deciding on an en-bloc sale.’
Located in Bedok Reservoir Road, the former HUDC estate is a 99-year leasehold property built in 1984 and privatised in 2002.

It was sold for $385 million last May to FCL Peak, a joint venture between Frasers Centrepoint and Far East Organization.

The couple bought their 14th-floor, 1,711 sq ft apartment 12 years ago for $515,000.

While each of the 583 unit owners will be paid about $660,000 from the sale, Mr Yeo argued that it was not enough to pay off his bank loan of $342,844 and CPF principal amount and interest of $407,599, which makes a total of $750,443.

Although Mr Yeo lost the case, STB deputy president Alfonso Ang pointed out that the report on the proposed method of distribution of sale proceeds filed by the sale committee ‘fell short of the high standard expected especially when involving a project of this size’.

Under the committee’s proposal, the total sale will be distributed evenly among all units regardless of storey or size – an issue Mr Yeo contended with, as he paid a premium for a high-floor unit with a reservoir view.

Mr Ow Yong Thian Soo of Lee & Lee, who represented the sale committee, said he respected the STB’s decisions and thought they were important and fair.

Mr Yeo has 28 days to appeal to the High Court, failing which it will take about three months for the sale of Waterfront View to be completed.

He is mulling over whether to lodge an appeal.

Another resident, Mr David Govinden, told The Straits Times the STB’s ruling had brought ‘tremendous relief’ to other residents who had already committed to other properties.

‘I do sympathise with Mr Yeo,’ said the 57-year-old insurance agent. ‘But at the end of the day, we have to go with the majority vote.’
Source : Straits Times – 6 Feb 2007

Bid to stop Waterfront View en bloc sale fails

August 1, 2007
The bid by minority owners of Waterfront View to stop the Bedok estate from being sold en bloc failed in the High Court yesterday.
The owners Yeo Loo Keng and his wife opposed the sale saying they will suffer financial losses to their CPF accounts, because the net proceeds are insufficient to fully repay the outstanding bank loan and fully return CPF monies with drawn to buy the property.
The couple bought their apartment 12 years ago for $515,000 and will be paid about $660,400 from the sale but argued that that was not enough. They said they have to pay off a bank loan of $342,844 plus CPF principal amount and interest of $407,599, which makes a total of $750,443.
However, the Strata Titles Board (STB) ruled in a landmark decision in February that the principal amount withdrawn from CPF accounts and the accrued interest cannot be taken into account when determining whether a financial loss has been suffered by owners involved in such a sale.
Justice Belinda Ang yesterday dismissed the minority owners’ appeal with costs and upheld the STB’s decision, noting the CPF Board had said the couple will not need to make up for the shortfall if the net proceeds of the sale, after repaying the bank loan, are less than the amount they owe the CPF. The former HUDC estate was sold for $385 million last May.
On whether the Yeos will lodge an appeal, their lawyer Leong Yung Chang from Veritas Law Corp told BT they are ’still looking’ at whether they have ‘further avenue for appeal’.
Source : Business Times – 28 Apr 2007