"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."
Drop Down MenusCSS Drop Down MenuPure CSS Dropdown Menu
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.

Reaffirmation Alternative

Reaffirmation is a sticky issue on which there is no general consensus.

What MinLaw has to say about it:-
Reaffirmation from owners before the award of a sale tender: A sales committee has to act in accordance with the mandate specified in its CSA. It really depends on what mandate is given to the sale committee. If the owners empower the sale committee to make the decision for award of tender within a certain prescribed parameters, without the need for reaffirmation, then it is not the governments position to intercede, and tell the owners how they should run the process. Likewise, there is nothing in the legislation, either in the past or going forward, to prevent owners from specifying that they want the sales committee to seek such reaffirmation from the owners, before the sale tender is awarded. This can be provided in the CSA if the majority wants.
The Minister of Law, Mr K Shanmugam, Order for Second Reading of Land Titles (Strata) (Amendment) Bill, 2010 and Oral Answers to Members Questions

If the sale committee stretches out the en bloc process to the maximum allowable under LTSA , then the time interval from setting the reserve price to sale through tender (or private treaty) can be lengthy indeed. In a booming market the RP can become outdated quite quickly. Too many owners have found this out the hard way - Horizon Towers being the most infamous. Too much trust is put into a sale committee's ability to read the market and raise the RP. Too many opposing pressures are exerted for them to take the necessary  risks. So, why not take that pressure and uncertainty away, and let the owners themselves have the final say.

Reaffirmation is also a buffer against an developer-friendly Sale & Purchase Agreement. If the CSA allows for the SC to negotiate the terms and conditions with the purchaser then it is the purchaser (and not the SC) who is in the driving seat. Again, too much confidence is put ina bunch of inexperienced volunteers pitched against experienced developer-bullies. It just isn't a fair match.

There is a simple alternative to reaffirmation which will protect owners from all of the above and inspire confidence in the process
  1. Shorten the signature collection time to 4 to 6 months. The RP should hold up for that length of time and as TC knows from experience, people either sign at the beginning or near the end; so jettison the  6 redundant months.
  2. Let Owners review the Terms & Conditions for Tender, the Final Draft Sales & Purchase Agreement and the CSA in advance.
  3. In the CSA, clearly state that the sale committee/marketing agent has no power to negotiate a sale with anyone. The terms and conditions are pre-set.
In other words do it the GILSTEAD way, and not by the flawed  LTSA way.

 I have deleted all 39 comments for this post from TC enbloc rd 2. The post above has changed since then.  I no longer feel that reaffirmation is necessary if steps 1,2,3 above are followed. 

No comments:

Post a Comment