Aug 27, 2008
Aug 26, 2008
The lady answered
To the lady who wrote in a comment. I forgot to ask you your unit size - so I just calculated for all sizes (154 sqm to 161 sqm).
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I have worked out the quantum used for the revised sale price for each unit size (it also depends on whether you are an alpha owner of a non-alpha owner). Since the costs & expenses were not calculable at the STB; the final sale proceeds cannot be given. Your legal costs seem to be unusually high - I think you have made a mistake there; but it doesn't matter as you are not anywhere near being a financial loss case,.
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Old Sale price: $395,000,000
Alpha (financial loss)?- No
Insufficient funds to redeem CPF? No, your CPF is fully redeemed.
Insufficient funds to pay Cost & Expenses of sale? It depends on the size of your unit/ the C&E were not known. I think the C&E would have been no less than $20k* and maybe even as high as $30k. So you would have come away with very little cash after deducting C&E.
Alpha (financial loss)?- No
Insufficient funds to redeem CPF? No, your CPF is fully redeemed.
Insufficient funds to pay Cost & Expenses of sale? It depends on the size of your unit/ the C&E were not known. I think the C&E would have been no less than $20k* and maybe even as high as $30k. So you would have come away with very little cash after deducting C&E.
CPF rich - cash poor.
*I cannot say for definite what the C&E would have been, but I am pegging it to Waterfront View which was $19k.
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These calculations are only applicable to the failed sale price of $395,000,000 and a 50-50 method of distribution (strata area - share value). I do not guarantee the figures are correct - just a blogger's armchair attempt. I hope someone else will have a go at deciphering the A-2 table and it's formulae.
These calculations are only applicable to the failed sale price of $395,000,000 and a 50-50 method of distribution (strata area - share value). I do not guarantee the figures are correct - just a blogger's armchair attempt. I hope someone else will have a go at deciphering the A-2 table and it's formulae.
Pro-Enbloc Vandalism at Laguna Park
Lost neighbourliness
Straits Times - 26 Aug 2008
Several residents of the Laguna Park condominium in Marine Parade Road had their mailboxes vandalised last night.
In the third such attack this month, vandals used glue to seal the keyholes of eight letter boxes - all belonging to residents who had not signed the condominium's en bloc sales agreement.
For some victims, last night's attack was the second time they had been hit.
Several had their cars damaged last month when vandals threw a corrosive liquid, possibly paint thinner, on them.
The residents have appealed to their management committee for help, and have suggested that closed-circuit television cameras be set up to prevent future attacks.
This is being studied.
One victim of last night's mailbox attack, who wanted to be known only as Mr Chan, 50, said: 'I'm disappointed that it has come to this. The kampung spirit we had here has gone...all over an en bloc sale.'
He added: 'I fear that this is not the end.'
Police are investigating.
JERMYN CHOW
Straits Times - 21 Aug 2008
Enbloc tussles take nasty turn as market cools
Straits Times-14 Aug 2008
**************
LAGUNA PARK VANDALS STRIKE AGAIN
Resident's usual vigilance slips, and car is hitMost vandalised cars belong to those yet to sign collective sale deal
By Carolyn Quek
JULY 12
This Mercedes Benz is streaked with black spray paint.
JULY 14
This Toyota Corona is scratched and sprayed with black paint.
JULY 22
A corrosive liquid is splashed on the bonnet of this Lexus as well as that of a Toyota Altis.
JULY 26
Mr Lau's three-month-old car is scratched when he parks it further away from the security guard post - for just two hours. It is one of at least two cars vandalised over the weekend.
THE Laguna Park car vandals have struck again: At least two more cars have been hit, including one which had already been targeted before.
A brand-new Toyota Altis was found scratched last Saturday.
The other car, a silver Nissan Cefiro, understood to have already been sprayed with black paint last week, was also scratched on Saturday. Its owner confirmed these details but declined to be named.
The Straits Times reported last Thursday that several cars in the estate had been damaged - sprayed with black paint or a corrosive liquid, or scratched. Residents there are divided over putting the place up for a collective sale.
Residents of the 530-unit development in Marine Parade Road say the three latest attacks bring the total number of vandalism cases to at least nine in the last month.
Coincidentally, all but one of the cars belong to owners who have not yet agreed to the sale.
The owner of the Altis, Mr Lau Cher Chye, said he has been parking his three-month- old car near the security guard post at the condominium's entrance as a precaution after reading the report about the spate of vandalism.
The 57-year-old financial adviser said: 'My wife and I thought we would be targeted soon.'
True enough, it happened last Saturday afternoon - on the one occasion when the couple had parked their car away from the guard post. They had just returned from the supermarket at 3.45pm and had many bags of groceries to lug home, so they parked the car nearer their block, Mr Lau explained.
He added that since they were going out that evening, the car would be left there for only a couple of hours.
As it turned out, that was enough time for several gashes to be made on the doors on one side of the champagne-coloured car.
Like other affected residents, Mr Lau said he believed he became a victim because he did not put his signature down for the collective sale.
'It is quite obvious. In one month, there are already so many cases, and most victims have not given their consent yet. Why such a coincidence?' he asked.
Nothing like this has happened to him before in his 30 years there, he said.
As of last Saturday, close to 64 per cent of home owners had voted for the proposed sale, according to notices put up around the estate.
The sales committee has until the end of the year to garner the 80 per cent vote needed to proceed with the deal.
A distraught Mr Lau said: 'We are very upset by this act of gangsterism. We love this estate. It's been very peaceful all this while. That's why we refuse to sign.'
He has made a police report but has not had repairs done to the car yet. He will also park his car near the guard post from now on, he said.
The estate's management committee will hold a dialogue with residents this Saturday to discuss the vandalism problem.
Notices posted around the estate said the committee would look into installing closed-circuit television cameras, and added that the management took 'a very serious view of the matter' and would hand over offenders to the authorities.
carolynq@sph.com.sg
Straits Times - 28 July 2008
*******
Vandals keen on en-bloc sale damage cars
Lexus and Toyota vandalised in the latest attacks in Laguna Park
By Carolyn Quek
UGLY ACT: Corrosive liquid was thrown on a Lexus belonging to a Laguna Park resident who is against a collective sale of the estate. It may have been a vicious attempt to change his mind. -- ST PHOTO: DESMOND LIM
HUNGER for en-bloc dollars looks to have turned vicious at a quiet private estate in East Coast.
On Tuesday night, two residents of the 530-unit Laguna Park estate discovered that their cars had been doused with a corrosive liquid, possibly paint thinner.
They were among the residents who had not yet agreed to put the seaside development up for sale. Earlier this month, two other cars belonging to the dissenting group were also vandalised.
Residents claim they were the latest of several cases of vandalism that began after the possibility of going en-bloc arose last December.
The estate has until the end of this year to gather an 80 per cent vote to put it up for sale. But so far, residents say less than 65 per cent are onboard.
Residents have been told by a property valuer that an average unit could be worth more than $2.1 million and the penthouses almost $4 million if the estate goes en-bloc. A resident said the market rate for a normal unit now is about $1.3 million.
Some of the holdouts have lived in Laguna Park since it was built in 1977, while others have been there for many years.
Some residents told The Straits Times they were surprised that the sale has fostered so much acrimony.
Five cars have been vandalised in recent weeks, said the outgoing chairman of the condominium's management committee, Mr Chua SC, who declined to give his full name. Some vehicles were doused with a corrosive liquid while others were scratched and splashed with black paint.
Police reports have been made and investigations are under way.
An independent analyst said residents sometimes do strange things in the hopes of pushing through an en bloc sale.
'But resorting to criminal acts...this would be the first time,' said Mr Ku Swee Yong, Savills' director of marketing and business development.
The vandalism could ultimately be a futile exercise with the cooling property market, said Mr Ku.
'It's a bit of a long shot in these market conditions to find buyers.'
Laguna Park residents told The Straits Times yesterday that they believed the vehicle attacks were 'inside jobs' committed by people who support the en-bloc deal.
If this proves true, Mr Chua thinks it is a 'very stupid, silly and naive way of trying to get people to sign'.
'I don't think this is the right way to do it,' said an agitated Mr Chua, who had the logo ripped off his Nissan about three weeks ago.
Mr Robin Sng, a company director, owns one of the cars damaged on Tuesday night. The corrosive liquid ate away the paint on the bonnet, door and bumper of his four-year-old Lexus.
'I feel frightened,' he said.
A brand new Toyota parked 50m away was also vandalised on the same night.
A resident diligently went round the estate's dustbins and found a can of paint remover in a rubbish bin near the carpark. The can was taken away as evidence by the police, who are investigating the rash of vandalism.
Mr Chua said he told residents at a recent annual general meeting that something had to be done about the cases.
Residents earlier shot down the idea of installing surveillance cameras, he said.
'Now I suppose it has become urgent enough to reactivate the idea.'
carolynq@sph.com.sg
Lexus and Toyota vandalised in the latest attacks in Laguna Park
By Carolyn Quek
UGLY ACT: Corrosive liquid was thrown on a Lexus belonging to a Laguna Park resident who is against a collective sale of the estate. It may have been a vicious attempt to change his mind. -- ST PHOTO: DESMOND LIM
HUNGER for en-bloc dollars looks to have turned vicious at a quiet private estate in East Coast.
On Tuesday night, two residents of the 530-unit Laguna Park estate discovered that their cars had been doused with a corrosive liquid, possibly paint thinner.
They were among the residents who had not yet agreed to put the seaside development up for sale. Earlier this month, two other cars belonging to the dissenting group were also vandalised.
Residents claim they were the latest of several cases of vandalism that began after the possibility of going en-bloc arose last December.
The estate has until the end of this year to gather an 80 per cent vote to put it up for sale. But so far, residents say less than 65 per cent are onboard.
Residents have been told by a property valuer that an average unit could be worth more than $2.1 million and the penthouses almost $4 million if the estate goes en-bloc. A resident said the market rate for a normal unit now is about $1.3 million.
Some of the holdouts have lived in Laguna Park since it was built in 1977, while others have been there for many years.
Some residents told The Straits Times they were surprised that the sale has fostered so much acrimony.
Five cars have been vandalised in recent weeks, said the outgoing chairman of the condominium's management committee, Mr Chua SC, who declined to give his full name. Some vehicles were doused with a corrosive liquid while others were scratched and splashed with black paint.
Police reports have been made and investigations are under way.
An independent analyst said residents sometimes do strange things in the hopes of pushing through an en bloc sale.
'But resorting to criminal acts...this would be the first time,' said Mr Ku Swee Yong, Savills' director of marketing and business development.
The vandalism could ultimately be a futile exercise with the cooling property market, said Mr Ku.
'It's a bit of a long shot in these market conditions to find buyers.'
Laguna Park residents told The Straits Times yesterday that they believed the vehicle attacks were 'inside jobs' committed by people who support the en-bloc deal.
If this proves true, Mr Chua thinks it is a 'very stupid, silly and naive way of trying to get people to sign'.
'I don't think this is the right way to do it,' said an agitated Mr Chua, who had the logo ripped off his Nissan about three weeks ago.
Mr Robin Sng, a company director, owns one of the cars damaged on Tuesday night. The corrosive liquid ate away the paint on the bonnet, door and bumper of his four-year-old Lexus.
'I feel frightened,' he said.
A brand new Toyota parked 50m away was also vandalised on the same night.
A resident diligently went round the estate's dustbins and found a can of paint remover in a rubbish bin near the carpark. The can was taken away as evidence by the police, who are investigating the rash of vandalism.
Mr Chua said he told residents at a recent annual general meeting that something had to be done about the cases.
Residents earlier shot down the idea of installing surveillance cameras, he said.
'Now I suppose it has become urgent enough to reactivate the idea.'
carolynq@sph.com.sg
Straits Times 24 July 2008
Aug 23, 2008
CPF loss/ Bank Loss
An Anonymous comment
"I believe there is a fundamental flaw in yr presentation. I will be very disturbed if yr inf is correct.
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Enbloc price: S$395 mil / 560 units = S$705k on average
Beta sum: S$10 mil / 560 units = S$18k (assuming no claim)
Total proceeds from enbloc = S$723k
Each SP will receive S$723k more or less. The buyer will not pay you one single cent more, becos total sales px is S$405 mil.
Regardless the order of charge, there will be financial loss; it is either a cash loss or a CPF loss.
Illustration:Buy px S$580k O/s bank loan S$300kCPF refund S$500k
"I believe there is a fundamental flaw in yr presentation. I will be very disturbed if yr inf is correct.
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Enbloc price: S$395 mil / 560 units = S$705k on average
Beta sum: S$10 mil / 560 units = S$18k (assuming no claim)
Total proceeds from enbloc = S$723k
Each SP will receive S$723k more or less. The buyer will not pay you one single cent more, becos total sales px is S$405 mil.
Regardless the order of charge, there will be financial loss; it is either a cash loss or a CPF loss.
Illustration:Buy px S$580k O/s bank loan S$300kCPF refund S$500k
CPF loss/Bank Loss answered:
There are 20 pages to this A-2 table highlighting the financial details of 239 owners (see below). This table was submitted at the STB by the en bloc lawyer; I have scanned a few pages to serve as examples.
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I believe there is a fundamental flaw in yr presentation. I will be very disturbed if yr inf is correct.
My information comes from documents submitted at the STB. I am always looking out for flaws in my writing and understanding. I am a blogger not an expert. I welcome comments such as yours, we can all come to a better understanding through questions and challenges. I will NOT release the names and unit numbers of the owners whose financial information is listed in the A-2 Table. Even if someone requests to see the original documents, I would have to photocopy and remove the unit identification (Columns A,B,C) before release. This information, while it is a matter of public record, has not been disseminated widely, the minority group has only one copy and it is in my possession.
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Aug 20, 2008
CPF Loss
Finally! It seemed the press was deliberately keeping away from this hot potato for the longest time - no matter how many times we highlighted the matter, it just never seemed to get reported in any depth! Thank you, Ms. Cheam for not forgetting the owners who are financial losers in the mythical world of en bloc millionaires; HUDC owners who lose their CPF, their homes and who have no cash for a down-payment on their next house (no money to pay even the removal van!).
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Enbloc Battles
Straits Times - 20 Aug 2008
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In the name of my neighbours, is there no hope for me?
I REFER to the article “Fix bank-or-CPF charge problem” (Aug 20) by Jessica Cheam. She called an en bloc sale “a forced sale in the name of urban renewal”.?
I might add that en blocs are “a forced process in the name of my neighbours”. As my condo tries to go en bloc again for the fourth time, I am now at the mercy of en bloc team No. 4 which has decided, after they formed a year ago, to actually stop short of the Collective Sale Agreement (CSA) signing. As most of us know, this is a technical ploy to keep the collective sale in the estate hanging over our heads like the sword of Damocles, for an indefinite period. Because the clock only starts ticking on the collective sale once the first SP (subsidiary proprietor) has signed the CSA.
So, how long will we live under threat of this and every en bloc? Every year after our 10th year in the condo? Should families be allowed to be unsettled in this way? Did the framers of those en bloc laws consider this?
In my estate, there is a diehard group of pro-en bloc residents. They form about 20 per cent of the owners. Again and again, they call for an extraordinary general meeting to “en bloc” the condo? Because the laws allow this. So far, they have been defeated, yet they are indefatigable! Once one disbands, a new committee rears its head. A committee, I might add, which consists primarily of owners who do not live in the condo and do not call it home. Should my abode, my place of rest, be subject to this repeated unease? Should someone who does not value my estate and looks upon it as an economic tool, who has no roots in my community, be allowed to unsettle those who have nested there? Surely the core values of home and community should outweigh those of “urban renewal”? Should it always be about the money?
Property laws that are created to facilitate urban renewal and allow others to steamroll the nesting urges of ‘Stayers’ will always create dissent and unhappiness. Why should we have to fight tooth and nail to keep our home??
Is there hope for Stayers?
Yeo Li Ying (Miss)
Straits Times - 27 Aug 2008
I might add that en blocs are “a forced process in the name of my neighbours”. As my condo tries to go en bloc again for the fourth time, I am now at the mercy of en bloc team No. 4 which has decided, after they formed a year ago, to actually stop short of the Collective Sale Agreement (CSA) signing. As most of us know, this is a technical ploy to keep the collective sale in the estate hanging over our heads like the sword of Damocles, for an indefinite period. Because the clock only starts ticking on the collective sale once the first SP (subsidiary proprietor) has signed the CSA.
So, how long will we live under threat of this and every en bloc? Every year after our 10th year in the condo? Should families be allowed to be unsettled in this way? Did the framers of those en bloc laws consider this?
In my estate, there is a diehard group of pro-en bloc residents. They form about 20 per cent of the owners. Again and again, they call for an extraordinary general meeting to “en bloc” the condo? Because the laws allow this. So far, they have been defeated, yet they are indefatigable! Once one disbands, a new committee rears its head. A committee, I might add, which consists primarily of owners who do not live in the condo and do not call it home. Should my abode, my place of rest, be subject to this repeated unease? Should someone who does not value my estate and looks upon it as an economic tool, who has no roots in my community, be allowed to unsettle those who have nested there? Surely the core values of home and community should outweigh those of “urban renewal”? Should it always be about the money?
Property laws that are created to facilitate urban renewal and allow others to steamroll the nesting urges of ‘Stayers’ will always create dissent and unhappiness. Why should we have to fight tooth and nail to keep our home??
Is there hope for Stayers?
Yeo Li Ying (Miss)
Straits Times - 27 Aug 2008
There are two points to argue in this matter:-
- Is the first charge /second charge differentiation fair?
- Should loan interest be taken into account when computing financial loss?
Is the first charge /second charge differentiation fair?
I shall use concrete examples taken from Tampines Court's data f submitted at the STB (Round 1) , to show the inequity of Bank/CPF & CPF/Bank order of charges:-
A) 239 out of a total of 560 owners in TC gave their partial or full financial details to the en bloc lawyer. These details were listed in a Table designated A-2 at the STB.
B) According to the statutory newspaper advertisement of 27 December 2007, listing out all the charges on all the properties in Tampines Court; here is an approximate breakdown as to how many were CPF/bank and Bank/CPF.
(my eyes aren't as good a they used to be, the newspaper print is pretty small, so allow for some error):
Total number of units :560
Total number of double/triple charges: 269
Total number with Bank first charge/CPF second: 150
Total number with CPF first charge/Bank second: 112
C) It was the change in CPF rules which divided home owners into two distinct groups; those who have protection pre-2002 CPF rules (the Winners) and those who have been abandoned and set adrift by post-2002 CPF rules (the Losers)*
* post-2002 - all properties have CPF second charge (except HUDCs phases III and IV, which were uniquely and inexplicably set adrift pre-1996).
C) It was the change in CPF rules which divided home owners into two distinct groups; those who have protection pre-2002 CPF rules (the Winners) and those who have been abandoned and set adrift by post-2002 CPF rules (the Losers)*
* post-2002 - all properties have CPF second charge (except HUDCs phases III and IV, which were uniquely and inexplicably set adrift pre-1996).
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The Losers with CPF as second charge (56% of double charged units):-
1) Full outstanding Bank loan redemption
2) Partial CPF redemption up to the maximum of sale proceeds
From the Table in A-2
1) Full outstanding Bank loan redemption
2) Partial CPF redemption up to the maximum of sale proceeds
From the Table in A-2
This is what some owners would have lost in their CPF accounts (had the sale been approved)
CPF loss (unrecoverable) + Alpha (recoverable)
- ($260,671) + Alpha $8,083
- ($252,180)
- ($251,063)
- ($222,552) + Alpha $3,298
- ($246,233)
- ($218,264 + Alpha $35,475
- ($206,001)
- ($203,164)
- ($193,534) + Alpha $26,570
- ($186,504)
- ($183,771)
- ($174,729)
- ($172,572)
- ($172,040)
- ($166,387) + Alpha $6,709
- ($165,107)
- ($163,881)
- ($160,474)
- ($144,683) + Alpha $25,687
- ($146,824)
- ($132,772)
- ($131,264)
- ($120,067)
- ($105,486)
- ($103,830)
- ($95,593)
- ($93,504)
- ($74,124) + Alpha $85,603
- ($66,188)
- ($63,921)
- ($52,898)
- ($43,462) + Alpha $21,839
- ($42,248)
- ($38,324)
- ($22,684)
- ($17,808)
- ($13,103)
- ($10,312)
- ($5,271) + Alpha $48,035 .
Only 9 in this group of owners were considered Alpha owners (i.e. financial loss) by LTSA rules. The CPF loss could neither be reclaimed from the Alpha sum nor from the defeated Beta sum, as the CPF Board had said it would waive any outstanding amount owed to it. The reason why there are so many CPF losers, is that rules changing CPF to second charge for HUDCs phases III & IV were applied between 6 to 9 years earlier than all other properties in Singapore. Also, since only 43% of TC owners gave their financial details, and there are up to 150 units with CPF second charge, there are potentially many more CPF losers out there.
The Winners with CPF as first charge
1) CPF redemption
2) Bank mortgage redemption
1) CPF redemption
2) Bank mortgage redemption
(actually, there's a specific order by which the CPF principle sum and interest is returned. See my post Financial loss and shortfall for an imperfect analysy.)
On top of a full refund to their CPF accounts taking up a mega portion of their sale proceeds; this is what other owners would have received extra, above and beyond the sale price to cover their outstanding Bank charges in full.
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Extra after full CPF redemption, bank charge +
Extra after full CPF redemption, bank charge +
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1. + $248,609
2. + $216,831
3. + $95,916
4. + $44,741 + Alpha $955
5. + $26,311
Because a Bank would never waive any outstanding amount owed to it, money would have had to be scrambled from somewhere to pay off these mortgages in order for the sale to go through. It could not be taken from Alpha, as they did not suffer financial loss according to LTSA rules. In TC, it would have been reclaimed from the failed Beta. In other enblocs, the money would have to come either voluntarily from the other owners or from the developer-buyer. If not, the sale would not get STB approval. Since there are up to 112 such owners with Bank second charge; clearly the A-2 table understates the total amount needed to cover possible payouts.
1. + $248,609
2. + $216,831
3. + $95,916
4. + $44,741 + Alpha $955
5. + $26,311
Because a Bank would never waive any outstanding amount owed to it, money would have had to be scrambled from somewhere to pay off these mortgages in order for the sale to go through. It could not be taken from Alpha, as they did not suffer financial loss according to LTSA rules. In TC, it would have been reclaimed from the failed Beta. In other enblocs, the money would have to come either voluntarily from the other owners or from the developer-buyer. If not, the sale would not get STB approval. Since there are up to 112 such owners with Bank second charge; clearly the A-2 table understates the total amount needed to cover possible payouts.
So, there is an inequality built into the system from the start. Different owners start from an unequal footing and either benefit hugely or are penalised brutally. This inequality is baseless, there is no earthly reason why CPF/Bank should be any different from Bank/CPF. Two owners can buy a similar sized unit at the same price and suffer widely different fates .
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Blk 118 - Buy price $660k - CPF 2nd charge - loses $222,552
Blk 123 - Buy price $580k - CPF 2nd charge - loses $203,164
Blk 119 - Buy price $605k - CPF 2nd charge - loses $172,572
Blk 119 - Buy price $640k - CPF 2nd charge - loses $252,180
Blk 119 - Buy price $655k - CPF 2nd charge - loses $251,063
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Blk 121 - Buy price $580k - CPF 1st charge - gains $216,831
Blk 130 -Buy price $605k - CPF 1st charge - gains $248,609
Blk 122 - Buy price $486k - CPF 1st charge - gains $95,916
Blk 133- Buy price $650k - CPF 1st charge - gains $44,741
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Comparing apple to apple:-
Blk 123 owner would have received $700k in sale proceeds taking a loss of $203,164 to his CPF account. Blk 121 owner would have received $916k. Both bought at the same price yet look at the difference in sale proceeds! The only significant difference between these two units is the ORDER OF CHARGE.
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Comparing orange to orange:
Blk 119 owner would have received $709k in sale proceeds taking a loss of $172,575 to his CPF account. Blk 130 owner would have received $949k.
Remember, all TC units have the same share value and are all around the same size (~1700sqft). The only difference between these two units is the ORDER OF CHARGE.
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If an owner were to sell his property individually on the open market, the order of charge would not matter - both would have to be repaid in full. Ironically, it is only in an en bloc sale that unjustness and discrimination go hand in hand.
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It is doubtful that many owners know what constitutes financial loss and shortfalls before signing the CSA, and naively assume that whatever is owed to the Bank and CPF will be covered automatically. Did so many owners really sign off knowingly on 6 figure sums in Tampines Court? I wonder.
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Actually, this baseless inequality only crystallized in the Waterfront View case in April 2007; before that, there were no reported cases of CPF loss in en bloc sales in the press. No En bloc owners complained of insufficient funds to cover Bank or CPF charges on their property. Perhaps all en bloc sale proceeds up to that point were sufficiently high enough to satisfy all charges AND let the owner walk away with a nice wad of cash, too. This is just speculation on my part; had there been cases, they surely would have been reported in the press. So, I am taking Waterfront View as the first such instance where CPF loss was brought up as a minority objection and tackled by a STB Board panel. They ruled that CPF loss is not financial loss. The Waterfront View couple then brought their case to the High Court where they pleaded that their CPF loss of $106, 244 should be recoverable (see ST articles here and here ). Again, they lost. The case was never brought to the Court of Appeal; so technically, the ruling is not set in stone and is still open to challenge if any future owner decides to take it on.
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Should loan interest be taken into account when computing financial loss?
According to the ST article above, Prof. Jayakumar's rational is that CPF funds that go into repaying bank loan interest should not be taken into account. This is to distinguish between owners who take no loans at all or who take a small loan with little interest and owners who take long-term mortgages with a high component of interest payments. Let me see if I can root out that speech.... (an excerpt of the speech relating to the CPF issue can be found at the end of this post)
On first blush, this is a convincing line of argument and I found myself in agreement, initially.
It is an individual decision whether or not to:-
- take out a small or large quantum loan
- go for a short-term or long term repayment period.
- pay by CPF or cash (or a combination of both)
An owner (A) would chalk up the highest CPF charge with a large, long-term loan, using CPF.
An owner (B) would chalk up the least CPF charge with a small short term loan, using CPF.
On first blush, this is a convincing line of argument and I found myself in agreement, initially.
It is an individual decision whether or not to:-
- take out a small or large quantum loan
- go for a short-term or long term repayment period.
- pay by CPF or cash (or a combination of both)
An owner (A) would chalk up the highest CPF charge with a large, long-term loan, using CPF.
An owner (B) would chalk up the least CPF charge with a small short term loan, using CPF.
An owner (C) might not use CPF at all and pay for his loan on cash
And of course, there is an infinite number of combinations in between.
So why should owner (B)/(C)receive less sale proceeds than owner (A) by virtue of being shrewd or more conservative or just plain wealthier?
The arguent is persuasive but on further reflection, I have two problems with this line of reasoning.
First, conversely, why should owner (A) be penalized for not being as shrewd, not as conservative or just plain poorer than owner B or C? He may be shrewd and conservative in nature but it simply may not be possible for him to take out a smaller, short-term mortgage and may not have the spare cash to service the loan.
And of course, there is an infinite number of combinations in between.
So why should owner (B)/(C)receive less sale proceeds than owner (A) by virtue of being shrewd or more conservative or just plain wealthier?
The arguent is persuasive but on further reflection, I have two problems with this line of reasoning.
First, conversely, why should owner (A) be penalized for not being as shrewd, not as conservative or just plain poorer than owner B or C? He may be shrewd and conservative in nature but it simply may not be possible for him to take out a smaller, short-term mortgage and may not have the spare cash to service the loan.
Interest payments are part and parcel of servicing a loan. Does it really matter how much interest an owner pays? The fact is he HAS PAID and it should be considered part of the total cost of buying his home. It matters not than owner A has paid $xx + yy interest or that owner B has paid $xx + y interest - they all should get back what they paid to be on an equal footing.
Secondly, and most importantly; SUCH A RULING DISALLOWING INTEREST PAYMENT HAS TO BE APPLIED EQUALLY TO EVERYONE IN ORDER FOR IT TO BE FAIR.
Secondly, and most importantly; SUCH A RULING DISALLOWING INTEREST PAYMENT HAS TO BE APPLIED EQUALLY TO EVERYONE IN ORDER FOR IT TO BE FAIR.
(my understanding)...
As the rules stand now; this rational applies ONLY to those owners who have CPF 2nd charge; these owners have to wave goodbye to their hard earned money as the CPF Board doesn't care and the High Court has said it isn't financial loss. But owners who have CPF 1st charge continue to enjoy having their “high component of interest payments” covered! Not fair!
As the rules stand now; this rational applies ONLY to those owners who have CPF 2nd charge; these owners have to wave goodbye to their hard earned money as the CPF Board doesn't care and the High Court has said it isn't financial loss. But owners who have CPF 1st charge continue to enjoy having their “high component of interest payments” covered! Not fair!
Owners who pay for their loans by cash have also forked out large sums in interest, they also lose out on having their interst payments covered.
Going back to a real life example in Tampines Court; following is one such lucky owner who benefits from this glaring anomoly in the legislation:
Blk 130 – Buy price $605k – CPF 1st charge a whopping $949,583 – no outstanding bank loan!! His top-up from sale price would have been $248,609!!! Sale proceeds are nearly a million bucks altogether!
A not-so -lucky owner:
Blk 123 – Buy price $615k – CPF 2nd charge at only $475k, - outstanding bank balance $194k, - long term mortgage paid mainly by cash. Interest componant not fully reflected in CPF . Sale proceeds S702k . Zip extra as a result.
Parliament should look at the real life negative consequences of this ruling. In their quest to make a flawed system seem fairer, they have instead skewed it to reward one group over another, and without achieving the objective stated by Minister of Law. They can fix this glaring anomoly by reverting to the CPF first, bank second and by allowing paid interest payments (not accrued) to be included in the cost of buying a home (which it undoubtably is).
Blk 130 – Buy price $605k – CPF 1st charge a whopping $949,583 – no outstanding bank loan!! His top-up from sale price would have been $248,609!!! Sale proceeds are nearly a million bucks altogether!
A not-so -lucky owner:
Blk 123 – Buy price $615k – CPF 2nd charge at only $475k, - outstanding bank balance $194k, - long term mortgage paid mainly by cash. Interest componant not fully reflected in CPF . Sale proceeds S702k . Zip extra as a result.
Parliament should look at the real life negative consequences of this ruling. In their quest to make a flawed system seem fairer, they have instead skewed it to reward one group over another, and without achieving the objective stated by Minister of Law. They can fix this glaring anomoly by reverting to the CPF first, bank second and by allowing paid interest payments (not accrued) to be included in the cost of buying a home (which it undoubtably is).
I have been told the rational behind the 2002 change in order of charge was "a change in the bankruptcy law and the drive to pin personal accountability for financial failures."(The Pariah).
So, untold numbers of ordinary, tax-paying, diligent folk struggling to pay their mortgage have to suffer hundreds of thousands of dollars in losses so that Banks are assured their pound of flesh from a tiny few? In the whole of Tampines Court, there was only ONE reported bankrupt.
Is this a case of the law taking a sledghammer to swat a fly?
Parliament's second reading of the bill: The Deputy Prime Minister and Minister for Law (Prof. S Jayakumar):
"Mr Alvin Yeo asked whether the Bill should go the full way to list in the Fourth Schedule all the permitted deductions, in other words, instead of being inclusive, be exhaustive. The specific point that he made was about CPF monies. He said that there is no reason why CPF monies should not be counted as a financial loss.
Madam, the list in the Fourth Schedule is based on what the STB currently considers as permitted deductions. It is not meant to be exhaustive. Over time, additional items could be added if the STB comes across other permitted deductions while dealing with future applications. On the treatment of CPF monies, I think what Mr Alvin Yeo is, in fact, asking us to amend the law is to reverse the High Court's decision in the Waterfront case. My Ministry has no ground to disagree with the ruling in that case, and hence we have not sought to amend the law.
Perhaps, I should explain. In a property purchase, CPF funds can be used to pay for three components: (1) the lump sum for the initial purchase; (2) monthly repayments of bank loan principal; and (3) monthly repayments of the bank loan interest. I should explain that CPF funds used for the initial purchase - this is the first component - and for monthly repayments of bank loan principal - this is the second component - are factored in financial loss computation as they constitute part of the original purchase price. But CPF funds used to repay bank loan interest - this is the third component - are not taken into account, because if the law were to do that, then there would be no parity between an owner who takes a long-term mortgage with a high component of bank interest and an owner who pays totally in cash or an owner who takes a small loan and pays off the loan faster.
Some have asked if CPF interest forgone for the total amount of CPF money that has been withdrawn should also be taken into consideration. This component is not relevant because there is no actual financial loss in the CPF interest forgone."
Aug 19, 2008
Has CPF lost it's mission?
From the CPF website (accentuation and cute pics are my own):
Mission
“To enable Singaporeans to have a secure retirement.”
Vision
“A world-class social security organisation enabling Singaporeans to have a secure retirement.”
“To enable Singaporeans to have a secure retirement.”
Vision
“A world-class social security organisation enabling Singaporeans to have a secure retirement.”
Corporate Philosophy
Our Commitment
Our Commitment
The Central Provident Fund (CPF) is a social security savings scheme jointly supported by employees, employers and the Government. CPF members are employees and self-employed persons in Singapore.
The basic purpose of the CPF is to help members meet primary needs like shelter, food, clothing and health services in their old age or when they are no longer able to work. Benefits offered are to help meet one or more needs of the CPF member in his retirement. They include withdrawals by the member for retirement, permanent disablement, home ownership and medical care. The amounts available depend on how much the member has saved in the CPF.
The basic purpose of the CPF is to help members meet primary needs like shelter, food, clothing and health services in their old age or when they are no longer able to work. Benefits offered are to help meet one or more needs of the CPF member in his retirement. They include withdrawals by the member for retirement, permanent disablement, home ownership and medical care. The amounts available depend on how much the member has saved in the CPF.
The Central Provident Fund Board
The CPF Board is the trustee of members' CPF savings. We seek to protect and preserve the value of the savings. We provide fair market returns at minimal risk, while opening avenues for members to seek higher returns on their own after carefully considering the risks involved. The guiding principle is prudence. And returns should contribute towards the member's well-being in his retirement.
Singaporeans spend their entire working lives contributing to this savings fund in the expectation that the money will be safe from marauders, thieves, mismanagement and the vagaries of the real world. They diligently save (albeit compulsory savings), whether in cash or in property, towards the day when they will be able to draw down on thier lifelong savings to finance themselves and their loved ones in their dotage. CPF was always the conservative protector, protecting members even from themselves, restricting what, when and how much members could utilize their savings. CPF rules are myriad and Singaporeans, by and large, have benefited greatly from this unique Singaporean scheme.
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So what went wrong?
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What happened to this grand scheme and vision when Waterfront View put them in the spotlight? Why were tens of thousands of dollars allowed to disappear from member accounts without so much as a squeak of protest from the trustees? Why did the CPF allow en bloc sales to go through knowing that members would lose large chunks of their precious retirement savings? Why didn't they fight back?
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As trustees of members' savings, can they be trusted with our nest egg anymore?
As trustees of members' savings, can they be trusted with our nest egg anymore?
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Building on the fine decision of Horizon Tower's Court of Appeal, perhaps the pendulum of common sense and justice can swing a littel further to the centre and put right the wrong that sprung up in April 2007, when the CPF allowed LTSA to undermine it's mission statement and surprisingly opened it's doors to en bloc marauders. When the LTSA came in the door, CPF prudence and purpose went out the window.
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Words are just words, facts speak volumes. See again my post CPF LOSS to recap on the numbers and the irrationality of the 1st charge vs second charge ...
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Will CPF reconsider their uncharacteristic and unpopular decision to waive outstanding amounts owed to it should the sale proceeds of an en bloc sale be insufficient? Will they repair the damage that this have done to their reputation as guardians? Will they compensate people for their retirement losses?
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If the Appeal Court can restore order to sale committees, I have faith the CPF Board can still review and revert back to it's primary mission of protecting and preserving the value of the savings even in an en bloc.
Aug 16, 2008
Ministry of Law in denial again
Enbloc panels already have a lifetime
Straits Times – 28 Jan 2010
'Ms Prior suggests that a collective sale committee should have a limited lifespan. This is already provided for in the Land Titles (Strata) Act. The committee will automatically dissolve on expiry of the collective sale agreement. The agreement will expire if the requisite consent level is not attained within 12 months from the date of the first signatory.'
Straits Times – 28 Jan 2010
'Ms Prior suggests that a collective sale committee should have a limited lifespan. This is already provided for in the Land Titles (Strata) Act. The committee will automatically dissolve on expiry of the collective sale agreement. The agreement will expire if the requisite consent level is not attained within 12 months from the date of the first signatory.'
Is the Ministry of law telling the whole story here? There are two possible avenues by which the sale committee can extend their lifespan - before and after the signature collection.
1) Before the signature collection begins.
They can delay starting the process for months or even years.* The sale committee members, who were duly elected at the AGM for that purpose, can resign at any time, and their positions either left vacant or filled by others who are neither elected nor vetted by the owners. The LTSA on this matter is shambolic (especially Paragraph 10, Third Schedule which nullifies most of what went before it!)
*The LTSA Amendments 2010 have limited this initial period to 12 months - which is exceedingly generous of them and ridiculously long. Why would they need to delay their signature collection and keep the estate on tenterhooks? They are merely holding on to their positions and can sign on the last day to extnd their tenure by another 12 months. If the MInLAw wanted to shorten the time-frame for a collective sale - they could have started here.
2) After the 80% has been reached but there's no sale:
Once the sales committee has reached the 80% mark they then can have an extended tenure - thanks to a recent high court ruling (see Koon Seng House).* Should the SC fail to secure a buyer they need not be disbanded, as the legislation suggests. Instead, all they have to do is collectively sign a SUPPLEMENTAL CSA lowering the reserve price and they have a FRESH 12 months to get another 80% approval! 12 + 12
Then they have ANOTHER 12 months after that to secure a buyer and make an application for sale to the STB (12 + 12 + 12).
This supplemental CSA is considered a new agreement. Of course, if the CSA can be renewed in this way, it is only logical that the SC tenure is renewed along with it.
The high court judge did not stipulate by how much the majority owners could lower the reserve price - so theoretically it could be by just $1.00.
And there is no limit to the number of supplemental agreements the majority can sign
And what about supplemental agreements changing other clauses in the CSA? What's the word on that?
This is another way the majority can circumvent the time frames and keep the estate in perpetual en bloc mode. Whatever happened to the process being finite? Can 'forever' even be considered a time-frame at all!
I ask the Minister of Law - is this fair?
*The LTSA Amendments 2010 have not made it a 'relevent event' when a buyer cannot be found within the time-frame - opening the door for the CSA and SC's continuance.
Aug 11, 2008
A case for 1-for-1 exchange
There should be a provision for a 1-for-1 exchange as an added alternative to cash compensation as is the case now; it would indeed defray a lot of aggravation, heartache and anxiety if an en bloc sale offered two choices instead of a wholly inadequate one. It's not acceptable that downgrading is considered a viable option. It is not acceptable that giving up our 'old' homes means moving into equally old or even older properties.
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A 1-for-1 is an attractive alternative. Owners can form a 1-for-1 Group and insist on it being an alternative. They can, and should, engage their own lawyer to look after their interests on this matter. It would also require a lot of work on the part of the SC, but the next SC is NOT going to have it easy, anyway. They have to understand the huge disparity of feelings/expectations/financial constraints faced by the residents of our large estate. ONE SIZE DOES NOT FIT ALL.
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Lets look at TC in more detail:
No of units: 560 averaging 1700sq ft each
Site area: 702,162 sq ft
Gross Floor Area (GFA): about 1 million sq ft
Plot Ratio: 2.8
Potential GFA (for any new development): about 2 million sq ft
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"Investment sales director, (name) said the 702,458 sqft site has a plot ratio of 2.8 and a potential gross floor area of at least 2 million square feet"
Business Times -23 Jan 2007
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So a Buyer has double the aggregate strata title area to redevelop. So even if 100% of the owners opted for a 1-for-1 exchange, he would still have 100% of the site left over for redevelopment.
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So from the developer's viewpoint, it's 1-for-2 : buy one; get one free, and if both are sold at double the price then at is effectively 1 for 4
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A developer will subdivide the strata area into units of varying sizes.
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" It can be potentially redeveloped into a new condominium with about 1,589 units averaging 1,300 sq ft"
Business Times - 28 Mar 2007
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"Prospective developers can be looking at building projects with around 1,700 units averaging 1,250 sq ft each"
Weekend Today -27 Jan 2007
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Let's look at Waterfront View (ex-HUDC)
En bloc sale price: $385 million by private treaty
Average sale proceeds/unit: $660,377/ unit
Developer: Far East, Frasers Centrepoint
Date of sale: May 2006
Land price: $241 psf ppr inclusive of DC/DP
Potential Gross Floor area; over 2 million sqft
Projected break-even cost: $450 psf
Let's look at Waterfront View (ex-HUDC)
En bloc sale price: $385 million by private treaty
Average sale proceeds/unit: $660,377/ unit
Developer: Far East, Frasers Centrepoint
Date of sale: May 2006
Land price: $241 psf ppr inclusive of DC/DP
Potential Gross Floor area; over 2 million sqft
Projected break-even cost: $450 psf
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Why is a 1-for-1 exchange an attractive alternative to cash?
- you are guaranteed an equivalent replacement home under whatever market conditions prevail at the time of completion. (remember an en bloc sale can potentially take up to 2 - 3 years before receipt of sale proceeds - unlike a normal sale which takes only 3 months). Add to that another 2 years before you can move into your new home....
- you preserve your special ties with the area
- you maintain the standard of living that you have struggled so hard to achieve by maintaining the size, level and orientation of your unit (if so negotiated).
- by not cashing out, you are in fact maintaining or increasing the value of your home.
- you are not being shortchanged, as was the case in our failed en bloc. [You could only get a new unit at half the size or double the price with the sale proceeds].
- if you are a single home owner (as most of us in TC are) then this is the best way to preserve your modest wealth.
Why 1-for-1 is attractive to a developer-buyer:
- lower up-front financing with each opt-in unit
- makes for an easier en bloc all round* with fewer objections based on sentimental/financial reasons.
Aug 4, 2008
The vestiges of a failed enbloc
The For Sale signboard:
I'm sure owners want to see this taken down as soon as possible. I believe the managing agent has called the property agent to come and remove it, failing which the MA will remove it and charge them costs.
UPDATE: 09 Aug 2008
The property agent has removed the signboard.
STB Costs
An outstanding issue that has not been fully resolved.
It was unusual for the STB to award costs to the Applicants, the amount is still being worked out and it appears (note, I am not 100% certain here) the burden of payment will fall on the two Applicants. This could be quite a substantial sum of money, and underlines the risks taken by those who put themselves forward as the main applicants in an en bloc sale.
There are caveats lodged on our homes. A caveat cannot be removed by a phone call, nor can it be done over the internet.
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UPDATE 13 Aug: ALL CAVEATS WERE REMOVED BY THE BUYER SHORTLY AFTER THE EN BLOC FAILED AT THE STB.
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However, in a Land Titles Search; each of the properties* continue to reflect another Interest/Encumbrance. It appears as Item No. 3: "Application to Register Collective Sale Application IA/970386M ". It lists the two STB applicants by name. Perhaps you should write to the en bloc lawyer to remove the said notification against each of your properties.
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* at least this is the case with my property; I am therefore assuming it is the same for all.
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