PLEASE refer to Monday’s article, ‘En-bloc uproar at Bayshore Park, Mandarin Gardens’ by Ms Jessica Cheam, and the letter by Mr Augustine Cheah, ‘En-bloc system needs relook, as Bayshore shows’.

The Mandarin Gardens collective sale committee would like to clarify that it was not involved in the proceedings of the annual general meeting on April 27.

However, we know of members who attended as legal owners or subsidiary proprietors. One of our members present at the AGM declared that none of us would stand for election to the council.

We certainly did not organise any collection of proxies, although some subsidiary proprietors may have approached committee members in their capacity as neighbours.

Tan Kok Khoon

Source : Stratits Times - 9 May 2008

IT IS interesting the fact that en bloc unhappiness still prevails despite last year’s new rulings.

Maybe it is time the guidelines are further tweaked to follow those of the Housing and Development Board’s Lift Upgrading System.

Before any en bloc committee is formed, the management committee should conduct a poll for every registered resident to either opt in or out of en bloc.

If 100 per cent consent is not obtained, the project should be scrapped and put on hold for three to five years.

This will be more efficient and neighbourly than forming an en bloc committee, wasting precious time and resources, and then scrapping a project when there is no majority.

David Soh Poh Huat

Source : Today - 7 May 2008

A REPORT by a major bank has flagged potential financing concerns for small property developers that swooped in on the collective sale boom in the second half of last year.

BNP Paribas said that given the current turmoil in the financial market, some of these small operators might face financing problems as they move to finalise deals struck in the property market heyday last year.

In fact, some may be forced to cancel the deals and walk away, it warned.

The report by the French bank said that most of the collective sales done in the second half of last year were by small private developers, contractor- cum-developers and non-core developers.

They included Soilbuild, Hiap Hoe, Lian Beng, KSH Holdings, Koh Brothers, Popular Holdings, Aspial Corporation and Eastern Holdings.

‘In the near future, we are concerned that some smaller players that have secured big and expensive en bloc sites may walk away from the deals as securing financing is not easy at this time, especially for non-core developers,’ said the recent report.

Already, a small private firm, Bravo Building Construction, said to be backed by a one-time big property player, has bailed out of three collective sale deals.

In all three deals, it has had to give up its deposit, which ranged from 1 per cent to 10 per cent of the sale price.

The biggest of the three deals was the $516 million purchase of Tulip Garden, for which Bravo had to forfeit its $25.8 million deposit.

A property consultant, who declined to be named, said the smaller buyers last year were mostly listed firms and thus unlikely to renege on their deals.

‘Some small privately owned firms are looking for joint-venture partners for their development sites or to divest the sites,’ said Credo Real Estate’s executive director, Mr Tan Hong Boon. ‘But they will sell only if they can get a reasonable market price.’

Mr Nicholas Mak, the director of research and consultancy at Knight Frank, said: ‘The last time developers defaulted on deals was when there was a prolonged downturn.

‘But we have yet to enter a price decline situation. The jury is still out on whether the property market will suffer a downturn.’

Source : Straits Times - 5 May 2008

Sales committees rein in estate councils, irking owners who want to upkeep homes

THE market for en bloc sales may have gone dead quiet, but the issue is still raising a ruckus at two of Singapore’s most iconic condominium developments in the East.

Sales committees pushing for the collective sales of Mandarin Gardens and Bayshore Park have been accused of trying to control the management councils running these estates and voting down proposals to upgrade estate facilities.

TALL ORDER: With $2 billion each needed to buy Mandarin Gardens (above) or Bayshore Park, analysts say their collective sales are unlikely in the current market. — ST FILE PHOTOS

The committees, made up of residents who are pro-en bloc, have denied the charges.

Still, things came to a head last Sunday at both condos’ respective annual general meetings (AGM), which lasted up to 10 hours each.

Sales committees are ad hoc committees formed by residents to explore the potential of an en bloc sale. They are different from the management council, which is appointed at the AGM by residents to run the estate and look into the upgrading of facilities.

Residents against en bloc sales at both condos claim that the sales committees had gone round collecting proxy votes from residents so as to control the outcome of the AGMs.

Mandarin Gardens’ emotional AGM has left the 25-year-old estate with no management council at all. The existing council quit and refused to be re-elected because of some resolutions passed at the AGM. At the centre of the dispute was a controversial proposal by the sales committee, which was formed last year, to reduce the management council’s current limit of $300,000 for expenses on urgent matters to $50,000. This was successful as the sales committee had enough proxy votes to form the majority. Council chairman Neoh Chin Chee said in a letter to residents last week that the resolutions passed made it ‘untenable or difficult to carry on as a council member’. Proposals to upgrade the condo’s rainshields and swimming pool tiles were also not approved.

The AGM was eventually adjourned when not enough candidates were nominated.

One resident Jeannette Aruldoss, 44, a lawyer, told The Straits Times that the $50,000 limit restricted the role of the council to run the estate. In emergencies, this fund may not be enough to address safety issues, she said.

But sales committee chairman Mr Tan Kok Khoon said some residents had felt the $300,000 limit was too high.

Over at the 21-year-old Bayshore Park estate, the sales committee proposed and pushed through a resolution to reduce the council members from 14 to nine.

Of the nine, four are also on the sales committee, so some residents are upset about the change.

Bayshore resident Mr S.K. Cheah, 40, a sales director, feels there could be a conflict of interest since sales committee members are likely to act in the interest of a sale, above that of the estate.

He noted that at the AGM, some resolutions for maintenance and upgrading were also voted down.

Another Bayshore Park resident, who declined to be named, commented that one common tactic used by many sales committees is to ‘run the estate down’ or keep maintenance to a minimum, so residents have little choice but to vote for a sale later.

But Bayshore’s sales committee member Alan Chua told The Straits Times that they had no intention of doing that.

‘We’ve lived here for many years and love this place, why would we do that?’ he said.

On the en bloc sale potential, Savills Singapore director (marketing and business development) Ku Swee Yong noted that at least $2 billion each would be needed to buy each estate - a tall order even when the market is good. ‘With the current market, the sale is impossible,’ he said.

Source : Straits Times - 5 May 2008

IF THE Government still thinks the current laws under the Building Maintenance and Strata Management Act and the Land Titles (Strata) Act (Amendment) are sufficient to regulate the issues of collective property sales, this tale of two condos may provide food for thought, especially as the Government has invited feedback on these laws.

On April 27, Bayshore Park and Mandarin Gardens both held annual general meetings. These two estates, with more than 1,000 units each, sit on 1 million sq ft of land next to the sea.

Both have got a collective sale initiative off the ground, with sale committees elected. With the support of pro-sale residents, voting powers are then used to control the rest of the estate, even though the votes represent only a minority of residents. Let me illustrate:

In Bayshore Park, the pro-sale group outvoted other residents on crucial issues and in selection of council members. Averaging 60 per cent of votes cast at the AGM, this roughly 20 per cent of residents (as only 30 per cent of owners were represented at the AGM) voted down a proposed increase in maintenance charges in line with current inflation, voted for a lower increase in the sinking fund, voted down crucial replacement of copper pipes in the common corridors and voted down any exploration of corridor upgrading. In addition, they voted for a reduction in council seats to nine, making sure four sale committee members were voted into the council, and ensured that four of the five previous council members retained had exhibited pro-sale inclinations. They made sure two previous council members who did not favour sale were not re-elected. I was one of the two.

At Mandarin Gardens, in a similar vein, the pro-sale camp mustered enough proxy forms to control 65 per cent of the votes in the AGM. They defeated a motion to reduce water ponding of walkways and lift lobbies to improve safety, and passed a resolution to reduce management council (MC) expenditure limits from $300,000 to $50,000 making it almost impossible for the MC to function. Consequently, the incumbent council refused to stand for re-election. Even more devastating, the pro-sale camp fielded no candidates for council. Hence, no council was elected.

The law was not broken at either AGM. However, many of us affected are sure the law was not designed to produce such outcomes.

Augustine Cheah
 
Source : Straits Times - 5 May 2008

Enbloc sales woes and unhappiness at Mandarin Gardens have left the condominium without a management committee for the past week.

The previous committee refused to be re-nominated for elections at its Annual General Meeting last Sunday.

Since then, no one is taking charge of the day-to-day management at the condominium on Siglap Road.

Channel NewsAsia understands that the entire management committee stepped down because of disputes with the estate’s enbloc sales committee.

Apparently, the enbloc sales committee pushed through resolutions which are unfavourable to the entire estate, through its control of proxy votes.

When contacted, the Strata Titles Board said such cases are rare, but it is unable to do anything at this point.

Under the law, all residents are jointly responsible for any liabilities incurred by the condominium during this period. - CNA/ms

Source : Channel NewsAsia - 2 May 2008

I REFER to the letter ‘Raise en bloc consent level to 99%’ by Ms Susan Prior (April 19) .

Her letter seems to me to be a way of asking the relevant government authorities to revert to the 100 per cent consent ratio for collective sales. How so?

For apartment buildings and condominiums with 50 units or fewer, a 99 per cent consent ratio means that 49.5 units have to agree to the collective sale.

As this is absurd, rounding up to the nearest whole figure means 50 units, that is, 100 per cent. Similarly, for developments with 99 units or fewer, a 99 per cent consent ratio means 98.01 units. Rounding up means that 99 units have to agree, or 100 per cent again. Over the years, how many projects that had been sold collectively had 99 units or fewer each?

I would say a significant number, going from my clippings of such reports published in the papers.

If Ms Prior’s suggestion is adopted, these developments would not have succeeded in being sold collectively.

However, I do agree that fairly new condominiums should not go under the en bloc hammer. My proposal is for the relevant authorities to consider disallowing buildings less than 20 years old from being demolished, unless there are extenuating circumstances, like a structural defect.

This does not prevent developers from buying and refurbishing them via a collective sale if they find that option financially viable.

Secondly, to allow for urban renewal to continue but at a more gradual pace, the consent ratio could be amended as follows: Buildings 20-24 years old (80 per cent); 25-29 years old (75 per cent); 30-34 years old (70 per cent); 35-39 years old (65 per cent); more than 40 years old (60 per cent).

Ace Matthews

DO IT THE OLD WAY

‘Why not put an immediate stop to this entire flawed, resource-wasting, socially divisive process and revert to a… supply-and-demand property market situation?” - MR DENNIS BUTLER, responding to a letter by Madam Ong Boot Lian calling for an end to the collective property sale mediation process

Source : Straits Times - 1 May 2008

A GROUP of 31 home-owners — most of them facing en bloc battles in condominium estates islandwide — have showed their support for one of their ilk, who was featured on the cover of Weekend Today.

Yesterday, representatives of the group, who call themselves the “Stayers”, delivered an envelope containing a letter and $520 to Today’s newsroom, in a symbolic show of support for business consultant Ken Lee.

Mr Lee, 52, had earlier got an en bloc application for his condominium, Airview Towers on River Valley Road, voided. But on Thursday, the Court of Appeal overturned the High Court’s decision and Mr Lee — who represented himself — was ordered to pay his opponents’ legal costs.

Today understands this amount, to be decided in court, could be anywhere from $150,000 to $300,000.

In the letter with 31 signatures, the group — residents from estates such as Bayshore Park, Horizon Towers and Mandarin Gardens — expressed their “admiration” for Mr Lee’s fight and said they wanted to “start a fund to help him pay his efforts”.

“We, in our own condos, are fighting against the en blocs affecting all of us and would like Mr Lee to know that we share his sentiments, and we too will oppose the sale of our homes even if we have to fight alone, like him, to do so,” the group wrote.

A member of the group, sales director Augustine Cheah, who lives in Bayshore Park, said the en bloc issue needed to be told from the point of view of the resident.

“The case for en bloc is being presented by developers and agents and they are all profit motivated,” he said.

Members of the group, who come from some 13 estates, had met each other online by word of mouth and share an interest in resisting en bloc attempts.

When shown the letter, Mr Lee said he was “touched by the gesture and appreciate the kind thoughts”, but doesn’t know what to do with the money yet.

He added that he would consult a lawyer on the issue of repaying the legal costs.

Source : Today - 29 Apr 2008

Defaulting parties stand to lose their deposits and can be sued for non-completion of the sale; it’s also risky to buy a new home before a collective deal is closed

Some owners of condominium units may still be keen on selling en bloc, but developers’ interest in collective sale sites has more or less dried up.

No residential sites have been sold en bloc in recent months. And given the market uncertainty these days, completion may not be a given for sites that have been sold.

Several collective sales have fallen through, with a few - Tulip Garden, Makeway View, Finland Gardens and Pender Court - already axed, regardless of whether approval from the Strata Titles Board (STB) was obtained.

A collective sale requires an 80 per cent minimum consent from owners before it can be sold. Unless there is unanimous consent, owners will have to get an order from the STB for the sale after they find a buyer.

After getting the order, they will have to wait for the buyer to complete the sale, which is when they will get their sale proceeds.

They have six months after the sale completion date to move out of the property.

The Sunday Times takes a look at what happens if your collective sale deal falls through. 

If the STB throws out your sale

The onus is on the majority owners - those who have signed off on the sale - to obtain the STB order.

‘If they do their part and get the STB order, they are not in breach of contract,’ said Credo Real Estate’s managing director, Mr Karamjit Singh.

If they cannot get the STB order, they have failed to fulfil their part of the sale agreement with the buyer. The buyer can thus take back his 5 per cent deposit, a sum he had to pay when he inked the deal.

Most sale and purchase agreements have a standard provision that stipulates that if the purchase fails to be completed, the deposit or option money will be forfeited. 

The buyer can also ask the majority owners to appeal against the STB decision in the High Court, said Mr Singh.

If they are not satisfied with the High Court decision, they can proceed to the next and last level, the Court of Appeal.

This is where the Airview Towers case went. The Court of Appeal overturned the High Court’s decision to reject the sale, putting the case back in the STB’s court.

In another collective sale, that of Finland Gardens, the buyer and sellers decided to withdraw their case in the High Court and terminate their agreement.

But as the sale had been thrown out by the STB, the developer remained entitled to keep its deposit.

It was a unique situation, and both sides negotiated on the terms, with the developer agreeing to bear most of the costs such as the litigator’s fees and advertisement costs.

If the buyer defaults on the deal

Whether owners can or cannot get back some money depends on which party is the one which has not fulfilled the contract.

Last year, developers were frantically buying sites and pushing to complete them.

But as the market slowed this year, it has so far seen a buyer, Bravo Building Construction, let go of three collective sale deals - Tulip Garden, Makeway View and Pender Court.

As it was the buyer that did not fulfil its part of the agreement to buy Tulip Garden for $516 million, it had to forfeit its 5 per cent deposit of $25.8 million.

The same developer also did not go ahead with the purchase of Makeway View and had to forfeit its option deposit of 1 per cent.

Owners from the 48-unit Pender Court got to keep the buyer’s 10 per cent deposit of $8 million, as well as a $4 million payment for granting a deadline extension. They had negotiated for an additional payment of $4 million to extend the deadline as the buyer had missed the completion deadline.

‘If the buyers default, sellers can sue them if the sale and purchase agreement does not contain a clause that limits the buyer’s liability to forfeiture of the deposit,’ said Mr Henry Heng, a director from law firm Tan Peng Chin LLC.

Or they could sell to another buyer and then go after the original buyer for the losses incurred, if any, again provided the agreement does not have the above clause.

While going after the buyer may sound logical to some, it depends on whether the company has enough funds to pay up, property consultants said.

Few would consider it as developers usually create shell companies for their property purchases, said DTZ executive director, consulting & research, Mrs Ong Choon Fah.

If you have committed to a property purchase

Last year, many owners bought replacement properties way before their collective sales were completed, in an attempt to beat the rising market.

This can get tricky. If the collective sale fails, the owners are basically left to their own devices. The risk is certainly much greater if the owners are dependent on the sale proceeds to finance their new property.

‘It’s a commercial risk, which is why property consultants and lawyers always advise owners not to take the risk,’ said Mr Singh.

All collective sellers have a six-month rent-free period after the completion of their collective sales, during which they can safely source for a property.

While it is uncommon, an owner could try to negotiate a deal with the seller of the new property where it becomes a done deal only if his estate’s collective sale is completed, said Mr Singh. The other party may agree if he is offered a higher price, he said.

DEALS EASING OFF

The market slowdown has resulted in one buyer, Bravo, giving up three collective sale deals - Tulip Garden, Makeway View and Pender Court.

Source : Sunday Times - 27 Apr 2008

Pender Court. Finland Gardens. Tulip Garden. Makeway View. These were all attempts to sell an estate en bloc which fell through, all within this month.

But even as the en bloc fever cools, not all the affected residents are getting hot under the collar. Many told The Sunday Times that they were disappointed to miss out on a good price, but were happy to stay put.

It was reported last Friday that the sale of Pender Court, off West Coast Highway, had fallen through. Others reported include Finland Gardens in Siglap on Tuesday; Tulip Garden in Holland Road on April 9; and Makeway View in the Newton area on April 1.

Italian expatriate Lucia Omodei, 43, who has lived at Tulip Garden for six years, said: “We looked elsewhere in case we had to move out, but we didn’t find anything this ideal. Besides, we would miss our neighbours.”

A fellow resident, music teacher Y.C. Lee, 75, saw the bright side in the “consolation hongbao” he received, a $120,000 payout which was his share of the $25 million deposit that the buyer forfeited.

The unhappy ones are most likely those who had bought another house and now face financing issues.

The Sunday Times spoke to residents in some of the failed en bloc estates to find out how their lives have been affected.

Source : Sunday Times - 27 Apr 2008