Some Horizon Towers owners in bid to reverse en bloc sale

May 1, 2007

Some Horizon Towers owners in bid to reverse en bloc sale

By Fiona Chan


A GROUP of unhappy home owners is trying to stop the collective sale of their condominium on Leonie Hill going through - three months after a developer agreed to buy it for $500 million.

Their gripe: the condominium next door is getting a lot more, thanks to fast-rising prices in the area.

Property prices have soared so much - especially in the Orchard Road area - that these owners of Horizon Towers feel shortchanged by their sale in January.

They have banded together to send a letter to fellow residents, urging those who have signed the collective sale agreement to back out of it.

But lawyers warn that ringleaders of any push to back out face being sued for inducing breach of contract.

Almost 84 per cent of owners had earlier signed the agreement to sell Horizon Towers to Hotel Properties and two foreign funds in January for $500 million.

That meets the legal requirement of more than 80 per cent of owners for properties more than 10 years old. It means each owner of the condo's 199 units will get about $2.3 million, with the 11 penthouse dwellers reaping up to $6.28 million.

But this is not enough for some owners, who sent out a letter dated April 25 saying the 'en bloc price no longer reflects the true value of Horizon Towers'.

The Straits Times obtained a copy of the letter, which added: 'If enough like-minded owners decide to rescind the (agreement) and the majority falls below 80 per cent, the application to STB (Strata Titles Board) can be repealed.'

The letter was not signed. Four apartment numbers were cited, but The Straits Times was unable to contact their owners to confirm if they had written the letter. It is also not clear if the letter writers themselves had signed the sale agreement.

The letter highlighted the fact that neighbouring Grangeford Apartments - a property five years older - is now going en bloc for much more than Horizon Towers achieved.

Grangeford owners are asking $660 million, or $2,016 per sq ft (psf) of total floor area - more than double the $850 psf of total floor area achieved by Horizon Towers.

Home prices in the Orchard Road area have risen 10 per cent since January, but asking prices for collective sales have soared to new heights as both sellers and developers bet on property prices rising further.

In the letter, the unhappy owners also said they are prepared to hire a lawyer to fight their case.

But law firm Drew & Napier, which is handling the collective sale of Horizon Towers, said these owners have no legal grounds to back out of the sale. On Friday, the firm issued its own letter to residents in response, saying the collective sale agreement is legally binding and that rescinding it would constitute a breach of contract.

Mr Jimmy Yim, senior counsel at Drew & Napier, warned of 'very serious consequences' for owners backing out of their agreement.

'In my view, they are treading on very dangerous ground,' he said. 'Whether an individual or a collective sale agreement, once it is signed, it has binding legal obligations.'

Mr Yim added that encouraging others to rescind the agreement would be 'inducing breach of contract'.

This could lead to the 'instigators' being sued for damages equal to the developer's and other home owners' lost profits, he said.

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http://www.straitstimes.com/vgn-ext-...00430a0a0aRCRD

check out the broken English of Horizon Towers resident! :D

so what are the legal means to block an en bloc sale ?
I've looked into these en bloc sales and more often than not, they are not a profit making venture for the sellers, especially in current conditions where prices goes up by the day. The en bloc laws should force the sale committee to call for another round of voting when the developer makes known his final price proposal.
By voting a year in advance, on a pre determined price for your apartment and knowing that property prices will change is a gamble, just like the stock market. We should not be forced to gamble on our hard earned property. Most of the time, the gamble will fail, because in good times, the property prices will spiral up and that makes the price you agreed on a year ago, a bad judgement. The effect on the home owner would be to downgrade to a shoebox for twice the price. In bad times, there will be no enbloc proposals.

People just never satisfied! Got enbloc still complain! Supposing after Horizon Towers enbloc and Bird flu strikes, every owner in Horizon Towers jump for joy and say " Heng AHHH!" All this on hindsight. If they readily sign the CSA and the price offered is a reasonable price, then what is there to complain? Always must win one, then happy.

If only we are all blessed with hind sight, we would not so unhappy cause we will always be on the winning end and not subjected to risk at all. AN ebloc exercise can be seen in the light of an investment like investing in the stock market cause nobody know when will the value of the stock be at the highest. When an SP signs on the CSA, he or she is agreeing to the price of the enbloc base on whatever info he or she has. End of the day it is a judgement call.

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Originally Posted by Unregistered

If only we are all blessed with hind sight, we would not so unhappy cause we will always be on the winning end and not subjected to risk at all. AN ebloc exercise can be seen in the light of an investment like investing in the stock market cause nobody know when will the value of the stock be at the highest. When an SP signs on the CSA, he or she is agreeing to the price of the enbloc base on whatever info he or she has. End of the day it is a judgement call.

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the question is why are we forced to make a judgement call ? we can't we decide on the price only when the developer submits the price proposal ? the laws are forcing us to make a judgement call a year in advance. If I refuse to make that judgement call and others makes that call, then I am bound by the majority ruling. Are there no rights for minority owners ?

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Originally Posted by Unregistered

People just never satisfied! Got enbloc still complain! Supposing after Horizon Towers enbloc and Bird flu strikes, every owner in Horizon Towers jump for joy and say " Heng AHHH!" All this on hindsight. If they readily sign the CSA and the price offered is a reasonable price, then what is there to complain? Always must win one, then happy.

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obviously written by someone with en bloc envy. Trust me, there is nothing to envy in en bloc sales. You will always get screwed by the developers. I've never voted for enbloc sale but now am forced to abide by the majority rule.
The en bloc sale is a zero sum game. Either the developer wins, or the home owner wins. Odds are the developer wins since they have the vast resources to predict the market. This is how en bloc works, the home owners decides on the current valuation of their property. The developers then decide on the future valuation of the that property a year down the road. If they see an uptrend or they can wait for the uptrend to happen (ie. under the strata laws, the developers have a year to respond). When the up trend starts, they quickly submit their proposal. By now, residents are bound to their short sighted valuation of their property at that time. All developers have to do is to submit a price a little above what the residents, a year ago, asked for and they are sure to get the property, under the law. It's a done deal.
So what if the market goes down ? you might ask. Well, that's when the developers quickly do a soft launch of the new project asap, say TOP in 3 years time. Soft launches can be done way in advance of TOP.
Buyers will queue up overnight to buy. If the market goes down in 3 years time, developer will not lose out cos' all new units are already sold out. The new buyers will lose out.
The only time the developers will lose out is if during the time gap between the price proposal submission and the soft launch, the market takes a down turn. That is why this gap is kept very very short by the developers.

Quote:

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Originally Posted by Unregistered

If only we are all blessed with hind sight, we would not so unhappy cause we will always be on the winning end and not subjected to risk at all. AN ebloc exercise can be seen in the light of an investment like investing in the stock market cause nobody know when will the value of the stock be at the highest. When an SP signs on the CSA, he or she is agreeing to the price of the enbloc base on whatever info he or she has. End of the day it is a judgement call.

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why are we put in a position where we are forced to speculate on our property ?
if you want to compare en bloc and stock market, take note that in an en bloc sale, once the residents agreed on a price, that price sticks for a year. It cannot be reviewed. In a stock market, once you buy a stock, you are not bound by law to hold on for a certain period of time. You can sell anytime you feel is right to cut loses. I can't do that in an en bloc sale. I have to wait for a year to lapse before I can do anything. Till then, I am at the mercy of a crazy property market where prices goes up 10% every week. That means my new replacement home price goes up 10% every week and also means I have to take out more loan for my replacement home. From a debt free life style (assuming I've paid off my current housing loans), I'm now forced to go to debt again to service a new housing loan, that will be much smaller than the one I lost in the en bloc sale. The net effect is that you actually lose money from en bloc sales.

I think the 80% ruling is fair because it's already a lot more than 50%. 80% of the owners making the collective decision cannot be far wrong IMHO. And nobody can tell for sure which direction Mr. Market is heading.

There is no dispute on those owners that are reluctant to sign on the CSA for one reason or another but for those who have signed, you are making a decision that this is an acceptable price base on your judgement. The 1 year waiting period and the property market movement must all be taken into account before you agree to the CSA. If you are not comfortable with the unpredictability of how the prices are moving, then you can always choose not to sign. End of the day, every individual owner has a reason to sell or not to sell and unfortunately or fortunately (depends on which side you are on), the 80% majority rule.

My advice is: once en bloc goes through, buy immediately. Not buying back replacement in a rising market is like "short selling" your stock.

There are lots of available condos at reasonable prices (in current market context) even in the same area. Of course you don't expect brand new one lah, or have much cash in hand left over. Your 30 year condo exchange for new one in the area, same size, same price, a bit ridiculous to expect right?

Quote:

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Originally Posted by Unregistered

why are we put in a position where we are forced to speculate on our property ?
if you want to compare en bloc and stock market, take note that in an en bloc sale, once the residents agreed on a price, that price sticks for a year. It cannot be reviewed. In a stock market, once you buy a stock, you are not bound by law to hold on for a certain period of time. You can sell anytime you feel is right to cut loses. I can't do that in an en bloc sale. I have to wait for a year to lapse before I can do anything. Till then, I am at the mercy of a crazy property market where prices goes up 10% every week. That means my new replacement home price goes up 10% every week and also means I have to take out more loan for my replacement home. From a debt free life style (assuming I've paid off my current housing loans), I'm now forced to go to debt again to service a new housing loan, that will be much smaller than the one I lost in the en bloc sale. The net effect is that you actually lose money from en bloc sales.

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Actually, Singapore is a very small country compared to many others. If I have my apt in say D10 enbloced and I cannot find a replacement unit in the same locale, I could consider moving away from this district and buy perhaps a bigger unit somewhere else and still have some spare cash. After all I don't really see why some people cannot adjust and adapt! We are still living in Singapore for goodness sake! It is not like we have to move out and live in the jungle! It seems that we are really spoilt sometimes. Only with enbloc then can you unlock greater value in your property.

some are elderly folks, which will explain why they cannot adapt or adjust easily.

on another note, i think some pple are caught because they have no extra funds available (till the enbloc buyer pays them) to get anything and are unable to take up loan to purchase the replacement property. hence, that may explain why they are stuck because by the time the money comes in, prices of the neighbouring projects may have already gone up alot more.

Quote:

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Originally Posted by Unregistered

My advice is: once en bloc goes through, buy immediately. Not buying back replacement in a rising market is like "short selling" your stock.

There are lots of available condos at reasonable prices (in current market context) even in the same area. Of course you don't expect brand new one lah, or have much cash in hand left over. Your 30 year condo exchange for new one in the area, same size, same price, a bit ridiculous to expect right?

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trust me, there is no available condos at the same size for the same price as the sales proceeds in the neighboring area. I'm not even considering the age of the condos at this point in time. I'm even willing to accept a 50 year old condo.

Whatever the developers gives you, will not be enough to purchase a equivalent condo of the same floor space, whatever the age of the condo.

Quote:

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Originally Posted by Unregistered

Actually, Singapore is a very small country compared to many others. If I have my apt in say D10 enbloced and I cannot find a replacement unit in the same locale, I could consider moving away from this district and buy perhaps a bigger unit somewhere else and still have some spare cash. After all I don't really see why some people cannot adjust and adapt! We are still living in Singapore for goodness sake! It is not like we have to move out and live in the jungle! It seems that we are really spoilt sometimes. Only with enbloc then can you unlock greater value in your property.

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the question is why are we forced to move and adapt ? if you're used to staying in the Central area for a long time, and then you're asked to move to Woodlands and adapt, why should I be forced to do that ? isn't my property, my decision to move and adapt ? why should the majority rule force me to move and adapt ?

Quote:

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Originally Posted by Unregistered

Only with enbloc then can you unlock greater value in your property.

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Agreed 100%! :cheers3:

Quote:

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Originally Posted by Unregistered

I think the 80% ruling is fair because it's already a lot more than 50%. 80% of the owners making the collective decision cannot be far wrong IMHO. And nobody can tell for sure which direction Mr. Market is heading.

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you must look into the demographics of the 80% rule. If the 80% comes from local / foreign speculators or NUS (who owns 50% of the units), or from home owners who already have multiple homes and currently not staying in that condominium, then that 80% ruling is unfair because it ignores the plight of the home owners who only owns 1 property in that condominium and have to buy a replacement apartment after the en bloc sale.

Quote:

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Originally Posted by Unregistered

the question is why are we forced to move and adapt ? if you're used to staying in the Central area for a long time, and then you're asked to move to Woodlands and adapt, why should I be forced to do that ?

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No need to be so extreme lah :D

If your central area condo goes en bloc, you can still find other central area condos to move into. Even within D9, 10, 11 you can find them, cos Central area is actually quite large. There are some undervalued ones in Holland and Bukit Timah and other prime areas if you look carefully. Hope you are able to find them.

Quote:

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Originally Posted by Unregistered

There is no dispute on those owners that are reluctant to sign on the CSA for one reason or another but for those who have signed, you are making a decision that this is an acceptable price base on your judgement. The 1 year waiting period and the property market movement must all be taken into account before you agree to the CSA. If you are not comfortable with the unpredictability of how the prices are moving, then you can always choose not to sign. End of the day, every individual owner has a reason to sell or not to sell and unfortunately or fortunately (depends on which side you are on), the 80% majority rule.

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what happened to the rights of the minority ? goes out the window in the name of progress and returns on investments ? so much for the old folks and the handicapped lot. Let's just let them fend for themselves in this heartless world.

Quote:

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Originally Posted by Unregistered

I think the 80% ruling is fair because it's already a lot more than 50%. 80% of the owners making the collective decision cannot be far wrong IMHO. And nobody can tell for sure which direction Mr. Market is heading.

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you know what's the irony of the 80% ruling ? the 80% that agreed to the en bloc sale is now regretting it cos' they find that replacement apartments are now at a price point beyond their reach.
The 20% that did not agree, have to abide by the decision of the 80% and they are of course, very unhappy. So we have 100% unhappy home owners. The only one that's happy is the developer who is laughing all the way to the bank.

There's something very wrong with the en bloc process.

Quote:

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Originally Posted by Unregistered

you know what's the irony of the 80% ruling ? the 80% that agreed to the en bloc sale is now regretting it cos' they find that replacement apartments are now at a price point beyond their reach.
The 20% that did not agree, have to abide by the decision of the 80% and they are of course, very unhappy. So we have 100% unhappy home owners. The only one that's happy is the developer who is laughing all the way to the bank.

There's something very wrong with the en bloc process.

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Ha ha ha!
Relax lah!
You win some, you lose some.
Ha ha ha!

Have the parties concerned given up the idea to contest the enbloc because it is irreversible? I guess it's just a lot of hot air that requires some release.