Friday, October 26, 2007

AN UNUSUAL proposal is being pitched at apartment owners

AN UNUSUAL proposal is being pitched at apartment owners at Richmond Park:

Its management corporation (MC) is seeking the power to co-broke the sale and rental of their units in return for half the commission from the transactions, which will go into the management fund.

Owners who let the MC play co-broker will get a 20 per cent discount off what they pay to the management fund for up to 12 months.

Those who want no part of this scheme will need to opt out, and pay 20 per cent more in their monthly contribution. However, it is not clear how this will apply to an owner who is selling his unit.

These are among the by-laws which the condo's MC chairman, Dr David Tan, will propose at its seventh annual general meeting (AGM) tomorrow.

Noting that about a third of Richmond Park's apartment owners were living in Indonesia or Hong Kong and were either absentee landlords or absentee home owners, he said: 'It is primarily in their interest that we have conceptualised this by-law.'

Its objective, said the 69-year-old retired eye surgeon, is to generate revenue for the maintenance fund so contributions to the fund can be kept low, since raising contribution rates always meets with resistance.

Not everyone is thrilled with the idea - the resident-owners, for instance.

A resident who has lived there for seven years said: 'Why should I give up my sole right to sell or lease my unit? This narrows my choices of agents who are willing to help me market my apartment, since they get only half the commission.'

Located in the heart of Orchard Road, Richmond Park has 159 units, each paying between $330 and $660 in monthly maintenance fees, depending on unit size.

Industry experts say the by-law is unusual.

Knight Frank Estate Management - which manages the condo and 90 other estates - went as far as to say it was unheard of.

Lawyer S. K. Phang of Phang & Co, saying an MC had no right to be a broker, explained that such a function fell outside the roles and powers of an MC as defined by the Building Maintenance and Strata Management Act.

He added that even if all attendees at tomorrow's AGM are fine with the proposed by-law, it does not follow that it would pass muster with the Strata Titles Board.

Chesterton International's head of research and consultancy, Mr Colin Tan, added: 'People don't realise that they can challenge certain by-laws. If they are unreasonable, they may not stand in the court of law.'

Real estate company PropNex's chief executive, Mr Mohamad Ismail, said no one had so far proposed this to his agents, and that PropNex would 'keep the option open at this juncture'.

Dr Tan is also proposing that security guards and staff be paid to show the units to prospective buyers and tenants.

He said: 'We know our property better than anybody else. We know the market value and the rentals charged by all units.'

Mr Ismail, however, said real estate agents had a better idea of market changes and demand.

He, too, sees resident-owners losing out in the scheme, because the agent working with the condo management may not want to co-broke with other agents, which would further divide up the commission pie.

It might thus take longer to find buyers and tenants, and resident-owners may lose a month's rental waiting for the deal to close.

Dr Tan, saying he expected resistance as he was 'going into uncharted waters', added: 'I don't see why this by-law will not be passed. It benefits everyone all round.'

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