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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 Reserve Price

The Proposed Sale Price is what the buyer offers to pay for the estate.

The Sale Price is the eventual price

The Reserve Price  is the Minimum Selling Price the owners have agreed upon in the CSA. The Reserve Price is a price below which the Collective Sale Agreement (CSA) does not allow the Sale Committee to enter into a Sales Agreement (S&P) with purchaser. It should not be taken as an asking or indicative price, or a guide price. The Owners leave it to the market in open competition to determine what the site is worth.

The Reserve Price is, of course, what sets the en bloc ball rolling. The underpinning motivation for selling collectively is to reap a substantial 'premium' above that which a unit could fetch individually on the open market. A juicy RP can whet the lips of even the most recalcitrant of owners (well, almost) - it is the carrot which is dangled before all.

The Reserve Price (RP) is a guide price only - it is not synonymous with the Final Sale Price.
The CSA is an agreement-in-principle to sell and the SC should go back to the consenting owners to reaffirm the final sale price before signing the Sales and Purchase Agreement (S&P). If owners do not request for this then they may be painting themselves into a corner. Nothing holds it's value for a year plus - and the RP especially cannot be left to sit on the shelf for the length of a collective sale. Alas, it is common practice NOT to seek owner approval so frequently owners are unhappy with their sales proceeds if they have shrunk in true value since the day they signed. 

What should you look at before setting the reserve price?
Ideally, do a formal valuation using the Residual Land Valuation method. Do this BEFORE choosing the marketing agent to avoid contamination and bias. Make sure you see all the detailed workings and not just a report high on words and low on figures. If it is too difficult to raise the money for a valuation, then do your best by looking at the Government Land Sales in your area to get a feel for the value of the land.

Remember you are selling land not individual units.

Valuations are dodgy things, though. Ask 3 valuers to do a valuation and you will get 3 different figures.  So beware those with vested interest in seeing the valuation low - ie the marketing agent, because they can juggle figures to suit themselves. Educate yourself on these matters, it is not rocket science and you can challenge their 'professional' opinion.

What is the premium?
The 'premium' is an old fallacious marketing tool used by property agents to entice owners to sign the CSA.  They say it is the difference between the market price of your unit at the present time  and the mythical sale price.

On top of that, you should not  peg the 'premium' to a figure that is valid only at the time of signing the CSA. There can be a time lapse of 2 to 3 years before the sale proceeds are deposited into owners' bank accounts, by which time the market would have moved substantially.

Markets don't stand still  - neither should the RP and the so-called  'premium'.

Owners should never lock themselves into a reserve price and a 'premium' and hope either the market remains unchanged (unlikely) or there is a magical downturn just when you need to buy a replacement home. Watch out for marketing agents telling you about 'Government cooling measures', he will throw any negative news at you if it serves his purpose. He will never highlight the good news. 

Is the sale committee obliged to sell at the reserve price?
Horizon Towers Court of Appeal Decision 02 April 2009 :
160 An SC must take care to inform itself of matters relevant to the decision to sell the property and take advice from appropriate experts on when and at what price to sell the property.
...However, an SC cannot rely on the mere fact of its having obtained such a valuation to excuse lapses in respect of its duty to obtain the best price.
...Although trustees may take the advice of a valuer they cannot simply delegate their duty to him, e.g.by agreeing to sell to a purchaser at a price to be fixed by a third party such as a valuer. The valuer might be shown to be unreliable or biased, e.g. acted also for the purchaser and negotiated the resale of the property before the completion at a much higher price. The effects of inflation and the erratic and sudden movements in the market are matters that trustees must most carefully consider in these times.
163 The SC should certainly not settle for the reserve price or market value of the property, if there is reasonable basis to believe (ie, with the benefit of independent expert advice) that a better price may be obtained within  a reasonable time frame in the future. The SC has to choose the most propitious timing for the sale of the property for this purpose. it should definitely wait on a rising market or for a falling market to recover (ie, again with the benefit of independent advice).
165 The SC should also ensure that it has been properly informed of all potential conflict of interests that may affect the advice it receives from any of its professional advisers (see [160]above).
166 Finally, whenever there is reasonable doubt as to the proper course to adopt, the SC ought to seek fresh instructions or guidance from the consenting subsidiary proprietors from whom it draws its mandate. It is true that the LTSA and most collective sale agreements do not contain any specific provision requiring an SC to obtain approval from the consenting subsidiary proprietors of the sale price before the SC issues an option to the potential purchaser.......
However, an SC's duty to consult with the consenting subsidiary proprietors arises out of it fiduciary obligations, independently of its contractual obligations.
167 An SC cannot rely on a mechanistic or literal compliance with its statutory and contractual obligations to escape indictment for breach of its obligations as fiduciary of all subsidiary proprietors.

Is the RP equivalent to replacement cost?.
Replacement cost is not provided for in the LTSA - its only determining test is whether there be financial loss (Eng Lok Mansion STB decision, 2006). So no whining to the STB, they won't listen. It is only in owners' dreams that the RP is sufficient to buy another home of similar size - some even dare dream of a better home, newer, more convenient, with facilities. Reality for HUDC owners will be something smaller, older, HDB and possibly even in Hougang..

See Minton Rise, and Waterfront View. Most owners in these estates had to downgrade to smaller units/HDB - all lamenting their small haul with the same refrain "The RP seemed good at the time of signing". See also Gillman Heights 2 yrs on.

But instead of wishful thinking, owners CAN make their dreams come true by making it a condition that a 1-for-1 exchange be the second payment option in the S & P, just in case.

Can signatories sign for to differing RPs?

This is open to a High Court ruling
  • First, there is the original RP which gets the enbloc ball rolling - RP1
  • A sale committee may decide to increase the RP in response to improving market conditions or simply as a hook to get more people to sign - RP2.  
  • The sale committee might increase it again for the same reasons as before - RP3
These are all increases so all are party to the higher RP.  Make no mistake - everyone will get the same sales proceeds regardless of which RP they signed for, but should there be a Supplemental Agreement  to lower the RP in the future then it MAY* matter which RP you signed for:-

*I think the following method has to be challenged at High Court:
  • If the lowered RP4 is less than what you signed for then the you will be asked to sign again. You of course may decide not to do so. 
  • If the lowered RP4 is equal to or above to what you signed for originally then you are still locked in. 
  • If the RP4 is lower than even the original RP1 then 80% fresh signatures are required.  (Shunfuville)
The Mechanism to Lowering the RP should be spelt out clearly in the CSA - if not then ask for a breakdown in the steps. People too often make the wrong assumptions and are surprised by small twists and turns.

Important rulings on Supplemental CSA’s to lower the RP:
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.

So, the Supplemental CSA can keep the sale process going and going until there is an eventual sale. Theoretically, there is no limit to the number of SCSA that may be signed, keeping the state in perpetual collective sale mode. 

The ShunfuVille CSA 'had a clause about a Supplemental Joint Agreement taking effect only if the consent of subsidiary proprietors representing at least 80% of the total share value and total strata area of the Property was obtained.' (COA 24)

So, the Court did not find it strange that 2 RPs were in the ring at the same time - the active original RP which made the 80% (and was itself composed of different RPs) and the lower Supplemental RP which was still in the oven, so to speak. 


  1. Anonymous24 May, 2017

    If there's an enbloc 4, please chair the CSC. Though you are not legally trained but your enbloc knowledge is impressive ! Just need to protect yourself.

    1. Anonymous24 May, 2017

      My friend, the blog owner already said she is against enbloc.