Proposed changes to rules on collective sales of properties to streamline process

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http://www.channelnewsasia.com/stori...052717/1/.html

Market watchers welcome proposed changes to en bloc sale regulations

By Wong Siew Ying | Posted: 26 April 2010 2301 hrs


SINGAPORE: Market watchers have welcomed proposed changes to the en bloc sale regulations tabled in Parliament on Monday. They said the move is timely and could help stabilise property prices.

Farrer Court was among 111 estates sold at the peak of the en bloc market in 2007.

This year, there are only four deals so far and analysts expect the market to pick up as developers replenish their land bank.

The four en bloc sales this year are Changi Complex, Diamond Tower, Culford Garden and an industrial plot at Jalan Ampas.

And developers may well benefit from proposed new rules that will speed up the collective sale process, such as reducing the number of Extraordinary General Meetings required.

Christina Sim, director, Investment, Capital Markets, Cushman & Wakefield, said: "The truth is that the gestation for en bloc sales is just far too long usually when you get an en bloc ready for marketing. The market may have moved down to ease up and to shorten the gestation period is a good thing for the developers."

Smaller developers, currently priced out of the state land market, may also benefit.

Observers also support rules to make it harder to restart an en bloc process after a failed attempt, including a two-year restriction period.

Tan Hong Boon, deputy managing director, Credo Real Estate, said: "This is a safeguard to the owners to minimise interference into their lives for certain projects or owners are too eager to re-initiate the en bloc process right after the failure. With that higher requirement for requisition, I think that ensures that there is sufficient interest from the owners to move ahead within the two-year period."

The first re-try to convene an Extraordinary General Meeting to reappoint a sale committee will need the backing of at least 50 per cent share value or total number of owners.

For second or subsequent re-tries during the two-year period, 80 per cent will be needed.

Currently, the requisition threshold is set at 20 per cent by share vale or 25 per cent of the total number of owners.

Analysts said the changes may push up potential land supply and curb runaway property prices.

Some market watchers said about 50 developments are currently in the process of preparing for collective sale and they expect about 20 sites, mostly small and medium ones to hit the market by the end of the year.

Some of the potential en bloc sales this year include Neptune Court, Mandarin Gardens and Meyer Place.

The 528-unit Laguna Park at Marine Parade is also expected to convene an EOGM to elect a sale committee on May 2nd.

The deal fell through last year when they could not find a buyer for the property at S$967 million. - CNA/vm

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http://www.channelnewsasia.com/stori...052623/1/.html

Proposed changes to rules on collective sales of properties to streamline process

By Hetty Musfirah Abdul Khamid | Posted: 26 April 2010 1508 hrs


SINGAPORE: The government is making more changes to the rules on the collective sale of properties, in a Bill tabled in Parliament on Monday. The proposed amendments to the Land Titles (Strata) Act aim to streamline the en bloc sales process.

They're also expected to give the process greater clarity, save time and balance the interests of owners.

When Horizon Towers condominium was put up for an en-bloc sale in 2007, it sparked a two-year legal saga.

It ended when the Court of Appeal ruled in favour of the owners who objected to the S$500 million deal.

The proposed changes to the law are expected to prevent owners from being caught in a similar long-drawn process.

The role of the Strata Titles Board will be refined to focus on mediation.

It will be empowered to issue a "stop order" to cease mediation if the owners are keen to bring the case to Court.

Currently, the Strata Titles Board mediates and adjudicates on objections filed by minority owners in en bloc sales.

The change could help to reduce the costs and time taken to resolve more contentious en bloc applications.

To prevent undue delays, the maximum time period spent on mediation will be set at 60 days. Presently, no time limit has been set.

A two-year restriction period will be also imposed after an attempt has failed.

To discourage further attempts when there is insufficient interest, those who wish to restart the sales process during the restriction period will also have to abide by stricter rules.

This measure could also prevent the draw down of management committee funds where EOGMs are convened incessantly.

The first re-try to convene an Extraordinary General Meeting to reappoint a sale committee will need to meet a requisition threshold of 50 per cent by share value or total number of owners.

This threshold will be moved to 80 per cent for subsequent efforts to convene an EOGM during the two-year period.

Currently, the requisition threshold is set at 20 per cent by share value or 25 per cent of the total number of owners.

Some feel the restriction will prevent owners from taking advantage of the process when market sentiments are good.

But others feel the changes can help them find a resolution faster.

Philip Fong, managing partner, Harry Elias Partnership, said: “I think it is going to help, in a sense, the process, because before any en-bloc process starts, the people in favour got to think carefully, plan the process and minimise costs.

“And if there is going to be a dispute, then it can be moved to the court procedure or the court process is quicker, compared to the present situation where it has to go through the Strata Titles Board. And if that cannot be resolved, it goes to the court anyway. So I think in this sense, it can expedite the matter.”

Mr Fong said it could also mean more cases ending up in court.

He said: "I think there is the likelihood that dissenting owners will opt to go to court and this means more cases will go to court. But there is a plus side to this because the court process is obviously quicker in that sense of dealing with such matters where the judge is certainly in a better position to access evidence, discovery process of documentation, issues that are legal.

"And the adjudicator in this case is definitely better trained with business of this nature."

To expedite the collective sale process even further, a non-consenting sales committee member can be voted by a simple majority should an application for sale has been made to the Strata Titles Board. This means after the required 80-90 per cent approval has been achieved.

And this is a concern for the sales committee of The Meyer Place, which is set to go the en-bloc way for a second time.

Lim Chong Seng, chairman, Sales Committee, The Meyer Place, said: "To vote someone out from the sales committee, I think you need to be very careful because it can create more conflicts.

“Because if they are volunteers, one of the bigger problems in en-bloc sales is that sometimes you can create bad relations with neighbours. This is one thing that we are very concerned about.”

Others feel the presence of a non-consenting member in the sales committee is important as a check and balance.

Mr Fong added: "I think it is better not to have the power to vote out a dissenting member because having someone there actually gives a check and balance to the whole process so that there can be no dispute as to what actually took place during sales committee meetings."

Even so, to ensure greater transparency, a person wanting to be in the sales committees must also declare the extent of his ownership including those connected to him and the date of purchase of the units.

The sales committee will also have one year to obtain the first signature for a collective sale agreement, or it will be automatically dissolved.

The one-year time frame will start from the date the sales committee is formed.

Currently, the law only provides for dissolution of the sales committee at the Extraordinary General Meeting by simple majority or when the collective sale agreement expires. These rules will remain.

The changes are expected to take effect in June.

The Land Titles (Strata) Act was last amended in 2007. - CNA/vm

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http://www.todayonline.com/Business/...-lengthy-spats

Putting an end to lengthy spats

Parliament considers Strata Act changes

by Jo-ann Huang [email protected]

05:55 AM Apr 27, 2010


SINGAPORE - Long-drawn conflicts arising from en bloc property transactions may likely be put to rest when the proposed amendments to the Land Titles (Strata) Act, which was tabled in Parliament yesterday, comes into effect likely in June this year.

The Ministry of Law said yesterday that the proposed changes in the Land Titles (Strata) Act is expected to provide greater transparency and streamline procedures for en bloc sales. It received feedback and consulted industry experts to review its existing regulations - which had last been amended in 2007.

Key among the recommendations is the role of the Strata Titles Board (STB) as a mediator for en bloc transactions and the disclosure requirements for sales committees.

When Horizon Towers condominium was put up for an en-bloc sale in 2007, it sparked a two-year legal saga. It ended when the Court of Appeal ruled in favour of the owners who objected to the $500 million deal.

The proposed changes to the law are expected to prevent owners from being caught in a similar long-drawn process.

The role of the Strata Titles Board will be refined to focus on mediation. It will be empowered to issue a "stop order" to cease mediation if the owners are keen to bring the case to court.

Currently, the STB mediates and adjudicates on objections filed by minority owners in en bloc sales. The change could help to reduce the costs and time taken to resolve more contentious en bloc applications. To prevent undue delays, the maximum time period spent on mediation will be set at 60 days. Presently, no time limit has been set.

The person standing in collective sales committees will also be required to disclose the extent of his or his kin's ownership in the development and obtain at least one signature for the collective sale agreement or risk its termination.

To expedite the process, the sales committee can vote off a non-consenting member by a simple majority when an application for the sale has been made to the STB.

The proposal on imposing a two-year restriction period on en bloc properties that fail to sell, is one that has so far garnered mixed reactions from industry players.

To discourage further attempts when there is insufficient interest, those who wished to restart the sales process during the restriction period will also have to abide by stricter rules. This measure could also prevent the draw down of management committee funds where Extraordinary General Meeting (EOGMs) are convened incessantly.

The first re-try to convene an EOGM to reappoint a sale committee will need to meet a requisition threshold of 50 per cent by share value or total number of owners. This threshold will be moved to 80 per cent for subsequent tries to convene an EOGM during the two-year period.

Currently, the requisition threshold is set at 20 per cent by share value, or 25 per cent of the total number of owners.

Mr Tan Hong Boon, deputy managing director of Credo Real Estate, said the two-year restriction should not pose a problem for home owners, as obtaining a 50-per-cent share value or number of units is feasible in a property upswing.

"A shorter process is good for the sellers as they would get their money earlier to find a replacement property as well as sell it for an optimal price in a property upturn," he added.

Others disagree, however. Ms Christina Sim, director of investment at Cushman & Wake*field, said more leeway should be given to properties with an 80- to 90-per-cent approval to sell but are unable to find a buyer.

"This is a huge source of land bank for developers. We have to allow these people to have a second try because the market has trended upwards. To wait another two years we don't know how the market is going to be."