LTSA is a MENACE

The LTSA Act is not a perfect document; it is not even close to being adequate. It not only causes headaches in estates going through the en bloc process, but an ongoing headache for those that aren't.
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Above is a table illustrating 57 of the worst cases of arrears in an estate, i.e those owing $1000 and above to the sinking fund/maintenance fund/Interest and outstanding privatisation balance.

TABLE REMOVED

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Monthly contributions to SF/MF:

2003-2008: $128/mth/unit = $1536/yr/unit

2008-now: $148/mth/unit = $1776/yr/unit

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Looking ar Column G (outstanding MF/SF/Int); in order to reach such high figures owners would need to have stopped making their contributions for several months, and in many cases, even years. Those under $2k would have chalked up their debt in the last year and those greater than $2k must have stopped during the en bloc years - expecting the sale to go through no doubt. Some seemingly stopped 5 yrs ago or more! (This conclusion is drawn from a bare reading of the table, a closer examination of the history of payment etc would need to be done in order to make a definitive statement of fact).

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'Perhaps they are suffering financial difficulties' - Yes, of course undoubtedly that is true for some, and indeed there are owners who make arrangements with the MC to pay off their debt by installments. But the others are just freeloading, if you ask me. I have cross checked the units with a recent car label exercise in the estate and found quite a few units able to afford a car, (in six cases 2 cars, and in one case 3 cars!)- -and if they can afford to run a car(s), they can afford to pay their monthly contributions.

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There are cases who just stubbornly refuse to pay the monthly fees either

a) out of protest at the failed en bloc or
b) are out to beat the system.
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LTSA (2004) Part VA
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(7) ...the Board shall, ..... approve the application .... unless, ....., the Board is satisfied that —

(a) any objector, being a subsidiary proprietor, will incur a financial loss; or

(b) the proceeds of sale for any lot to be received by any objector, being a subsidiary proprietor, mortgagee or chargee, are insufficient to redeem any mortgage or charge in respect of the lot.
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NOTE: WHAT FOLLOWS IS JUST MY OWN PERSONAL OPINION:-
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Somewhere in my blog I said I would keep an eye out for owners who deliberately run up MCST debt by non-payment of maintenance and sinking fund contributions. Well, I have done so and have come to a preliminary conclusion - that yes it indeed happens. I cannot say for sure that that is their primary motive, but it is my strong suspicion.

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The management committee has a duty to try and recover arrears. As a last resort they will have the MCST lawyer place a caveat on the unit. This means the owner has to pay off the MCST debt should he sell his unit.

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I believe these owners are happy to have caveats lodged on their units as this personal debt, now becomes a legal charge for others to pay should their own sale proceeds in any future en bloc be insufficient. Without the charge, the debtors would be liable to pay for their debt themselves.

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In the meantime, they can happily not pay a cent month after month, year after year, and live as freeloaders on the estate whilst the majority of decent folk diligently contribute towards the monthly funds.

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The LTSA Act may have made some owners into blatant defaulters who continue to default even in periods of no en bloc. They simply don't care and their numbers are growing.

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The LTSA Act may have rewarded owners who  default with a dollar amount equal to their charge, should their sales proceeds be insufficient in a future en bloc.

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The LTSA Act may have penalised the diligent and honest owner who pays his monthly fees and does not run up deliberate debt.

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The LTSA Act may have had the effect of hampering the ability of an estate not going through en bloc to gather sufficient funds to run the estate.

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I don't mean to dig up the dirt on the last failed en bloc, but one interesting fact has come to light with these figures and I think it bears mentioning.

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It was through an SP's persistent complaint that she had an unjustified 'outstanding privatisation balance' of $148.00 which put me on the hunt for the source and I traced it to the A2 table at the STB, and from there had a look at all the other claims of privatisation balance.

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Please refer to Column B and C in my table above and compare with F and G, remember there is 7 month difference so the figures would have increased somewhat.

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At the STB, the Table A2 was presented by the applicants with a statutory declaration that the information given was accurate and true. Under Column N was listed 'MCST PRIVATISATION BALANCE' and supposedly only reflected the outstanding amounts owed for privatisation and NOT MCST debt attributed to sinking fund/maintainance arrears.

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Crosschecking with the actual account figures, I now see that it did include all MCST debt, and some owners were even listed as having privatisation debt when all they had was maintenance/sinking fund arrears. So, the above mentioned SP's privatisation balance was actually just her outstanding monthly fee. Monthly fees amounting to thousands of dollars were incorrectly identified as privatisation balance.

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Newspaper reports

Collective sale impetus fizzles out
Sunday Times-5 April 2007

"At the height of the property boom in 2007, 116 collective sales were completed. This figure was whittled down to just eight last year, after the onslaught of the global economic crisis.
There was no collective sale done in the first three months of this year."

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A much needed respite for genuine home owners and "The once fever-hot collective sale market is now stone-cold, and property experts predict it will take at least five years for transactions to reach the pitch seen before."

Though, in five years, the lessons learned from our failed en bloc might well be forgotten through collective amnesia!

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Not an end for en bloc sales

Straits Times - 10 April 2009

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"The judgment has been met by howls of protest from many in the property sector. The fear is that the bar has been set so high that any future deals will be impossible. They say the balance has been shifted too far in favour of en bloc dissenters, such that an en bloc deal becomes vulnerable to even the smallest objections.

As long as sale committee members act on behalf of all owners and transparently, it shouldn’t be a problem,’ said Knight Frank investment sales head Foo Suan Peng.

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It restores the requisite level of care and attention that should be paid when people contemplate selling something they are as emotionally attached to as their homes.
And if society in general eventually learns to be guided by principles other than monetary gains, then it can only be a good thing."

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Let them howl! The scoundrels have had it their way for far too long. The problem was the bar was set so low that sale committees, devoid of all moral responsibility, were acting like gangsters to drive a sale to completion. The gangster character, the desperate bankrupt, the retrenched, the flipper, the double unit owner, the soon-to-be-emigre should all be banned from serving on sale committees. They are at the bottom of any list of suitable candidates and owners should be wary of their ulterior motives.

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"It is the first time the minority group has won on the basis that the sale was not in good faith, and not on a technicality,’ said Mr Philip Fong of Harry Elias Partnership, who represented the objectors."

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Excuse me? That should read "It is the first time the monority group has won on the basis that the sale was not in good faith at the court of appeal."

Tampines Court also won on the basis that the sale was not done in good faith in the method of distribution of the sale proceeds AND in the sale price.

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Glitches at Grangeford

Business Times-15 April 2009

Think of the elderly

Straits Times - 15 April 2009

HORIZON TOWERS WIN!

HORIZON TOWERS MINORITY

WIN AT APPELLATE COURT!
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This is a HUGE win for the minority and a much needed breath of fresh air from the courts . The minority fought long and hard on this one, and they have been rewarded with the most sensible judgment on the en bloc process ever to come out of the courts, and the first ever in favour of the minority. It has taken a long time for the courts to mirror the 'everyman'' view of justice; that if 80% want to force 20% out of their homes against their will, then they had better do it properly. Too long have sale committees/property agents/en bloc lawyers run roughshod over the minority, and increasingly, the majority, too. Looking after their vested interest being the prime motivation in a sale. It seems almost too good to be true. This decision puts POWER back into the hands of the STB to take a good hard look at the sale, especially in the area of good faith; power that previous rulings had stripped away from them, leaving the STB (in my humble layman's opinion) almost impotent in the face of legitimate minority objections. This decision reigns in somewhat the crazy excesses of the purposive approach, defining what the duties of the SC are and when they overstep the mark. Fiduciary duty has regained it's central importance and the Board has to play a "proactive inquisitional role" (reversing Hon. Choo Han Teck's pronouncement that the STB "was not the appropriate forum for considering the conduct of the SC"). The hallowed words of Parliament that the 'safeguards are found in the rules' don't ring so hollow anymore (at least, these are some important wrongs that have been righted).

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The pendulum of Justice has swung back to the centre.

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Horizon Towers ruling: All owners to get slice of $1.9m pie
Straits Times; 17 Jul 2009

En bloc sale of Horizon Towers falls through

ChannelNewsAsia - 2 April 2009

Horizon Towers sale won't go ahead

Business Times - 2 April 2009

Court quashes en bloc sale of Horizon Towers

Business Times - 3 April 2009

Troubled Towers: A timeline

Sunday Times - 5 April 2009

The Lawyers 21/2 tear bonanza of billable hours

Sunday Times - 5 April 2009

Minority Owners: "Sweet victory" but no winner

Sunday Times - 5 April 2009

The Buyers: a good deal that turned sour

Sunday Times - 5 April 2009

The Majority turned Minority: Mixed feelings

Sunday Times - 5 April 2009

The majority Sellers: Stuck with their units

Sunday Times - 5 April 2009

Just glad the saga is over

Sunday Times - 5 April 2009

No ill feelings over failed sale

Sunday Times -5 April 2009

Horizon Towers owners ready to move on

Sunday Times - 5 April 2009

Not an end to en bloc sales

Straits Times - 10 April 2009

Scrutinise future collective sales to protect home owners

Straits Times - 14 April 2009

Failed deal nets Horizon Towers owners $1.5m

Straits Times - 23 April 2009

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The Court of Appeal has issued two documents

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1) Summary of Case (5 pages)

2) Judgment (122 pages long!)

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Ng Eng Ghee and Others v Mamata Kapildev Dave And Others (Horizon Partners Pte Ltd, intervener and Another Appeal[2009] SGCA 14

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From the 'Summary of Case' :-

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"(2) An SC was the agent of all the subsidiary proprietors in relation to the collective sale of their strata units as a result of which a fiduciary relationship arose between the SC and the subsidiary proprietors. Since ............ an Sc had the power to sell the units of objecting subsidiary proprietors against their wishes, the need for the imposition of high standards of conduct upon the SC ................... was even more pressing than in the case of an ordinary common law agency relationship".

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"The SC's duties included: (a)the duty of loyalty or fidelity; (b) the duty of even-handedness (c) the duty to avoid any conflict of interest (d) the duty to make full disclosure of relevant information; and (e) the duty to obtain the best price for the properties of the subsidiary proprietors:"

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(3) In considering whether there was "good faith" in the transaction ..... The Horizon Board should not have confined itself to determining whether the sale price was fair or not, but should have considered what was good faith in general law (common law and equity). The word "transaction" in s 84(A)(9)(a)(i) of the LTSA embraced the entire sale process....."

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(4) A Strata Titles Board had to play a proactive inquisitional role in determining applications for collective sale whenever objections had been filed. It was not confined to the evidence presented to it by the contending parties, but had to seek out the facts whenever there was reason to believe that the SC had not disclosed everything about the transaction to the Board:

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(5) In refusing to subpoena (ex sale committee member) to testify and in allowing the original SC to assert legal privilege in respect to the advice given by it's solicitors, the Horizon Board had erred in law."

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(6) ....the Horizon board had applied the wrong test for conflict of interest. The correct question to ask was whether there was a possible conflict of interest. Furthermore , the Horizon Board had wrongly placed the burden of proof on the objectors:

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(8) In it's ruling that the requirement of "good faith" ........... :meant "honesty, fairness, and absence of unconscionable and perhaps even reckless behaviour", the Horizon Board had erred in law by adopting a narrow interpretation of "good faith":

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(9) In concluding that the original SC had acted in good faith in selling the property to HPL as it had received and relied on legal advice when deciding ......... the Horizon Board had erred again. It was not the law that a fiduciary was entitled to rely on legal advice alone to exonerate itself from any breach of duty.

...ultimately the trustee had to make his own decision in good faith, responsibly and reasonably.

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(10) The judge had erred in law in taking a restricted view of the duties of a Strata Titles Board in dealing with applications for approval for collective sales.

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(11) The original SC had breached its duties as fiduciary agent for all the subsidiary proprietors by failing to act with due diligence and transparency in the process of appointing a property agent; failing to proactively follow up on the Vineyard offer and other expressions of interest; failing to improve the chances of obtaining a better price for the property by leveraging on the Vineyard offer in negotiations with HPL; failing to obtain advice from an independent property expert prior to the sale and disregarding First Tree's obviously conflicting motivation in pushing for the sale; acting with undue haste in finalising the sale to HPL when there was no legal or moral obligation to do so; deciding to sell the Property to HPL when there were undisclosed potential conflicts of interest on the part of the two key SC members; and failing to consult (or even to update) the consenting subsidiary proprietors to seek further instructions despite the surge in the property market: "

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Future sale committees,

en bloc lawyers and property agents beware!

You can no longer get away with blue murder,

engage in tricky business with impunity,

close your ears to minority concerns,

look after your own vested interest,

keep owners out of the picture,

show scant regard to the rules,

ignore higher counter offers

hide behind legal privilege,

sell at the lowest price,

or in haste,

because

the STB is back in the saddle!

Furthermore, they now have INQUISITIONAL POWERS!

REGENT COURT

January 20, 2011

Regent Court put up for sale

Regent Court, a freehold residential property at 1091 Serangoon Road, has been put up for sale by tender.
The property has a combined land area of 38,857 square feet and is zoned for high rise residential development of up to 36 storeys.
It has a plot ratio of 2.8, which allows a maximum gross floor area of 108,800 square feet.
No development charge is payable.
According to its marketing agent Cushman & Wakefield, the land can allow the new developer to build some 200 apartment units with average sizes of 500 square feet.
The property is worth in access of S$83 million, translating to a minimum price of S$763 per square foot per plot ratio.
The minimum break even project cost works out to be about S$1,200 psf, said Cushman & Wakefield.
Donald Han, vice chairman of Cushman & Wakefiled said “the Serangoon area has been recognised as a strategic suburban residential area”.
This is due to its proximity to the city centre, as well as HDB upgraders’ interest to own and occupy condominiums.
The area also has potential to become a choice residential cluster, due to its relatively central location and its closeness to the new Nex shopping mall.
Cushman & Wakefield said the connectivity of the Serangoon area will be improved with the completion of the circle line and the Upper Serangoon PIE viaduct.
The tender exercise for Regent Court is expected to close on February 28, 2011.

Source : Channel NewsAsia – 20 Jan 2011

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REGENT COURT WIN AGAIN AT STB

After losing at the Appellate Court over financial loss and the having the case returned to the STB for continuance ..........Regent Court had it's case dismissed at the STB again; this time for another reason!

Something about the STB insisting that the developer pay Stamp Duty on the sale before the case would be heard by the Board unless all parties agree to 'impound the S&P'. At least two dissenting minority owners did not agree to impound the S&P and so the case was dismissed. Actually, it was a case of the application being rejected rather than the case being dismissed.

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The STB now insist that the stamp duty on the S&P MUST be paid upfront, before an application is made to the Board. Stamp duty is usually paid within 2 weeks of the sale and purchase agreement being signed, but this rule has not been enforced for en blocs up until now. A late payment incurs a heavy penalty by the IRAS. If the STB does not approve a sale then the stamp duty is returned but not the penalty.

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STB circular on Stamp Duty
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Mohamed Amin bin Mohamed Taib and Others v Lim Choon Thye and Others
[2009] SGHC 216