Friday, May 4, 2007

No time to dilly-dally

Measures must be taken to bring about an en bloc sale once majority consent is given

Letter from Radha S Khoo
Head (Corporate Communications), Ministry of Law

Ms Lucy Huang, in the letter "STB should offer protection" (April 19), says that the Strata Titles Board (STB) is being "partisan" and taking "the side of the sellers" when it appoints a representative to execute the necessary documents to effect the sale in certain situations.

The STB is not partisan. It is acting pursuant to the provisions of the law. Under the law, when an en bloc sale order is granted by the STB, it is binding on all the unit owners, including those who have not agreed to sell. This is the essence of collective or en bloc sales.

Where an owner refuses to comply with the STB sale order or where an owner is unable to execute the necessary documents to effect the sale, the representatives of the majority owners may apply to the STB for the appointment of a person to act for that owner in all aspects of the en bloc sale, such as the execution of the transfer, the receipt of the sale proceeds, et cetera.

The reason why the law provides for this, is to ensure that once an en bloc sale order has been granted, the sale of all the units will not be delayed or frustrated by the inability or refusal of an owner to execute the required legal documents.

This is necessary to give effect to the en bloc sale after it has achieved the necessary majority consent, and to avoid delay of the sale as unit owners may be liable under the sale and purchase agreement for any late completion of the sale transaction.

Such applications are required to be accompanied by an affida- vit from the lawyers acting for the majority owners declaring the reasons why the unit owner is unable to effect the transfer; or if the owner cannot be located or has refused to execute the necessary documents, that they have done what they reasonably could to contact that owner.

The STB will not act unless it is satisfied that all these conditions have been complied with.

Such a provision is also present in the en bloc legislation of other jurisdictions, like Hong Kong.