The rush to push deals through …in en bloc sales

With residents increasingly holding out for higher payouts as estates around the island continue to fetch record reserve prices in en bloc sales, allegations have emerged of sale committees trying to push through deals before new legislation kicks in.

King’s Mansion resident Abdul Hamid, for one, was shocked at the haste in which the en bloc sale process was carried out. All it took was three days and “all that was left for us to do was to sign or not sign the Collective Sale Agreement (CSA)”, he said.

The Government has announced plans to amend the current laws governing en bloc sales by the year’s end. While this was welcomed by many, calls are growing for urgent action to address issues such as the lack of transparency and neglect of minority interests during an en bloc sale.

Over at Minton Rise, a resident, who declined to be named, accused his estate’s sales committee of pressuring unit owners into agreeing to the sale.

When contacted, the estate manager maintained that the sale committee did everything by the book, but he declined to comment further.

A member of Clementi Park’s sale committee, Mr K C Lim, conceded that his committee was looking to bring forward the deadline for residents to decide on the deal — not because of the impending legislative changes but due to the soaring prices.

Already, a group of owners at Horizon Towers are trying to back out of an en bloc sale because they felt that the $500-millon deal no longer reflect the condominium’s “true value”.

Said Mr Lim: “If everybody is playing a waiting game, it becomes very tedious and time-consuming to carry on.”

When contacted, a Ministry of Law spokesperson told Today that the ministry has “no intention” to suspend the current en bloc regulations pending the review exercise.

The spokesperson said: “Owners who object to the en bloc sale of their development need not sign the CSA. If they have valid grounds to object, they can file their objections with the Strata Titles Board (STB).”

And refuting suggestions that the current regulatory framework appeared to side with the majority owners, the ministry reiterated that the STB was “not partisan”.

So, can anything be done to help the aggrieved parties before the new laws kick in?

One way, lawyer S K Phang suggested, is for more developers and sale committees to work out old-for-new exchanges for unit owners, under which they would get back a comparable unit in the same location.

Said Dr Phang, who has helped facilitate such deals at Eng Kong Green and Paterson Lodge, where all the owners opted for a straight swap: “If I were a developer, I would save on land costs, cash outlay and the interest to pay. The risk is also smaller.” This way, homeowners would not be affected by property-market fluctuations, he added.

Chesterton International’s research director Colin Tan attributes the unhappiness to a “misunderstanding” of the majority consent rule. He said: “Many of those on the sale committees see the 80- or 90-per-cent majority consent required as the magic number. They think that as long as they structure a deal which the majority will agree to, their job is done.”

A change in approach on the part of the sale committee, such as taking into account the interest of everyone involved, could go a long way in reducing acrimony during an en bloc sale. Mr Tan added that the impending legislative amendments merely seek to “make it clearer that the whole process must be fair”.

For some such as Mr Abdul Hamid, the amendments cannot arrive quickly enough. He said: “Year-end is too late. By then, I would have lost my home. What the Government does six months later is of no advantage to me.”

Source: Today