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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.

Some points from an SP

The following is an email I received from the vice-chairman of the SC. He requested that I post it on my blog. Sorry the format got a bit messed up. I have edited out my proper name only and replaced it with itshometome. 

 MY OBSERVATIIONS ON ‘itshometome’‘s  QUERIES  ON DRAFT  CSA ( collective suicide agreement)
  1.  8.1.1   “ ANY MODE OF SALE “ , in my view .would include sale  that could be a combination of  the three methods specified   and not by one specifically  - I  would think these words can be deleted too – SC will request solicitors to clarify. 
  2. 8.1.1 and 8.1.4 – Clause 8.4  is intended to provide SC a means to test market conditions ahead of 80% and  is only a contingency for prudent use.
  3.  8.1.12 : This clause is mean to provide “separate sale contracts with buyers by each seller” (if so required by buyer) but the terms of sale will be what has been agreed upon as collective sale – it would not lead to any seller getting a better deal 
  4.  9.2  -again a contingency condition subject to SC approval  - and  not a blanket concession to buyers – SC  PROPOSES TO DELETE THIS CLAUSE
  5.  4.4.7   This clause does not give the buyers the “powers  of demolition etc  as alleged but only refers to execution of documents  that may be needed by buyers- 
  6.  8.1.8  If any seller does not vacate as agreed upon as per CSA, he is naturally responsible for outgoings if any – how can be he exempted ?
  7.  8.1.8    The law society conditions do not apply where seller  does not vacate as agreed to him by completion date
  8. 12.4   is a logical clause following the failure to complete  by completion date-  the presumption of the SP does not appear correct
  9. 11.7 &11.21   the interpretation given by itshometome is not correct  in my view . as  it refers to survey or any other documents  that are “ INCIDENTAL OR NECESSARY” for the purpose of the CSA agreement  - it does not say SP should sign any document of abject surrender or abrogation 
  10. 11.21    I do not agree with itshometome's inference or  stretch of the meaning and effect of this clause – SC WILL REQUEST LAWYERS TO CLARIFY
  11.  4.4,11.9 AND 11.21 :   Clause 4.4  begins with the  CLEAR STATEMENT that the SC has all but only  the POWERS , DUTIES AND FUNCTIONS CAST UPON THE SALE COMMITTEE UNDER   THE STARTA ACT” and ends with 4.4.12 and 4.4.13  STATING THE FIDUCIARY DUTIES ANDOBLIGATIONS OF THE SC UNDER THE ACT “11.9 refers to  “ coopereation “ and 11.21 refers to survey forms or documents having correlation to the purpose  of agreement. I DO NOT SEE ANY REASON FOR itshometome’s CLAIM THAT THESE CLAUSES MAKE ANY SIGNATORY A “VASSAL" . SC WILL REQUEST SOLCIITORS TO  CLARIFY FURTER IF NEED BE.
  12. 4.4.10  This clause only states that SC will convene EGMs in accordance with Strata Act.
  13. In my View this clause needs AMEDMENT  since EGM is not necessary to remove any SC member  who has not signed CSA as  Sale committee itself can do so Solicitors are requested to  verify this and amend  suitably, if required
  14. 4.4.2/11.29  These clauses are not an authority for BLANK CHEQUE “in my view but only provide for a  contingency if more than one valuation needed . When a majority of SPs constitute an SC , I    do believe that they will also trust SC to exercise the  necessary discretion  based on  evolving market situation (This issue has been considered at recent EGM ON 24.09.2011)
  15. 4.4.2 AND 11.29 :   4.4.2 may be deleted  though it does not mean a blank cheque situation . Clause 11.29 covers a very possible scenario and does not mention about appointment of  more than one solicitor. In SC’S view RHT law LLP has the required expertise to handle these situations on their own.
  16.  -
  17. I do not comment as it appears “ free for all “   view and I am unableto ascertain “what free spending activity “ is being referred to .( No clause quoted)
  18. 9.6  This clause has been discussed and clarified by the Solicitors at the EGM on 24.09.11. In any case , I am requesting the Solicitors to clarify and amend further if necessary
  19. 4.4.7   I do not agree  with the views of itshometome on this clause –after all cooperation with any buyer without prejudice to our right of sale or to terms of sale  ( within legal bounds) is not to be objected to.
  20. 8.1.10  I see  no “ illegality “in this clause   which is a standard  clause .
  21. 9.4      Yes  itshometome's objection deserves consideration and Solicitors will  be requested  to  re-examine this clause
  22. 9.3   “ No , there is  no any HELL SITUATION as it is subject to SELLERS APPROVAL
  23. 4.4.2/5.2.6  As mentioned earlier clause 4.4.2 may be deleted  if so deemed fit. 5.2.6 only refers to appeal to Strata Title Board/High court  when required  which is a logical process of Collective sale and as per other clauses of CSA.
  24. The situation of  payment in kind is not being envisaged
  25. Clauses  8.1.11 and 8.3 specifically provide for sale only at Higher of Reserve Price/ Valuation either by tender or private treaty . I do not see merit in this objection.
  26. 26.As it is possible to lower RP only with sellers consent ,obviously an EGM would be required to be called for within the legal time frame available under strata act.
  27. 8.1.3 This is a theoretical objection as any Lower price less than RP is subject to Sellers approval and Sellers are not expected to agree to any price  -let alone SC endorsing any such price
  28. 8.1.3 (B)  I do not see the validity of this observation of itshometome – apparently the withdrawing seller  is ultimately bound by the eventual outcome if 80% consent is there (barring him)
  29. clause 8.1.14  I see no harm in sharing this data.
  30. Clause 16.3 This was clarified by solicitors at the EGM on 24.9.2011                                                                         
  31. 11.10.11.9 11.21 . Frankly  I am unable to understand the deduction arrived at by itshometome  from these clauses  - these have been clarified  earlier
  32. 11- Well, any legal  agreement has to have some covenants / clauses depending on the complexity of transaction and legal provisions  - I would prefer to be guided by my solicitors on these covenants unless I find any thing obviously prejudicial to  my interests as c collective seller .
  33. 11.8    We can request the solicitors to amend this clause to exempt  seller(S) disclosure to their  own solicitors
  34. 6, 11 .29 and 14.1    I would leave the Solicitors  to explain the rationale of these clauses to SPs but I do note that STRATA ACT provides for indemnity for SC members acting in a  bonafide manner  .
  35. 11.27  I would imagine that this clause is required given the nature of the CSA and in any case the key word here is  “ in accordance with this agreement  “ AND “lawfully” SC will request solicitors to amplify. 
  36. 11.7.11.8 .11.9 11.10 ,11.21 11.27  - I do not concur  with the inference/Conclusion  drawn by itshometome from reading these clauses some of which have been dealt with individually earlier . SC will request solicitors to clarify.
  37. Yes  it is important observation  and  I will leave it to be discussed with SPs/Solicitors at the next SC meeting
As regards the  VIEWS/OPINIONS expressed by itshometome  on:

a)     Incomplete CSA ( This a valid point and already discussed at last EGM)
The next EGM should have the complete CSA.
b)   Units VERSUS All lots of common property – The observations are well  taken, but  it is to be noted that  clauses 1 and 2 make it clear as what is being sold and the    
    “ unit or units “ have to be read in the context of these clauses
c)     Mode of Sale- The fears of itshometome that “any other mode of sale” paves the way for sale AKA round I do not seem to be justified though the solicitors are being requested to clarify as to the legal import/practical implication of these words
d)     Promises and loss of Liberty :   itshometome’s  fears / considers compromise of individual sellers interest  in clauses 11.7. 11.9 11.20 AND 11.21 do not appear justified (in my view) if one reads these clauses fully and in the whole context of the CSA. Of Course, the words” Vote for “ can be amended to “Vote on” .Clause 11.7 refers only to documents
Incidental “ or required for the “ purpose of this agreement  and not for any or all  document s

Does clause 11.21 deprive Seller(S) of all rights and is it really  “A Knuckeduster clause”.
I Do no think so but  I will leave it to Solicitors to clarify .

e)   Sellers approval :  The Gist of  ‘itshometome’’s extensive arguments on this subject (clauses 8.13, 8.2.1, 8.2.2 ,9.1 ,9.3AND 12.2 )  is that “ SELLERS APPROVAL MUST BE OBTAINED BEFOR SIGNING SALE AND PURCHASE AGREEMENT “                                                    

The Point is STRATA ACT does not require it and Third Schedule clause 4 quoted by her says” interalia  “ that the meeting of subsidiary proprietors must be convened AFTER THE CLOSE OF TENDER /AUCTION  OR SALE COMMITTEE ENTERED INTO A PRIVATE CONTRACT ,
TO PROVIDE INFROMATION ON OFFERS RECEIVED/INFORMATION ON SALE AND PURCHASE AGREEMENT  ‘S TERMS AND CONDITIONS

This section envisages a Sale and Purchase contract prior to convening the meeting  .

 It is not therefore clear  how itshometome claims that this is the perfect point  for  sellers affirm UNLESS the sellers/SC agree  to do so in advance in CSA. 

In my opinion the suggestion of  itshometome may be impractical though the merits of the suggestion are unquestionable . This needs to be discussed with Solicitors /SP s.

f)       The Omnipotent Sale Committee  (4.4to 4.4.13, 9.6,5.2.6 and 8.1.11)

IT MAY NOT BE  PROPER ON MY PART TO COMMENT ON itshometome's OBSERVATIONS ON THESE CLAUSES  AS I AM A MEMBER OF THE SALE COMMITTEE BUT I CAN ASSURE THAT THIS DRAFT IS PREAPRED BY THE SOLICITORS ON  THEIR OWN AND IS NOT  ON DICTATES OF ANY ONE .BE IT SC OR MARKETING AGENT.

Clauses 4.4 and 9.6 were briefly discussed at the last EGM and I would deem it best to discuss these clauses with the Solicitors  in the SC meeting   convened  for discussing CSA.

g)       Lowering of RP 8.1.3

I do not concur with the view that this clause enables SC to  sign  “illegal agreements with “topups”  for some units . Of course it is agreed that we need to have a fair and transparent  mechanism for signing any supplemental agreement with stated purposes with sellers approval ,where necessary .

SC will seek Solicitors opinion on this clause .

h)     2.11 .2.12 and 8.1.14 ( Funny clauses)

It may not be fair to brand these clauses as “ Funny “. The words “otherwise where they enter “ may refer to a situation where they wish to sign  ON THEIR OWN VOLITION while STB/HC proceedings are on . Solicitors will be requested to elaborate .

Clause 8.1.4 : Why it should be presumed  that the lawyers will be “tardy “ here ? one can Ask “ why not in all situations” – Does one really think any lawyer will be so negligent?

i)      DREADFUL SALE TERM CONTINGENCIES  -9.1 to 9.6

While  I do not think all these clauses  require removal , there is  a case , for relook at clauses 9.2 and 9.4 ( as has been commented earlier )
The Solicitors will be requested to look into these clauses again .
Pl.note clause 9.3 requires sellers approval.                                             

j)      Dreadful Covenants and Agreements.11.5 AND 11.6

 My comment is : Should not we have deterrent clauses and conditions to avoid willful default or negligence in any collective sale ? Even in individual purchase and sale  , indemnities and recovery of costs of enforcement are provided.
The solicitors will be requested to clarify further.

k)       Missing data-   Well noted  and will  be incorporated in Final draft CSA .
 
VASAN

Note : Though I am a member of the Sale Committee , my above reply /observations to the various queries/observations of  itshometome are my own and are not necessarily the formal views/response of SC . My views or replies are based  on my understanding of law and errors and omissions  in interpretations of legal provisions are excepted.

1 comment:

  1. In my opinion, this sale committee member is the only member worth his salt. A lot has fallen on his shoulders. A sale committee decides by a simple majority, so I lament the fact that it will be the dead wood who will make the ultimate decisions.

    ReplyDelete