If the Beta sum is approved for TC – this could theoretically open the floodgates to potential financial scams in future enblocs. Lump sums could be skimmed off the top and re-labeled to override the controls built into the LTSA rules governing method of apportionment.Just think about it for a moment.
A Sale Committee need only include the reserve price and the method of apportionment for that sum in the CSA. Other ‘problems’ could be kept under wraps. The CSA would definitely include that nasty cover-all clause that allows the SC to amend, delete, alter, etc the terms of the sale……. blank cheque to do as they will (why oh why don't people read their CSA's before signing!)
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During negotiation, an understanding could be reached with the successful developer buyer to carve a sum out of the sale price and label it, say “Beta Sum”. This can be used to pay for other outstanding issues, including but not limited to financial loss, debts and costs & expenses of sale for some, but not all owners. Some owners therefore would receive an amount above and beyond the agreed collective sale price.
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Why is this bad, some might say? After all, no owner should have to be 'out of pocket' as a result of an en bloc sale, right?
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Since this Beta Sum is not governed by the apportionment method stated in the CSA it can be meted out at the discretion of the SC – and there are no checks and balances as to where that money actually goes. A SC cannot give a full and accurate account of how much and where the sum will be distributed at the STB. So how can the STB approve a sale when nobody knows what their final sale proceeds will be! This portends potential scam number one.
Since this Beta Sum is not governed by the apportionment method stated in the CSA it can be meted out at the discretion of the SC – and there are no checks and balances as to where that money actually goes. A SC cannot give a full and accurate account of how much and where the sum will be distributed at the STB. So how can the STB approve a sale when nobody knows what their final sale proceeds will be! This portends potential scam number one.
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If a Beta sum becomes commonplace, what is to stop its abuse? A few clued-in owners may decide not to pay their privatization costs (if applicable) and manintenace and sinking fund contributions years in advance knowing that these debts would be covered by the owners (whether they agree to it or not). This portends potential scam number two. Diligent owners are penalised, laggards and freeloaders are rewarded.
If a Beta sum becomes commonplace, what is to stop its abuse? A few clued-in owners may decide not to pay their privatization costs (if applicable) and manintenace and sinking fund contributions years in advance knowing that these debts would be covered by the owners (whether they agree to it or not). This portends potential scam number two. Diligent owners are penalised, laggards and freeloaders are rewarded.
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Since owners sign on the basis that not more than 1% of their sale proceeds goes to cover losses then are they not being conned out of their rightful share of the full sale proceeds?
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Since owners sign on the basis that not more than 1% of their sale proceeds goes to cover losses then are they not being conned out of their rightful share of the full sale proceeds?
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Price skimming warps the whole framework on which a collective sale is built. When owners sign the CSA they also sign for the method of apportionment. The formula is written there in the CSA. They would not sign if owner A gets $xx more dollars than owner B with the 
same size unit, (other than for financial loss). They sign on the presumption that the sale price is calculable in the same way for all. This is an LTSA requirement. It is no longer a collective sale if everyone is getting different benefits and price after they have agreed otherwise. It really throws a spanner in the works!
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Creative circumvention of LTSA rules should not be encouraged. If there is a "Beta" problem to be covered - then by all means cover it - but it should be done up front and in the CSA. Everyone should know in advance exactly what it is they are giving. If owners are to donate more than the regulation 1% - then a sale committee should have the common decency to ask permission first, and gather their 80% on that basis.
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same size unit, (other than for financial loss). They sign on the presumption that the sale price is calculable in the same way for all. This is an LTSA requirement. It is no longer a collective sale if everyone is getting different benefits and price after they have agreed otherwise. It really throws a spanner in the works!.
Creative circumvention of LTSA rules should not be encouraged. If there is a "Beta" problem to be covered - then by all means cover it - but it should be done up front and in the CSA. Everyone should know in advance exactly what it is they are giving. If owners are to donate more than the regulation 1% - then a sale committee should have the common decency to ask permission first, and gather their 80% on that basis.
So, let's hope that Tampines Court's experimentation with Beta fails.
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Approval might be given for sale and money could be ordered to be divided equally. stb decision
ReplyDeleteThe STB does not have the power to change the method of distribution.
ReplyDeleteThen if it is abused we have the courts to take them to task. Lets hope there is transparency as to who was given what for what. Fairness...
ReplyDelete