Pg 4 - Letter of Authority

Just when we are nearly done and dusted, another little hiccup comes along. Never thought I would be writing another piece such as this ever again. I waited until after the signing was finished to comment on this strange little matter of the Page 4 Letter of Authority .

We are at the very last stages and it should be no bother for people to sign the necessary documents to close the matter - but really, asking people to sign off on a substantial bill-as-yet-unseen is too much - especially when the numbers don't seem to tally. The 'vocal' amongst are bound to object - - and object we do.

So, what was on this Page 4 that has caused it to be possibly withdrawn on the last day of signing (to be confirmed)?

Well, it was a Letter of Authority to the 2 law firms confirming that we agree to permit payment due to them' in the manner as follows'.

1. Our lawyers fees in accordance with the CSA
2. The Property Agent's fee in accordance with the CSA
3. Bank redemption
4. CPF redemption
5. The balance going to our bank account

First objection:

'In the manner as follows'? What does that mean - that they will deduct their fees in that particular order? Surely the CPF and Bank have first charge - they have to wait until those sums have been settled, surely. Remember me asking about 'Order of Charge' at the last meeting and not getting a satisfactory answer? This to me looks like we are being asked to agree in writing to a specific order in which the funds are to be channelled. Why does this matter? For the vast majority, the sales proceeds are ample enough to cover all 4 payments and then some, but you never know if there are units under stress and what complicated arrangements they might have with lending authorities. 

Hypothetically speaking - if a unit runs out of money after paying the first 3 items on the list - the CPF has a waiver policy which means the unit will lose his CPF (capital as well as accrued interest).

If the order of charge were reversed and items 1 & 2 were last then there would not be enough cash left to pay the collective fees and they would have a hard time getting blood from stone. This is all just hypothetical and only if the Letter of Authority is referring to the order of charge.

'In the manner as follows' is an odd choice of words if not. Perhaps they meant to say "In the matters that follow"

2nd Objection

The young lawyer was very adamant that we sign for the fees as stated in the CSA, I told her I didn't sign the CSA, nor are the fees fully fleshed out and that I wasn't signing for a bill I have not yet seen.  I have no problem with the fees as stated in the CSA - amounting to 1.28%, I have a problem with the unbilled extras which may be 'plus or minus 0.22%'. We were told we would be given a breakdown of costs and here they were, getting hundreds of people to sign on the dotted line without them ever seeing any kind of breakdown. Their confirmation of the unseen fees would be 'irrevocable'. To me this is bad practice. An asterix at the end of the letter noted that a draft completion account would be provided at the end of May - lets hope it is not just bald figures and is a comprehensive breakdown of all the costs & expenses.

The young lawyer also told me 'everyone will pay the same' and that the percentage is 1.5%. I told her the percentage was not 1.5% and everyone will pay according to their proportion of the sales proceeds. In the end, I just didn't sign page 4 and toddled off to my favourite lawyer who has more informed answers.  This lawyer told me I need not sign and after I confirmed with her that neither the Bank not the CPF require me to sign this form for matters to move along, I took my page 4 home until after the itemised bill is presented in May.

It is my opinion that I do not have to sign Page 4 at all, it is totally redundant because I have sold my house and these things will be done automatically anyhow.

Now on to the next matter of the 1.5% 'plus or minus'
As with any collective sale, the full costs of the sale cannot be known at the beginning. Base fees are agreed upon in the Terms of Appointment and it is these base fees that add up to 1% for the MA and 0.28% for the lawyer.
What's not included in these fees (as far as I can determine from the CSA)

• GST @ 7% 
• STB Application fee 
• Newspaper Advertisement 
• Valuation at close of tender 
• Legal fees with regard to Discharge of Mortgage / CPF / SSD / PropertySearches - all of which are minimal fees
• Disbursements; eg printing @15cents/page, postage ($20 each), probably the number of paper clips used, travel expenses
• Unknowns to blogger

Now, the question is, will all these extras really add up to the extra 0.22% of the Sales Price =  $2.134 m or approx $3,800 per unit. 

GST alone costs approx $870k, but it is our money being spent, and it is only correct and proper that we be given the bill before signing off on any amount. Expedience and efficiency should not trump proper procedure and accountability.