March 9, 2007


Cap majority owners' power to block sale

THE rules on collective sales are about to be reviewed. I would like to highlight the inadequacy of current rules in protecting the minority in a residential sale.

Owners who want to sell are usually investors who have made gains, retirees who want to downgrade, those who have a second or third property, or where the building is old and costly to maintain.

The current rules do not take into account the age, architectural value and condition of a property, nor provide an adequate avenue to address the grievances of the minority as long as the majority votes have been obtained.

The minority of owners whose sale proceeds cannot buy them an alternative home of an equal living standard in the current property market, and are not ready to downgrade, suffer the most. They are also probably unresourceful and could not afford to appeal through the legal process.

A developer/speculator bought units of a condo recently which gave him a more than 20 per cent share of the property. He then wanted the property to be sold to him en bloc, failing which he threatened to block future en bloc attempts and have the estate rot.

The power of majority owners in a residential property who could block an en bloc sale must be capped.

Currently, the only way a minority owner could block a collective sale is to prove financial loss Yet, the definition of 'financial loss' is vague. The most difficult to quantify is the loss of standard of living.

As the rules now stand, a minority owner has no right to block a sale if there is no loss. However, shouldn't the reverse apply - so long as an owner can make a reasonable profit from selling in the open market, he should not try and push through a collective sale to make more money, at the expense of the minority?

Sin Fook Seng