Collective Suicide Agreement DRAFT dated 23 Aug 2011

UPDATE: 25 SEPT

This draft is not the final draft. Owners will be presented with a NEW draft  to decide upon at a special EGM 4 .

I have no legal training whatsoever... the post below is just my own armchair reading of the Draft CSA. You ought to get your own independent legal advice on the CSA before making any decisions.

 In a nutshell, by reading between the lines, this is what I think signing the CSA means:-

NOTE: After a rethink, I made some amendments to my original post; especially to the 'completion date'. The OPP, Lease top up and QC are done before application to the STB and not after legal completion. )

1. I agree to sell the ‘units’ by any mode of sale, and not just by way of tender, auction or private treaty only,  as stated in the LTSA.  (8.1.1)(Definitions Sale Contract date)
2. I agree to search for a buyer immediately and not wait for the 80% requisite majority. (8.1.1 & 8.4).
3. I agree to allow owners sell their ‘units’ directly to the purchaser and I am not sure whether they are party to the CSA or not. These direct sellers might be getting a better deal but I will never know.  (8.1.12)
4. I agree to give myself 3 months to find a new home and vacate Tampines Court. (9.2)
5. I agree to allow the developer into the estate during those 3 months to start demolition/digging/building of show flats etc (11.26)
6. I will continue to pay full maintenance, even though the estate is now dirty, dusty, noisy and dangerous. (8.1.8)
7. I will continue to pay property tax even though, by the Law Society of Singapore's Conditions of Sale, it is for the purchaser to pay for all outgoings after the date of completion (Definition of Outgoing, 8.1.8)
8. I agree to let the Solicitors retain x% of my Gross Sales Proceeds for payment of outgoings I should not be paying for in the first place (12.4)
9. I agree to surrender my liberty (and common sense) and sign any piece of paper shoved in front of me sight unseen. (11.7 & 11.21)
10. I agree to bind myself with the most pernicious of clauses and to hand the Developer a potent weapon to use against me in a court of Law.  I am happy to bind myself totally and leave myself with no legal avenue for redress.  (11.21)
11. I agree to make the sale committee all powerful and myself a vassal (4.4 & 11.9 & 11.21)
12. I agree to spend thousands from the estate's sinking fund to hold any number of EGMs for any reason relating to the sale (4.4.10)
13. I agree to ignore the new LTSA rule and kick out the sole minority owner on the sale committee even though she has a statutory right to be there until application for sale to the STB. (4.4.10)
14. I agree to give the sale committee a blank cheque in order to choose a valuer; indeed they can choose as many valuers as they like without regard to cost. Property Consultants can also be engaged in this free spending activity. (4.4.1 & 11.29)
15. I agree to give the sale committee a blank cheque and allow them to spend my money freely in the engagement of any number of other professionals which might include;  senior counsels (remember the three at the STB from round 1!) other solicitors not directly involved in the sale  even though by LTSA, I need only engage a 1 solicitor, 1 marketing agent and 1 valuer. (4.4.2 & 11.29)
16. I agree to another blank cheque which allows the sale committee to spend unlimited amounts of money from my sale proceeds to prosecute my fellow neighbours and myself. They may spend freely on other solicitors and consultants with my blessing. (11.21, 4.4.8 & 11.29)
17. I agree that I cannot possibly know what the eventual costs and expenses of this sale will be with all this free spending activity going on.
18. I agree to let the sale committee change the terms in the CSA to suit the purchaser in the sales & purchase agreement (S&P). (9.6)
19. I agree to go above and beyond the duties of a vendor and what is required by me in the LTSA  and help the purchaser in the redevelopment of the land (4.4.7)
20. I agree that a retention sum of xx% of my Gross Sales proceeds can be withheld until vacant possession by me. (8.1.10)
21. I agree that a retention sum of xx% of my Gross Sales proceeds can be withheld until the last person has left the estate (9.4)
22. Hell, I even agree that the retention sum of xx% can, in fact, be as high as 100% if the other sellers agree (and they will) (9.3)
23. I agree that the Representatives can go ahead with all High Court actions without first asking for my reaffirmation (5.2.6) and spend as much money of my sale proceeds as they like in the defense of the sale (4.4.2 & 5.2.6)
24. I agree to ignore the LTSA rules and state that the reserve price is in cash only, even though the LTSA says 'in cash, in kind or both'.
25. I agree that only the sale's committee approval is required to raise the RP. So, if the market rises by 10% and the SC decide to raise the RP by only 1% (giving the Purchaser a nice bonus aka Horizon Towers), I cannot disagree with them.  I look forward to repeating the mistakes made by other estates.
26. I agree that the reserve price (the minimum proposed sale price) can be lowered, but I do not know the time frame or the mechanism involved.
27. I agree that the minimum sale price may be even lower than the proposed sale price by an undefined amount, which could be millions. (8.1.3)
28. I agree that if I withdraw my consent to a lower RP then I also agree to be put in legal limbo. I am neither majority owner nor minority owner.
29. I agree to continually inform the Purchaser of any change in address and telephone for seemingly nothing more that their own data collection (8.1.14)
30. I agree that only Sellers and not all Owners receive some of the Notices (16.3)
31. I agree that a Sellers meeting can be held at a drop of a hat with no minimum time of notice. It is entirely possible that I miss these important meetings but that is okay, because I have agreed to vote for any matters concerning the sale in advance. (11.10, 11.9, 11.21)
32. I agree to bind myself with 33 covenants (11)
33. I agree to gag myself and keep the CSA and S&P secret (11.8)
34. I agree to hold myself 100% liable for any costs, any expenses,  any damages and claims that may be incurred by the sale committee members and indemnity them for any error or act of omission on their part. Any error or act of omission on my part will be dealt with severely and I shall have no indemnity whatsoever. ( 6 & 11.29, 14.1)              
35. I agree that whatever the sale committee does, it does so in my name (11.27)
36. I agree that whenever a Sellers Approval is required, I will approve. (My conclusion only from combining clauses; namely 11.7, 11.8, 11.9, 11.10, 11.21, 11.27)
37. I am aware that the all important COMPLETION DATE is wide open, and that the developer will have the ultimate control on when the S&P expires. I know this from previous collective sales (HT, Gillman Hghts etc) and from TC’s own experience. Extensions to extensions are common practice. 

I feel there are some very serious problems with this CSA and the method of sale which it proposes.

(a) First of all, the CSA is incomplete.  It is always unwise to approve  a document which is still in the earliest stage of drafting. Important pages are left completely blank, information necessary to make an informed decision absent. By the LTSA, the CSA must state the Reserve Price, Method of Apportionment of Sales Proceeds, Solicitor and Marketing Agent Fees, other costs (such as compensation fund), person entitled to interest derived from moneys held by the stakeholder and date of delivery of vacant possession of the lot.  Only the marketing agent fees have been included, the rest have not or are vaguely set out. One cannot simply assume or imagine with a document of this importance that the correct information will be appended later on. The CSA has thus been presented to us prematurely and cannot be passed in it's present form.

(b) 'Units' verses the LTSA 'all lots and common property in the strata plan'.

I have to wonder at the wisdom of 'dumbing down' a legal document into the vernacular if the essential meaning gets lost in translation.  There needs to be clarification on what is actually being sold in this collective sale. Starting with the Definitions of 'Collective Sale', 'Purchaser' , 'Sale price', and 'Units';  there clearly is no mention of common property. Indeed under 'Units', it refers specifically to the Schedule 1 at the back of the CSA - a Schedule that is completely blank. So we do not know exactly what units will be eventually added to this page - and consequently we do not know what is exactly being sold collectively.  Will it be 560 or some other figure? Do not assume, one must see it in black and white as that is the whole point of legal documentation.   Further to this point, please take note of clause 8.1.1 whereby  Sellers agree to sell their units by any mode of sale and 8.1.12 where the Purchaser may require separate agreements for the sale of each unit. The combination of a loose meaning for 'Units' and a Purchaser going around apparently mopping up units as if they were on the open market makes me wonder if the wording is not intentional after all.  If 'Units' is indeed synonymous with 'all lots and common property in the strata plan' then it must specifically say so. The Purchaser cannot buy units individually, they must be sold as a collective package, or not at all.

(c) The mode of sale is at variance with the LTSA Third Schedule 11.(1)(2)(3).
There are only three methods of sale in the LTSA: public tender, public auction or private treaty. This CSA does not restrict itself to these three alone, but opens the door to any mode of sale in clause 8.1.1. This is a reversion to the old ways and a possible sale aka round 1.
There is no reference at all made to 11.(1) of the Third Schedule in the CSA but there is a lookalike clause in 2.5 . Important words, however, have been substituted, the word 'only' has been scrubbed and there is a subtle change in the meaning.  There is no doubt that there will be a tender or auction as we are assured of that in clause 8.1.11 - but it may just be going through the motions of satisfying the mandatory requirement. Any mode of sale means just that, anything is possible. Tender, Auction, Private Treaty, Expression of Interest (8.4), Invitation for an offer to purchase (8.4), separate agreements (8.1.12) - or a mix of of some sort.  The 5 possible modes of sale are envisioned and cemented in the DEFINITIONS  of "Sale Contract"
I would advocate the removal of  clauses 8.1.12 , 8.4,   'any mode of sale' in clause 8.1.1, and the alignment of all related clauses to the exact wording of LTSA 11.(1)

(d) Promises and loss of liberty. The 33 covenants and agreements are not for the fainthearted. A seller may be the legal owner of his property but he is not the master of his home or his destiny - the SC is (and through the SPA, the eventual Purchaser) . Owners need to be aware of clauses 11.7, 11.9, 11.10, 11.21 as being particularly restrictive and controlling. In fact, I believe the acceptance of these clauses will impinge on the Sellers liberty to choose when it comes to executing his 'Approval' on certain matters. I would advocate clause 11.7 come with an exception for those documents that require 'Sellers Approval'.  Sellers need to be certain that any non - approval will not be in breach of the Agreement and expose them to being sued under clause 4.4.8. Clause 11.10 needs to be amended likewise, there must be liberty to vote 'against ' and not only 'for' any matters relating to the collective sale. I suggest a rewording to 'vote on' with no negative repercussion on the Seller.  Similarly 11.21 should be scrapped in it's entirety as this is the mother of all knuckleduster clauses - it strips the Seller of their right to dissent, even in the event of a disastrous sale. 21 Phoenix Court majority owners found this out the hard way at the High Court when the judge came down very heavily on them drawing on this very same clause. On top of that, as they were obliged to indemnify the sale committee jointly and severally against all losses, damages and expenses ( same as 11.29 in our CSA) they were ordered to pay indemnity costs to all 9 SC members. Thus, such provisions in our CSA should be removed, for owners' protection.

(e) Sellers' Approval for clauses 8.1.3, 8.2.1, 8.2.2, 9.1, 9.3, 12.2. . Owners will need the Solicitor at the EGM to state for the record the exact process by which Seller Approval, especially for clause 8.1.3 would be executed. The actual process is vague which is in stark contrast to the precise legal nature of the rest of the CSA and so should be amended  to include the detailed mechanism by which Sellers' Approval is obtained. . Sellers' Approval is required for  a) lowering of the RP b) amending the Method of Apportionment and c) extending the SC approved 2 month extension of the  Completion Date

Sellers' Approval is a mirage in the SPA
How potent or weak is Sellers' Approval?
Phoenix Court Story: Under the SPA, the sellers had 6 months to obtain the STB approval  failing which the SPA would terminate. They received a letter from the Purchaser reminding them that they had to use their best endeavors to perform the SPA failing which the Purchaser was entitled to its remedies under the SPA.  They were told that in order to satisfy the requirement of using it's best endeavors under the SPA and to avoid breaching the contract in the event the STB order was not obtained in time, the sellers had to extend the validity of the SPA. The SC called for an urgent sellers meeting and less than 80% approved the extension. 14 angry sellers took the matter to the High Court. The ruling made was very illuminating; clause 3.(i) of their SPA stated that the Agreement would terminate at 6 months if no STB order was obtained. The STB order was not made in the 6 months time frame but because the sellers had given the SC wide-reaching powers including the authority to negotiate and enter into an SPA , because the sellers, by law, have to use their best endeavors to obtain the order from the STB, and because sellers had signed a promise not to do anything whether by act or omission that may prevent or otherwise be detrimental to the Collective sale or the fulfillment of any of the purpose under the CSA or the SPA, the extension was guaranteed. The lesson I have learned from all this is that it does not matter one iota what SPA says with regard to termination or extensions - the Sellers have no choice but to extend or they are landed in hot water.

There is one glaring omission from this list of Sellers' Approval - and that is to seek  Sellers' Approval or Reaffirmation before the SC sign for any SPA. If they can take the trouble to get 80% signatures for the above 3 matters - then there is NO REASON why they cannot add this to their list. There is a perfect point in the process where this can be done; the final scheduled Subsidiary Proprietors meeting (but not after the sale, please, that would be  preposterous!)
Third Sch: (4) As soon as practicable after the close of the public tender or public auction referred to in paragraph 11 or, where applicable, after the collective sale committee has entered into a private contract under that paragraph, the collective sale committee must convene a meeting of subsidiary proprietors, of which at least 7 days' notice is given —

    (a) to provide information on the number of offers received for the collective sale and the     respective prices so offered; and
    (b) to provide information on the terms and conditions of the sale and purchase agreement.
At the end of the day, this is the most important condition for owners, and if 80% want to proceed from this point onwards, then all the extensions to extensions etc can be happily entered into.

(f) The omnipotent Sale Committee
The powers given to the sale committee are wide-reaching : 4.4.1 to 4.4.13 , 9.6, 5.2.6, 8.1.11
According to the 2nd Schedule (4) “powers, duties or functions shall be decided  by ordinary resolution passed at the general meeting.”  So the extra powers 4.4.1 to 4.4.13 should have be voted on separately and not passed with all the other terms in the CSA. 


4.4.1 and 4.4.2 are open to abuse and owners might find themselves severely out of pocket if they sign these clauses. The SPs at EGM 3 on Sat 23 Sep 2011 voted against doing a valuation prior to setting the RP. So  'more' can be deleted in the sentence as only 1 valuation report is called for at close of tender. Is the MA envisioning engaging a second Valuer if the Valuation at close of tender is higher than the proposed SP and the valuer refuses to reconsider? (aka Marine Point 2011). And why are other property consultants added to the list? What is their function? Aren't we paying ERA $X million if the sale is successful? Other professionals can mean a dozen lawyers, senior counsels ...
4.4.3, 4.4.4, and 9.6 is where the real danger lies.
4.4.3 It is not for the sale committee to propose the terms of the Agreement solely - Owners  can ask for what they think is necessary for the process, or for them to participate in the process. The ultimate choice is with the owners themselves on how the sale should be conducted.
I wonder if the drafter of this CSA was aware of the significance of the numbers 444 when he chose to use them for this particular clause - it surely is a die-die item! Too much power is being given to the SC, especially when 4.4.4 is combined with 9.6 (which allows them to change the terms and 5.2.6  'take all actions'. The SPA is far more dangerous document that the CSA and  owners will not have the luxury of looking over the terms and conditions as the SC will  decide (or capitulate) on all the terms. Just by looking at the Sale Term Contingencies (9) you can get a feel for how this marketing agent is readying for a pro-Purchaser Agreement. There is nothing good here, just an ominous warning of things to come. The CSA  is taking care to get early clearance for the worst of Purchaser demands when they should be shoring up owners interests and concerns.  Worst of all is 9.6; a total repeat of round 1. Why are we bothering to discuss the terms if the SC can change them willy-nilly afterward?  Dangerously absurd.

I advocate :-

• the removal of clauses 9.6, 4.4.1, 4.4.2, 4.4.3, 4.4.7, 4.4.8, 4.4.10
• amendment to  4.4.4  'to  ............. purchaser and to seek approval from the Sellers at the Scheduled Owners meeting to which 7 days notice has been given before approving ................................ Sellers'. 
• amendment to 4.4.13 to include 'all other laws, regulations or government policies '

(g) Lowering of the Reserve Price 8.1.3
This is new ground for Tampines Courters and we should tread very carefully by making sure there are no traps ahead. Owners should first be satisfied that a fair and transparent mechanism for signing any supplemental Agreement is in place.  The time frame must be established and adhered to.
Clause 8.1.3 (a) needs to be explained because it makes no sense why 'below' is there if the proposed sale price is already on the table. There is definitely something wrong here.
There is always the danger that some owners might get 'top ups' to encourage them to re-sign.  It is illegal, but really, what can you do about it?  If it is done in stealth then how to catch them at it?  Clause 8.1.12 looks suspicious to me for this reason.
I advocate the removal of 8.1.12  because why give the Purchaser a legal loophole if they are caught topping up.

(h) Solicitor needs to explain these funny clauses
There is another clause that gives me pause for thought: 2.11 and it's 'or otherwise where they enter', because I do not know what supplemental agreement they are talking about. Neither am I sure if all 4 instances are referring to the STB and High Court orders 
In clause 2.12, how can there be an 'or otherwise'? Surely only the STB or the High Court can force a minority owner to be bound to the terms of the CSA? Only they have the right to strip owners of their proprietary rights.
Clause 8.1.4:  So, if the Solicitor is tardy in sending out the letter, and the Purchaser claims he never received it, these can add  months on to the completion of sale. Why is it not 3 months from the date of receipt by the SOLICITOR of the STB's confirmation?

(i) Completion Date (8.1.4, 9.1)
Clause 9.1 blows the completion date right out of the water. The Purchaser can delay the date of completion ' for any other reasons'. So, if the property market takes a sudden downturn, the Purchaser can put the sale on hold for a few years? It all hinges on whether 'Sellers' Approval' has any bite  - or is it just whitewash. Will a Sellers' obligation to use his best endeavours to give effect to the terms of the agreement coupled with his multiple covenants render him powerless to refuse? Turn your thoughts back to the gun held to the Sellers heads in Horizon Towers and Phoenix Court and probably many more if I dig deep enough.

(i)Dreadful Sale Term Contingencies
In round 1, some of the SPA terms were owner-friendly: -for example,  only 5% of the sales proceeds to be retained until vacant possession, Owners to pay a token $1 rent per month to stay for the FULL 6 months until vacant possession.  Over-stayers to pay $300 per day. Non completion due to death or incapacity was 1 month for each occurrence. Owners did not have to give vacant possession simultaneously or moneys held until the last person left. The owners did not have to pay property tax and the Purchaser paid for all outgoings.

Compare that to the full 9. Clause:  9.2, 9.3 (a real bruiser, read it as 100%  again with a possible whitewashing Sellers' Approval), 9.4, 9.5. There are people in the estate who haven't moved home in 26 years; you can't expect them to find a new home in 3 months. Only those who have second properties can move out at such short notice.  If the Purchaser wants this term then the SC should tell him a straight No! The LTSA allows for 6 months, the Purchaser knows this and should not disturb this condition for collective sale.

We do not need to hobble the Sale Committee in their negotiations by agreeing to pro-Purchaser terms in advance.  These are not 'deal breaking' terms, they are arm-twisting terms. Lets have some faith that our negotiating team can do better than this. If not, why are we sending in a bunch of schoolgirls to do man's job? Why are we throwing in the towel before the fight begins?
I advocate the removal of all Sale Term Contingencies

(j) Dreadful Covenants and Agreements
11.5, 11.6 ; Who  decides what is sufficient? Why don't we just get a 'cat-o-nine-tails' and whip the owners into submission? We must not leave any owner out to dry like this, I would prefer to see a reasonable set sum ($300 per day) rather than an open 'claims, losses or damages' which would bankrupt anyone . There is no mercy, no discretion, no consideration at all for how an owner would find himself in this predicament. Remember, this is an Agreement between neighbours,  have we become that bloodthirsty?

(k) The execution page (page 30)
VERY POORLY DRAFTED - 
What's missing:

• Name and IC number of Seller(s)
• Place of Signature
• Contact number
• Reserve Price (because it is SO important)
• Special Conditions/ Supplemental agreement(s) (if any)
• Previous Rescission date (if any)