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"I am a BLOGGER NOT an expert. This is a BLOG not a 'go-to' website for official information. I represent no one's view save my own. I have neither legal nor financial training, nor do I have anything to do with the real estate industry. My understanding of the Collective Sale Process is from a layman's position only. My calculations, computations and tables are homespun and may contain errors. Please note that nothing in this blog constitutes any legal or financial advice to anyone reading it. You should refer to your lawyer, CSC or financial adviser for expert advice before making any decision. This disclaimer is applicable to every post and comment on the blog. Read at your own risk."
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There is one thing worse than an Enbloc ----- and that is an Enbloc done badly. Since the majority have the necessary mandate to sell, then they owe it to all SPs to make a success of it. Minority SPs can only watch and wait, if they sell then lets pray it's at a price we can move on with, if they don't sell, then we are happy to stay for a few more years.

Venus fly Trap

Example of possible dirty trick scenarios:
For example; I heard of a hoodwinking tactic which owners might want to look out for. I call it the Venus Fly Trap of clauses and it goes something like this:



The Reserve Price is set very high (possibly even ludicrously high) to get the owners excited and lure them into signing. A clause is inserted into the CSA which in the event that the proposed sale price is lower than the RP, owners' approval (80%) shall be required before accepting the lower price . Sounds okay? but wait there's a catch..........




Owners who do not agree to the lower price have to actively withdraw from the agreement and will no longer be treated as a seller for the purpose of the agreement. The withdrawing owner is not entitled to take any action against any of the other sellers.

So what do I make of this?


Normal practice would have 80% of owners signing a Supplemental Agreement in the event of the RP being lowered. This is messy and takes time. What this new clause does is eliminate the need for a fresh round of signature collection - by changing the standard opt-in policy to that of an  OPT-OUT one. The onus is on the owners to withdraw if they do not agree rather than sign a new agreement if they do. Clever, yes? But oh so wrong!


This is tantamount to securing 80% by attrition - sneaky.


Instead of the Reserve Price RP being the lowest that the owners agree to sell - it has effectively become the highest (or Dream Price, DP). Lawyers do not put superfluous clauses in CSAs, if it exists, then it IS going to be used. The unholy trinity (SC / en bloc lawyer / PA) are many steps ahead of the posse and are already envisioning a price lower than the RP being offered.


Another point: there is no express provision that owners have to be individually informed by the SC of the lowered price. The SC could selectively not inform those they believe might withdraw. One of the past High Court decisions  specifically highlighted that owners need not be personally informed "indeed, large numbers could be left out of the loop" (Lincolnsvale). Selective dissemination of information is commonplace.



Remember, the majority owners have NO recourse at the STB after the fact.


Also, there is no time-frame for this opt-out option. Do owners have one week or one day? What if the owner is not in town? If he can't be reached is he agreeing to the lower RP by default? Is this fair? Is this legal? It doesn't matter what atrocious clauses are put in the CSA; if the owner signs then he is deemed to have agreed to them. Even more so now that the en bloc lawyer is present at the signing.


And, there is no EGM to discuss the matter, only an informal owner meeting is scheduled at around this time


to provide information on the number of offers received for the collective sale and the respective amounts.

This informal owner meeting might not have a proper venue (void deck perhaps), be held at a moments notice and serve merely to rubber-stamp their evil plan. My guess is that this owner meeting will be held after the public tender, where owners will be informed of the low bids and tenders etc and generally be brainwashed into believing the market is not biting. 


But the SC will have a buyer quietly waiting in the wings and it is with this buyer that the new, lower RP will surface at a private treaty.


So this clause, I believe, is tailored to spring into force after the public tender, after the owners have had their obligatory owner meeting by  LTSA rules but before the already decided on private treaty.


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