Group photo with legal dream team

The lady answered

To the lady who wrote in a comment. I forgot to ask you your unit size - so I just calculated for all sizes (154 sqm to 161 sqm).

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I have worked out the quantum used for the revised sale price for each unit size (it also depends on whether you are an alpha owner of a non-alpha owner). Since the costs & expenses were not calculable at the STB; the final sale proceeds cannot be given. Your legal costs seem to be unusually high - I think you have made a mistake there; but it doesn't matter as you are not anywhere near being a financial loss case,.

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Old Sale price: $395,000,000
Alpha (financial loss)?- No
Insufficient funds to redeem CPF? No, your CPF is fully redeemed.
Insufficient funds to pay Cost & Expenses of sale? It depends on the size of your unit/ the C&E were not known. I think the C&E would have been no less than $20k* and maybe even as high as $30k. So you would have come away with very little cash after deducting C&E.

CPF rich - cash poor.

*I cannot say for definite what the C&E would have been, but I am pegging it to Waterfront View which was $19k.

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These calculations are only applicable to the failed sale price of $395,000,000 and a 50-50 method of distribution (strata area - share value). I do not guarantee the figures are correct - just a blogger's armchair attempt. I hope someone else will have a go at deciphering the A-2 table and it's formulae.

CPF loss/ Bank Loss

An Anonymous comment

"I believe there is a fundamental flaw in yr presentation. I will be very disturbed if yr inf is correct.
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Enbloc price: S$395 mil / 560 units = S$705k on average
Beta sum: S$10 mil / 560 units = S$18k (assuming no claim)
Total proceeds from enbloc = S$723k

Each SP will receive S$723k more or less. The buyer will not pay you one single cent more, becos total sales px is S$405 mil.
Regardless the order of charge, there will be financial loss; it is either a cash loss or a CPF loss.
Illustration:Buy px S$580k O/s bank loan S$300kCPF refund S$500k

1. Bank 1st charge CPF 2nd charge Enbloc proceeds S$723k - bank loan S$300k - CPF refund S$500k = CPF loss -S$77k (need not top up)

2. CPF 1st charge Bank 2nd chargeEnbloc proceeds S$723k - CPF refund S$500k - bank loan S$300k = Cash loss -S$77k (must settle b4 bank discharge)

Personally, I feel CPF 2nd charge is more relevant in today context. It afford owner the option to downgrade without topping up CPF loss, which is not the case in CPF 1st charge becos one hv to settle loan shortfall....remember the aftermath of 97 crisis when many pple were trapped in negative equity situation and were forced to continue with heavy servicing burden as they cant afford to settle loan shortfall.

Hence, the real life example you quoted in TC:-

"Blk 130 – Buy price $605k – CPF 1st charge a whopping $949,583 – no outstanding bank loan!!"

is highly unlikely as enbloc proceeds is S$723k only, instead of gain he will suffer CPF loss.
If my understanding on above is correct, I hope you will keep your original posting but add on my findings for readers' benefit "

I will answer sometime today....

CPF loss/Bank Loss answered:

There are 20 pages to this A-2 table highlighting the financial details of 239 owners (see below). This table was submitted at the STB by the en bloc lawyer; I have scanned a few pages to serve as examples.

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I believe there is a fundamental flaw in yr presentation. I will be very disturbed if yr inf is correct.

My information comes from documents submitted at the STB. I am always looking out for flaws in my writing and understanding. I am a blogger not an expert. I welcome comments such as yours, we can all come to a better understanding through questions and challenges. I will NOT release the names and unit numbers of the owners whose financial information is listed in the A-2 Table. Even if someone requests to see the original documents, I would have to photocopy and remove the unit identification (Columns A,B,C) before release. This information, while it is a matter of public record, has not been disseminated widely, the minority group has only one copy and it is in my possession.

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Enbloc price: S$395 mil / 560 units = S$705k on average (nominal proceeds, column G)

Beta sum: S$10 mil / 560 units = ~S$18k (assuming no claim, Alpha owners excluded)

Total proceeds from enbloc = ~S$723k (assuming no claim, Alpha owners excluded)

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All calculations are based on the nominal proceeds. The total proceeds were not and could not be given at the STB, as the table was incomplete and many owners financial details were unknown. The costs & expenses of the sale were also not included as the final cost was indeterminable at the time. Waterfront View's C&E were approx. $20k, I would have expected TC's to be higher - with the Senior Counsels etc...

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Each SP will receive S$723k more or less.

Not true. Each owner will receive their nominal sales proceeds (Column G) and the Omega owners only would have received the balance of the Beta sum

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The buyer will not pay you one single cent more, becos total sales px is S$405 mil.

True -though he could make extra-gratia payments if so inclined.

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Regardless the order of charge, there will be financial loss; it is either a cash loss or a CPF loss.

Financial loss (as defined by LTSA) calculation is based on your buy price. It is represented in column R on the Table and is recoverable from the Alpha sum. It is not dependent on order of charge as it has nothing to do with redemption of mortgages or charges.

CPF loss is NOT considered financial loss (Waterfront View High Court decision).

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Illustration:

Buy px S$580k - O/s bank loan S$300k -CPF refund S$500k.

This is a hypothetical case, I am dealing with actual figures.

At such a low buy price, this owner would most definitely NOT QUALIFY as a financial loss owner in the meaning of the LTSA rules.

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1. Bank 1st charge / CPF 2nd charge

Enbloc proceeds S$723k - bank loan S$300k - CPF refund S$500k = CPF loss -S$77k (need not top up)

Sale proceeds are NOT $723k. As can be seen from the en bloc lawyer's A-2 Table, calculations are done on the nominal sum (G). Hypothetically, the owner would have indeed suffered an unrecoverable loss of $95k to his CPF account (a hole in his account). This is NOT financial loss.

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2. CPF 1st charge Bank 2nd charge

Enbloc proceeds S$723k - CPF refund S$500k - bank loan S$300k = Cash loss -S$77k (must settle b4 bank discharge)

Ditto to above. Yes, the $95k would have been recovered from the Beta Sum. Had there been no nBeta sum, then the money would have had to come from either the majority owners or the buyer. The STB could not grant the sale unless this outstanding bank charge was satisfied.

NOTE: THESE TWO SCENARIOS ARE NOT CONSIDERED FINANCIAL LOSSES. THEY ARE INSUFFICIENCIES, SHORTFALLS - WHICH ARE COMPLETELY DIFFERENT.

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Personally, I feel CPF 2nd charge is more relevant in today context. It afford owner the option to downgrade without topping up CPF loss, which is not the case in CPF 1st charge becos one hv to settle loan shortfall....remember the aftermath of 97 crisis when many pple were trapped in negative equity situation and were forced to continue with heavy servicing burden as they cant afford to settle loan shortfall.

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" it affords the owner the option to downgrade" - no, it forces the owner to downgrade against his will. CPF second may mean he loses a large sum of money in his CPF account. The owner may be at an age where he can't take out a new bank loan, or just a small one with only a very short repayment period, so his CPF cache becomes very important. So if he takes a hit in his CPF, how is he to pay for a new home? This is not 1997, and an enbloc sale is supposed to ENRICH you not IMPOVERISH you. There should be no talk of 'losses' or 'holes in CPF accounts' or 'enforced downgrading'! If there is, then the sale price is way too low!!

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The bank's shortfall will always have to be covered in an enbloc sale, if not, then the STB can rule no sale, so CPF first is the best. Your CPF is fully redeemed AND your bank loan is fully redeemed. You then have the option to downgrade if that is your desire.

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The CPF will waive outstanding amounts in an enbloc sale. I believe the owner will still be liable to top up the outstanding amount in an individual sale - but I am not 100% sure of this fact. perhaps the CPF will waive on a case by case basis.

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Hence, the real life example you quoted in TC:- "Blk 130 – Buy price $605k – CPF 1st charge a whopping $949,583 – no outstanding bank loan!!" is highly unlikely as enbloc proceeds is S$723k only, instead of gain he will suffer CPF loss.

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Please refer to the Table A-2. It is an actual case. This person does not qualify for financial loss in the meaning of the LTSA rules as his buy price is too low. But because he is CPF first charge - he would have gotten $248,609 from the Beta sum as can be seen from the last column (W).

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The second to last column (V) is 'CAPPED CPF REDEMPTION IF BANK IS 1ST CHARGE' and if a figure is bracketed eg ($222,552) then that means that loss will not be covered. (CPF hole)

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Here is another example of an owner in similar circumstances:

Nominal proceeds $698,406 , Buy price $486k, no bank loan, CPF $792,421. Cpf first charge

Top up from beta sum: $95,916
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If my understanding on the above is correct, I hope you will keep your original posting but add on my findings for readers' benefit.

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I understand your viewpoint perfectly. It indeed seems logical that the outstanding amount owed to the CPF would be waived in cases where the CPF is first charge and there is no Bank loan . If I didn't have the figures in front of me, I would actually agree with you. But the table says differently, these shortfalls were covered by the Beta - so it must have been necessary to do so. Hence, my conclusion that CPF shortfalls in first charges have to be covered. If they didn't why was 'free money' given out to these 2 cases? It really was a surprise to me, too. What say you?

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Even I find this whole issue of financial loss confusing sometimes and must backtrack to do a rethink! People must realise there are 2 calculations to be done:

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1) Are you a financial loss under LTSA rules ? - If your buy price is above $640k, then maybe (and I'm only talking about this enbloc's sale price here). This has nothing to do with order of charge.

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2) Do you suffer from insufficient funds to pay outstanding charges? This has NOTHING to do with 1). You don't have to be a financial loss sufferer (Alpha) to have insufficiencies. The order of charge is super important in this calculation - it determines whether you are a CPF loser or winner. The bank charge will always be covered.

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The failed enbloc sale should be a lesson to all of us. If we don't understand and learn from our mistakes then there is a chance we will have to go through this all over again. This is an opportunity to go through every detail, reappraise preconceptions, clear misconceptions and come to a better understanding of the nitty gritty details.

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I am very sure the effected owners who signed did not realise their CPF would take such huge hits - as indeed the CPF ruling to waive did not come out until many months after they had signed. But it was too late for them then to rescind anyway, even if they had wanted to, and signing the CSA means you can never appeal to the STB, no matter what happens. I really, really hope people will educate themselves on the many, many pitfalls of en bloc and go into the next round, if and when that happens, with their eyes wide open.


(2010)
Managed to find a way to put the table (edited to hide unit identification) on the blog 

A2 at STB, edited for privacy
 

CPF Loss

Finally! It seemed the press was deliberately keeping away from this hot potato for the longest time - no matter how many times we highlighted the matter, it just never seemed to get reported in any depth! Thank you, Ms. Cheam for not forgetting the owners who are financial losers in the mythical world of en bloc millionaires; HUDC owners who lose their CPF, their homes and who have no cash for a down-payment on their next house (no money to pay even the removal van!).

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Enbloc Battles

Straits Times - 20 Aug 2008

In the name of my neighbours, is there no hope for me?

I REFER to the article “Fix bank-or-CPF charge problem” (Aug 20) by Jessica Cheam. She called an en bloc sale “a forced sale in the name of urban renewal”.?

I might add that en blocs are “a forced process in the name of my neighbours”. As my condo tries to go en bloc again for the fourth time, I am now at the mercy of en bloc team No. 4 which has decided, after they formed a year ago, to actually stop short of the Collective Sale Agreement (CSA) signing. As most of us know, this is a technical ploy to keep the collective sale in the estate hanging over our heads like the sword of Damocles, for an indefinite period. Because the clock only starts ticking on the collective sale once the first SP (subsidiary proprietor) has signed the CSA.

So, how long will we live under threat of this and every en bloc? Every year after our 10th year in the condo? Should families be allowed to be unsettled in this way? Did the framers of those en bloc laws consider this?

In my estate, there is a diehard group of pro-en bloc residents. They form about 20 per cent of the owners. Again and again, they call for an extraordinary general meeting to “en bloc” the condo? Because the laws allow this. So far, they have been defeated, yet they are indefatigable! Once one disbands, a new committee rears its head. A committee, I might add, which consists primarily of owners who do not live in the condo and do not call it home. Should my abode, my place of rest, be subject to this repeated unease? Should someone who does not value my estate and looks upon it as an economic tool, who has no roots in my community, be allowed to unsettle those who have nested there? Surely the core values of home and community should outweigh those of “urban renewal”? Should it always be about the money?

Property laws that are created to facilitate urban renewal and allow others to steamroll the nesting urges of ‘Stayers’ will always create dissent and unhappiness. Why should we have to fight tooth and nail to keep our home??

Is there hope for Stayers?
Yeo Li Ying (Miss) 
Straits Times - 27 Aug 2008

There are two points to argue in this matter:-

• Is the first charge /second charge differentiation fair?
• Should loan interest be taken into account when computing financial loss?

Is the first charge /second charge differentiation fair?

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It is always best to deal in facts, words alone can only take you so far. Therefore I shall use concrete examples taken from Tampines Court's data, submitted at the STB, to show the inequity of Bank/CPF & CPF/Bank order of charges:-

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A) 239 out of a total of 560 owners in TC gave their partial or full financial details to the en bloc lawyer. These details were listed in a Table designated A-2 at the STB.

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B) According to the statutory newspaper advertisement of 27 December 2007, listing out all the charges on all the properties in Tampines Court; here is an approximate breakdown as to how many were CPF/bank and Bank/CPF.

(my eyes aren't as good a they used to be, the newspaper print is pretty small, so allow for some error):

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Total number of units :560
Total number of double/triple charges: 269

Total number with Bank first charge/CPF second: 150

Total number with CPF first charge/Bank second: 112
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C) It was the change in CPF rules which divided home owners into two distinct groups; those who have protection pre-2002 CPF rules (the Winners) and those who have been abandoned and set adrift by post-2002 CPF rules (the Losers)*
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* post-2002 - all properties have CPF second charge (except HUDCs phases III and IV, which were uniquely and inexplicably set adrift pre-1996).

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The Losers with CPF as second charge (56% of double charged units):-
1) Full outstanding Bank loan redemption
2) Partial CPF redemption up to the maximum of sale proceeds

From the Table in A-2

This is what some owners would have lost in their CPF accounts (had the sale been approved)

CPF loss (unrecoverable) + Alpha (recoverable)

1. ($260,671) + Alpha $8,083
   
2. ($252,180)
   
3. ($251,063)
   
4. ($222,552) + Alpha $3,298
   
5. ($246,233)
   
6. ($218,264 + Alpha $35,475
   
7. ($206,001)
   
8. ($203,164)
   
9. ($193,534) + Alpha $26,570
   
10. ($186,504)
    
11. ($183,771)
    
12. ($174,729)
    
13. ($172,572)
    
14. ($172,040)
    
15. ($166,387) + Alpha $6,709
    
16. ($165,107)
    
17. ($163,881)
    
18. ($160,474)
    
19. ($144,683) + Alpha $25,687
    
20. ($146,824)
    
21. ($132,772)
    
22. ($131,264)
    
23. ($120,067)
    
24. ($105,486)
    
25. ($103,830)
    
26. ($95,593)
    
27. ($93,504)
    
28. ($74,124) + Alpha $85,603
    
29. ($66,188)
    
30. ($63,921)
    
31. ($52,898)
    
32. ($43,462) + Alpha $21,839
    
33. ($42,248)
    
34. ($38,324)
    
35. ($22,684)
    
36. ($17,808)
    
37. ($13,103)
    
38. ($10,312)
39. ($5,271) + Alpha $48,035 .

Only 9 in this group of owners were considered Alpha owners (i.e. financial loss) by LTSA rules. The CPF loss could neither be reclaimed from the Alpha sum nor from the defeated Beta sum, as the CPF Board had said it would waive any outstanding amount owed to it. The reason why there are so many CPF losers, is that rules changing CPF to second charge for HUDCs phases III & IV were applied between 6 to 9 years earlier than all other properties in Singapore. Also, since only 43% of TC owners gave their financial details, and there are up to 150 units with CPF second charge, there are potentially many more CPF losers out there. 

The Winners with CPF as first charge
1) CPF redemption
2) Bank mortgage redemption

(actually, there's a specific order by which the CPF principle sum and interest is returned. See my post Financial loss and shortfall for an imperfect analysy.)

On top of a full refund to their CPF accounts taking up a mega portion of their sale proceeds; this is what other owners would have received extra, above and beyond the sale price to cover their outstanding Bank charges in full.

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Extra after full CPF redemption, bank charge +

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1. + $248,609
2. + $216,831
3. + $95,916
4. + $44,741 + Alpha $955
5. + $26,311

Because a Bank would never waive any outstanding amount owed to it, money would have had to be scrambled from somewhere to pay off these mortgages in order for the sale to go through. It could not be taken from Alpha, as they did not suffer financial loss according to LTSA rules. In TC, it would have been reclaimed from the failed Beta. In other enblocs, the money would have to come either voluntarily from the other owners or from the developer-buyer. If not, the sale would not get STB approval. Since there are up to 112 such owners with Bank second charge; clearly the A-2 table understates the total amount needed to cover possible payouts.

So, there is an inequality built into the system from the start. Different owners start from an unequal footing and either benefit hugely or are penalised brutally. This inequality is baseless, there is no earthly reason why CPF/Bank should be any different from Bank/CPF. Two owners can buy a similar sized unit at the same price and suffer widely different fates .

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Blk 118 - Buy price $660k - CPF 2nd charge - loses $222,552

Blk 123 - Buy price $580k - CPF 2nd charge - loses $203,164

Blk 119 - Buy price $605k - CPF 2nd charge - loses $172,572

Blk 119 - Buy price $640k - CPF 2nd charge - loses $252,180

Blk 119 - Buy price $655k - CPF 2nd charge - loses $251,063

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Blk 121 - Buy price $580k - CPF 1st charge - gains $216,831

Blk 130 -Buy price $605k - CPF 1st charge - gains $248,609

Blk 122 - Buy price $486k - CPF 1st charge - gains $95,916

Blk 133- Buy price $650k - CPF 1st charge - gains $44,741

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Comparing apple to apple:-

Blk 123 owner would have received $700k in sale proceeds taking a loss of $203,164 to his CPF account. Blk 121 owner would have received $916k. Both bought at the same price yet look at the difference in sale proceeds! The only significant difference between these two units is the ORDER OF CHARGE.

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Comparing orange to orange:

Blk 119 owner would have received $709k in sale proceeds taking a loss of $172,575 to his CPF account. Blk 130 owner would have received $949k.

Remember, all TC units have the same share value and are all around the same size (~1700sqft). The only difference between these two units is the ORDER OF CHARGE.

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If an owner were to sell his property individually on the open market, the order of charge would not matter - both would have to be repaid in full. Ironically, it is only in an en bloc sale that unjustness and discrimination go hand in hand.

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It is doubtful that many owners know what constitutes financial loss and shortfalls before signing the CSA, and naively assume that whatever is owed to the Bank and CPF will be covered automatically. Did so many owners really sign off knowingly on 6 figure sums in Tampines Court? I wonder.

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Actually, this baseless inequality only crystallized in the Waterfront View case in April 2007; before that, there were no reported cases of CPF loss in en bloc sales in the press. No En bloc owners complained of insufficient funds to cover Bank or CPF charges on their property. Perhaps all en bloc sale proceeds up to that point were sufficiently high enough to satisfy all charges AND let the owner walk away with a nice wad of cash, too. This is just speculation on my part; had there been cases, they surely would have been reported in the press. So, I am taking Waterfront View as the first such instance where CPF loss was brought up as a minority objection and tackled by a STB Board panel. They ruled that CPF loss is not financial loss. The Waterfront View couple then brought their case to the High Court where they pleaded that their CPF loss of $106, 244 should be recoverable (see ST articles here and here ). Again, they lost. The case was never brought to the Court of Appeal; so technically, the ruling is not set in stone and is still open to challenge if any future owner decides to take it on.

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Should loan interest be taken into account when computing financial loss?

According to the ST article above, Prof. Jayakumar's rational is that CPF funds that go into repaying bank loan interest should not be taken into account. This is to distinguish between owners who take no loans at all or who take a small loan with little interest and owners who take long-term mortgages with a high component of interest payments. Let me see if I can root out that speech.... (an excerpt of the speech relating to the CPF issue can be found at the end of this post)

On first blush, this is a convincing line of argument and I found myself in agreement, initially.

It is an individual decision whether or not to:-
- take out a small or large quantum loan
- go for a short-term or long term repayment period.
- pay by CPF or cash (or a combination of both)

An owner (A) would chalk up the highest CPF charge with a large, long-term loan, using CPF.
An owner (B) would chalk up the least CPF charge with a small short term loan, using CPF.

An owner (C) might not use CPF at all and pay for his loan on cash
And of course, there is an infinite number of combinations in between.

So why should owner (B)/(C)receive less sale proceeds than owner (A) by virtue of being shrewd or more conservative or just plain wealthier?

The arguent is persuasive but on further reflection, I have two problems with this line of reasoning.

First, conversely, why should owner (A) be penalized for not being as shrewd, not as conservative or just plain poorer than owner B or C? He may be shrewd and conservative in nature but it simply may not be possible for him to take out a smaller, short-term mortgage and may not have the spare cash to service the loan.

Interest payments are part and parcel of servicing a loan. Does it really matter how much interest an owner pays? The fact is he HAS PAID and it should be considered part of the total cost of buying his home. It matters not than owner A has paid $xx + yy interest or that owner B has paid $xx + y interest - they all should get back what they paid to be on an equal footing.

Secondly, and most importantly; SUCH A RULING DISALLOWING INTEREST PAYMENT HAS TO BE APPLIED EQUALLY TO EVERYONE IN ORDER FOR IT TO BE FAIR.

(my understanding)...
As the rules stand now; this rational applies ONLY to those owners who have CPF 2nd charge; these owners have to wave goodbye to their hard earned money as the CPF Board doesn't care and the High Court has said it isn't financial loss. But owners who have CPF 1st charge continue to enjoy having their “high component of interest payments” covered! Not fair!
 

Owners who pay for their loans by cash have also forked out large sums in interest, they also lose out on having their interst payments covered.

Going back to a real life example in Tampines Court; following is one such lucky owner who benefits from this glaring anomoly in the legislation:

Blk 130 – Buy price $605k – CPF 1st charge a whopping $949,583 – no outstanding bank loan!! His top-up from sale price would have been $248,609!!! Sale proceeds are nearly a million bucks altogether!

A not-so -lucky owner:
Blk 123 – Buy price $615k – CPF 2nd charge at only $475k, - outstanding bank balance $194k, - long term mortgage paid mainly by cash. Interest componant not fully reflected in CPF . Sale proceeds S702k . Zip extra as a result.

Parliament should look at the real life negative consequences of this ruling. In their quest to make a flawed system seem fairer, they have instead skewed it to reward one group over another, and without achieving the objective stated by Minister of Law. They can fix this glaring anomoly by reverting to the CPF first, bank second and by allowing paid interest payments (not accrued) to be included in the cost of buying a home (which it undoubtably is).

I have been told the rational behind the 2002 change in order of charge was "a change in the bankruptcy law and the drive to pin personal accountability for financial failures."(The Pariah).

So, untold numbers of ordinary, tax-paying, diligent folk struggling to pay their mortgage have to suffer hundreds of thousands of dollars in losses so that Banks are assured their pound of flesh from a tiny few? In the whole of Tampines Court, there was only ONE reported bankrupt.

Is this a case of the law taking a sledghammer to swat a fly?

Parliament's second reading of the bill: The Deputy Prime Minister and Minister for Law (Prof. S Jayakumar):

"Mr Alvin Yeo asked whether the Bill should go the full way to list in the Fourth Schedule all the permitted deductions, in other words, instead of being inclusive, be exhaustive. The specific point that he made was about CPF monies. He said that there is no reason why CPF monies should not be counted as a financial loss.

Madam, the list in the Fourth Schedule is based on what the STB currently considers as permitted deductions. It is not meant to be exhaustive. Over time, additional items could be added if the STB comes across other permitted deductions while dealing with future applications. On the treatment of CPF monies, I think what Mr Alvin Yeo is, in fact, asking us to amend the law is to reverse the High Court's decision in the Waterfront case. My Ministry has no ground to disagree with the ruling in that case, and hence we have not sought to amend the law.

Perhaps, I should explain. In a property purchase, CPF funds can be used to pay for three components: (1) the lump sum for the initial purchase; (2) monthly repayments of bank loan principal; and (3) monthly repayments of the bank loan interest. I should explain that CPF funds used for the initial purchase - this is the first component - and for monthly repayments of bank loan principal - this is the second component - are factored in financial loss computation as they constitute part of the original purchase price. But CPF funds used to repay bank loan interest - this is the third component - are not taken into account, because if the law were to do that, then there would be no parity between an owner who takes a long-term mortgage with a high component of bank interest and an owner who pays totally in cash or an owner who takes a small loan and pays off the loan faster.

Some have asked if CPF interest forgone for the total amount of CPF money that has been withdrawn should also be taken into consideration. This component is not relevant because there is no actual financial loss in the CPF interest forgone."

Has CPF lost it's mission?

From the CPF website (accentuation and cute pics are my own):

Mission
“To enable Singaporeans to have a secure retirement.”
Vision
“A world-class social security organisation enabling Singaporeans to have a secure retirement.”

Corporate Philosophy

Our Commitment

The Central Provident Fund (CPF) is a social security savings scheme jointly supported by employees, employers and the Government. CPF members are employees and self-employed persons in Singapore.

The basic purpose of the CPF is to help members meet primary needs like shelter, food, clothing and health services in their old age or when they are no longer able to work. Benefits offered are to help meet one or more needs of the CPF member in his retirement. They include withdrawals by the member for retirement, permanent disablement, home ownership and medical care. The amounts available depend on how much the member has saved in the CPF.

The Central Provident Fund Board

The CPF Board is the trustee of members' CPF savings. We seek to protect and preserve the value of the savings. We provide fair market returns at minimal risk, while opening avenues for members to seek higher returns on their own after carefully considering the risks involved. The guiding principle is prudence. And returns should contribute towards the member's well-being in his retirement.

Singaporeans spend their entire working lives contributing to this savings fund in the expectation that the money will be safe from marauders, thieves, mismanagement and the vagaries of the real world. They diligently save (albeit compulsory savings), whether in cash or in property, towards the day when they will be able to draw down on thier lifelong savings to finance themselves and their loved ones in their dotage. CPF was always the conservative protector, protecting members even from themselves, restricting what, when and how much members could utilize their savings. CPF rules are myriad and Singaporeans, by and large, have benefited greatly from this unique Singaporean scheme.

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So what went wrong?

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What happened to this grand scheme and vision when Waterfront View put them in the spotlight? Why were tens of thousands of dollars allowed to disappear from member accounts without so much as a squeak of protest from the trustees? Why did the CPF allow en bloc sales to go through knowing that members would lose large chunks of their precious retirement savings? Why didn't they fight back?

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As trustees of members' savings, can they be trusted with our nest egg anymore?

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Building on the fine decision of Horizon Tower's Court of Appeal, perhaps the pendulum of common sense and justice can swing a littel further to the centre and put right the wrong that sprung up in April 2007, when the CPF allowed LTSA to undermine it's mission statement and surprisingly opened it's doors to en bloc marauders. When the LTSA came in the door, CPF prudence and purpose went out the window.

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Words are just words, facts speak volumes. See again my post CPF LOSS to recap on the numbers and the irrationality of the 1st charge vs second charge ...

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Will CPF reconsider their uncharacteristic and unpopular decision to waive outstanding amounts owed to it should the sale proceeds of an en bloc sale be insufficient? Will they repair the damage that this have done to their reputation as guardians? Will they compensate people for their retirement losses?

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If the Appeal Court can restore order to sale committees, I have faith the CPF Board can still review and revert back to it's primary mission of protecting and preserving the value of the savings even in an en bloc.

The Language divide

Tampines Court is a microcosm of Singapore life; a hodgepodge of residents, people spanning all races, ages, economic strata and education. We have hawkers, teachers, pilots, air-stewards, architects, salesmen, retirees, engineers and the unemployed. The young, middle-aged and the old. Families, singles and widowed. Chinese educated, English, Malay, Indian and an increasing number of new permanent residents from around the region. 

Everything is conducted in English and quite a lot of that goes over the heads of many. In an estate like TC, the language barrier is perhaps more pronounced than in more affluent estates.

But people generally mosey along as best they can, frequently missing out on the nuances of phrases or misunderstanding the trickier aspects of English grammar, especially when things are expressed in legalese. I have more than once thought that legal jargon is used simply to befuddle the reader, that complex grammatical sentences are employed to perplex and purposely convey an ambiguous meaning.

Some people, hampered by their lack of understanding, just follow the herd trustingly. They may start to read the 2 inch thick CSA but give up after page 4. Agents who have dialect skills target the non-English speakers, visit their homes and workplaces, and badger them until they sign.

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The onus is on the owners themselves to seek independent advice and to rope in family members who are more conversant in the English language. They shouldn't be over reliant on agent-talk; agents only say what they want you to hear.

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There may have been a suggestion once to the Government for the CSA at least to be translated into other languages, but that request was not granted. The language of the legal profession is English, end of story. I see the impracticality of it and the quadrupling of expenses if documents were to be made available in all the 4 official languages, not to mention the translation fees.

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The CSA need not be in legalese, though. I have seen a CSA (Gillman Heights, I think it was) that was written in everyday language. Seeing as the majority of residents have difficulty differentiating between, 'not minded to agree' and 'don't mind agreeing' perhaps the more down to earth layman version is for us.

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Let owners request for it.

Indemnity

Indemnity - protection from liabilities or penalties incurred by one's actions.

The Sale committee are a group of volunteers; they frequently present themselves to the SPs as having some 'experience' in en bloc sales and thus are 'qualified' persons for the job. In reality they can be anything but. Some sale committees can be entirely made up of bumbling idiots. In all CSA's that I have seen, the SC are very careful to indemnify themselves - they cannot be sued for their actions or inactions.

As volunteers, their actions create liabilities and legal obligations on the part of SPs, as they act on behalf of the SPs in a fiduciary as well as contractual capacity (see Horizon Towers Appellate Court decision). So when things go wrong, the fallout is on the SPs heads entirely, the SPs pay for sale committee mistakes, in spades.
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This does not seem right to me, in fact it is quite bizarre.
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From an owner's perspective, handing over my property to a group of neighbours, (non-professionals with zero professional insurance coverage) to sell on my behalf, borders on the insane to begin with. Their potential mistakes could leave me out of pocket by tens of thousands of dollars, I could even be left a bankrupt if they, say, 'indemnify the developer -buyer against loss due to delay etc'  (yep, our last group did just that!). I would  at least craft a contract in my favour. The terms on which the SC -SP relationship are to be established have to be very clearly set out and have to be acceptable to me, and should provide sufficient protection to me in case I suffer any liabilities or incur any obligations due to their action or inaction in the course of that relationship.

So.... I would indemnify myself against the sale committee.

Remember, you are giving someone the power to sell your most valuable personal property without insurance. The current model of en bloc leaves owners naked and exposed to the unimaginable.

Supplemental Agreement

A Supplemental Agreement (SA) is a legal document amending one or more terms in the original Agreement. If 80% of owner signatures are required for the Agreement to be valid then so must it be for the Supplemental Agreement.

Only, they don't have to be the same 80%. The owners who do not agree to the new term(s) are deemed to have withdrawn from the Agreement and are no longer treated as a Signatory to the Agreement. New owners can sign up for the Supplemental Agreement and they become part of the new 80%.

I smell a RAT here; why would owners who refused to sign for a higher RP choose to sign for a lower RP? Are there side agreements going on? Top ups from the developer, maybe?

SIGNING makes it look like the owners have the POWER TO CHOOSE ... but my question is; do they really?

In the CSA terms, there may be a clause or clauses dotted about that restrict the owner from exercising his freedom of choice. For example, it might state that the owner must render his full co-operation and efforts to assist the sale committee in the discharge of its duties and obligations.  The owner might also have to sign any document to effect any of the purposes in the Agreement, and not to do anything by way of act or omission that might jeopardize the sale or be detrimental to the fulfillment of any of the terms of the Agreement.

If they do not sign, then they may be in breach of their obligations and the SC can sue them.  Deep trouble of the owners' own making.

So does signing any document also cover the Supplemental CSA?  I don't know, but it's a question.

It's a slippery slope if one term in the CSA can negate another and you don't spot it before you sign.

I have come across two types of Supplemental Agreements:

• A Supplemental Agreement  to lower the Reserve Price (Koon Seng House), (Marine Point)
• A Supplemental Agreement to extend the validity of the Agreement (Gillman Heights)

Koon Seng was the one that put the cat among the pigeons by declaring that the SA is a fresh agreement and another 12 months added. Sheesh! 

I am not sure if a contractual promise that it won't is stronger than a High Court judgement that it will - I'd need a lawyer to answer that! In the meantime, caution dictates that you go with the High Court interpretation and not a contractual wish.

Marine Point was another condominium which signed a Supplemental Agreement to lower the reserve price. This was because the Proposed Sale Price from a buyer was lower than the RP.  The valuation at close of tender was high - too high for the Proposed Sale Price.  So, instead of sticking to their guns they did another tender and another valuation from a different valuer (since the first guy said his valuation was correct and stuck by it) - and it turned out to be magically lower ..... so they could go ahead with the sale. Another sheesh!

Now Gillman Heights had a Supplemental Agreement to extend the validity of the Agreement since they were running out of time. It caused a lot of problems as many owners refused to sign and 4 of them brought it to the High Court. In that instance, 20 owners who had signed the CSA refused to sign the SA - but 26 fresh owners did sign. The CSA and S&P had opposite clauses; the CSA stated that "the Vendors shall  not be required to execute the Supplemental Agreement"  and in the S&P, it stated that agreement from the 80% was necessary. The judge went with the CSA.

A supplemental Agreement is a FRESH Agreement

KOON SENG HOUSE

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Goh Teh Lee v Lim Li Pheng Maria and Others [2009] SGHC 242
27 Oct 2009

A sole minority owner lost at the High Court. This mixed estate took a very long time to reach this point - the time line is as follows:

First signature to CSA: Dec 2006
First signature to supplemental CSA (to lower the RP): Mar 2007
90% achieved for supplemental CSA: Sep 2007
Application for sale: Apr 2008
STB order for sale: Dec 2008
Grounds for decision: Feb 2009
High Court decision: Oct 2009

Whether the application to the Board for a collective sale order was out of time
35 The plaintiff contended that the application to the Board, which was made on 16 April 2008 for a collective sale order, was out of time. In his view, the application had to be made within 12 months after the first owner appended his signature to the first CSA, that is, by 28 December 2007. This view was erroneous for two reasons.

36 First, where an earlier CSA had failed to achieve its intended purpose, ie, to sell the land to a purchaser, the proprietors of the land could not be precluded from making a new agreement with a lower reserve price. Hence, the supplemental agreement constituted a fresh agreement. Therefore, time for the purpose of para 1A(a) of the Schedule should be reckoned from the date the first signature was appended to the supplemental agreement.

37 Second, s 84E(3)(b) provides that proprietors holding not less than 80% of the aggregate share value may apply to the Board for a collective sale order. At the earliest, the 12-month period within which application may be made to the Board starts when 80% majority has been reached or first crossed (as the case may be). The plaintiff was therefore wrong to say that time for this purpose started running from the date of the first signature. There are two distinct 12-month periods. As I said, application may be made to the Board as soon as 80% majority has been reached or first crossed. However, this does not mean that the 12-month period within which application must be made to the Board necessarily starts then (see para 1(a) of the Schedule). For example, it could start at a later date when a greater percentage majority is reached so long as the time elapsed from the first signature to the time when such desired majority is reached is also not greater than 12 months (see para 1A of the Schedule).

38 The first signature to the supplemental agreement was appended on 24 March 2007 and the last was on 6 September 2007 (well within the 12-month period within which a majority of not less than 80% had to be reached). The other 12-month period (ie, that within which application to the Board had to be made) commenced on 6 September 2007. Therefore, the application made on 16 April 2008 was well within time.

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It seems this ruling has opened up an avenue for the sale committee and the 80% majority to extend the 12 month validity period for the CSA set in the LTSA Schedule indefinitely. They can piggyback a supplemental agreement to start a new 12 months afresh just before the old one runs out. This could theoretically become an instrument of abuse if, say, a SC and a jittery majority can't find a buyer and don't want to process to end after all their 'hard work' - all they would need do is trot out a new CSA with a minor adjustment (for justification's sake at the STB should it be challenged) and Bob's your uncle. There is no mention of by how much the Sale Price can be lowered so , theoretically, it could be a nominal $1.00 

So

12 + 12 + 12 + 2 +Y
becomes
12 + 12 + 12 + 12 + 2 +Y
or even
12 + 12 + (12)m +12 + 2 +Y (in months)

Where:

12 = time taken in months from election of sale committee at first EOGM  to first signing.
12 = twelve months from date of first signature of first CSA
(12) = twelve months from date of first signature of first Supplemental CSA
m = multiplier for number of Supplemental CSAs
12 = time taken to find a buyer and apply for sale to STB
2 = two months for STB mediation
Y = time taken for hearings at High Court, Court of Appeal

It beggars the question why set time limits at all?

• Once a sale committee is elected; they can twiddle their thumbs for a full 12 months. What on earth is the MinLaw thinking about here. All the time in the world given to these people at the beginning and NO TIME given to owners to decide on the bids at the end. 
• It can be argued in court that if the CSA can be extended with a fresh 12 months through a supplemental CSA, then so too the SC's tenure - that's only logical, you can't have one without the other.
  
• An estate can be kept in limbo with successive SCSAs until an eventual sale; that is the only finality possible.
  
• Once you sign a CSA; you cannot rescind (except during the initial 5 day cooling off period).