Disclaimer






"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.

THE CSA

The CSA will require careful thought, and later; careful inspection. 

From the FIRST SCHEDULE


3. The collective sale committee shall provide a preface to the collective sale agreement stating the clause numbers and page numbers in which the following information are found:

(a) the reserve price for the development;
(b) the apportionment method for the proceeds of sale;
(c) the fees payable to the advocate and solicitor, marketing agent and other person involved in handling the collective sale;
(d) the amount of the compensation fund, if any;
(e) the person entitled to any interest derived from moneys held by any stakeholder; and
(f) the date of delivery of vacant possession of the lot or flat.


 
These form the basic elements in a collective sale agreement. They are not the only terms - it is up to the owners themselves to put it whatever terms they deem fit.

Our  Minister of Law Mr. Shanmugam has explicitly stated that owners have the ultimate say and that the sale committee must act in accordance to the owners wishes as stated in the CSA.
 
(Second Reading of the LTSA Amendment Bill, 18 may 2010): 
"A Sale Committee has to act in accordance with the mandate specified in its CSA. Thus, it really depends on what mandate is given to the Sale Committee."
"Owners have the ultimate say, they can ask for what they think is necessary for the process, or for them to participate in the process."
"The real point is that owners are free to adopt these measures if they are suitable for their particular circumstances. Thus, the ultimate choice is with the owners themselves on how the sale should be conducted."


What measures do you want to put in place regarding:
  • Sale Committee members: restrictions on far-reaching powers 
  • Indemnity to be given to Owners as well as the SC or it is to be removed altogether.
  • Reserve price: only upward revision allowable - never down!
  • CSA execution page: only single page format permitted, full details, including the minimum selling price of the Agreement being signed, 
  • No Conditional/Supplemental Agreements; no ex-gratia payments except that allowable under FOURTH SCHEDULE.
  • Freedom of choice: no clauses that  limit owners in their freedom of choice. Owners should not be asked to sign for clauses that obligates them to sign all documents put in front of them.
  • Terms and Conditions of tender and S&P to be set in advance with owner approval and the SC has no power to change those terms and conditions. .
  • Sale to be by public tender only; no back room private treaties or expression of interest 
  • No gagging of owners 
Read the Draft CSA carefully, or get help. Do not sign blind.
 
The CSA might be written in legalese and most people will stop reading after page 3. A crafty lawyer will insert clauses inside clauses, twisting words around so as to obfuscate the meaning.  Clauses that are related may be separated by pages and difficult to put together. Small words such as 'not', 'and' 'or' are there to trip you up, so read carefully.

Read the Definitions page first, don't assume anything.
What is omitted is equally important as what is written, and what is not expressly forbidden is possibly allowed.  But there is only so much a layperson can deduce; the deeper ramifications of opaque clauses written in unfamiliar legalese may sometimes only be clear to another lawyer - so be sure to get your own independent legal advice before signing.

SUPPLEMENTAL AGREEMENTS

Be very wary of these - as a Supplemental Agreement (SA) is a FRESH agreement and adds another 12 months onto the process. (Koon Seng High Court Decision). Supplemental is a catch-all phrase which could possibly mask ex-gratia payments ....

Well, who knows what might surface in a CSA- the permutations are endless, but all clauses (or absence of clauses) that clamp down on owners wriggle room should be vigorously contested. 
  • Clauses that nullify other clauses.
  • Clauses that allow the SC to change the terms and conditions of the sale 
  • Clauses that give the sale committee full discretion in all matters
  • Clauses that lets the S&P  supersede the CSA
  • Clauses that give the SC far reaching powers.
  • Avoid clauses that include vague wording with far reaching consequences such as "best endeavours", "professionals", "or any other case".....
  • Clauses that indemnify the SC against their own acts, but does not indemnify the owners against the SC.
  • Clauses that gag owners,  threaten litigation.
  • Clauses that allow some owners to sign separate agreements
  • Clauses that allow owners to sign for different minimum selling prices
  • Clauses that keep expanding on the definition of Completion Date
  • Clauses that use 'may' instead of 'will' or 'shall'
  • Clauses that allow ANY member of the SC to sign, and not just the authorised representatives.
  • Clauses that allow the SC to change the reserve price 
  • Clauses that allows the SC to conduct invitations for an offer to purchase or an expression of interest exercise with less than 80% (that is, from after the first signature at least)
  • Clauses that allow execution pages to be substituted/added without specifying exactly why
  • Clauses that strips owners of their freedom of choice, forcing agreeing owners to sign all documents put in front of them.
  • Clauses that threaten dire consequences if they refuse.
  • etc

  • Read the fine print and do not sign anything you do not fully understand 

COOLING OFF PERIOD (5 days):
From the FIRST SCHEDULE
4. The collective sale agreement shall be signed by the subsidiary proprietor, and, if signed in Singapore, in the presence of an advocate and solicitor who has a valid practising certificate appointed by the collective sale committee .

5. The collective sale agreement shall be accompanied by a notice, in the prescribed form, that may be used by the subsidiary proprietor to rescind his agreement to be a party to the collective sale agreement.

6. A subsidiary proprietor may rescind his agreement to be a party to the collective sale agreement by serving a notice of rescission referred to in paragraph 5 within the cooling-off period which shall be a period of 5 days (excluding any day which is a Saturday, Sunday or public holiday) after the day on which the collective sale agreement was signed by him.

7. The notice of rescission shall be signed by the subsidiary proprietor and shall be served personally on the advocate and solicitor appointed by the collective sale committee before 5 p.m. on the last day of the cooling-off period.

8. A subsidiary proprietor shall not be entitled to serve a notice of rescission more than once for the same collective sale agreement.


Can the Sale Committee  deviate from the terms set out in the CSA when negotiating the terms of the Sales & Purchase Agreement (S&P)?

No, not if it is a material difference -  something important.

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