Saturday, August 1, 2009

The trouble in condos

More people are buying private homes, but few seem to know or care about what it really takes to look after their estate. Lulled into complacency by the efficiency of government services, they prefer to leave the job of running their condominium to someone else. But a lot can go wrong.

A HOME owner in The 101 complex in Beach Road complained to the property's manager earlier this year that the water pressure in her unit was low. The water pump, it seemed, had broken down.

But the residential and commercial building had no money to fix it, says its property manager Vijayen Nair. It was deep in debt of more than $200,000 after messy lawsuits involving disputes over its common area, and some of its apartment owners were withholding maintenance payments.
The home owner herself owed about $2,500 in maintenance fees. She paid up almost immediately to get the pump fixed.

Mr Nair, 52, whose firm Philip Motha Property Management runs about 30 condominiums and commercial buildings, says it is an example of how bad things can get if people do not care about their estates. 'Generally, people do not know what is going on,' he says.

The 101's problems are far from uncommon in Singapore.

The Strata Titles Board, which handles disputes involving private properties, is having to deal with an increasing number of cases these days. The number of disputes not related to collective sale issues has steadily risen from 46 in 2006, to 56 in 2007 and to 66 last year.

While the majority involve neighbours tussling over inter-floor leaks, there are also wrangles over a host of other issues from car parking to financial management.

Four years after the Building Maintenance and Strata Management Act was introduced to nudge private home owners into taking proper collective care of their estates, not much progress seems to have been made in this area.

Veteran management council members and estate management professionals all cite the same root problem - Singaporeans, desensitised by the quiet efficiency of government services, turn a blind eye to the needs of their own private estates.

Mr Arthur Ngiam, president of the Association of Management Corporations in Singapore (Amcis) which represents about 300 private estates in Singapore, blames it on apathy.

'The biggest problem is apathetic owners. They don't come for meetings until there is an en bloc sale, or a substantial increase in their maintenance contribution.'

It is feared that this problem could worsen, with more and more individuals trading up from Housing Board flats to condominium apartments.

These upgraders, shut out by sky-high prices during the 2007 boom, are snapping up homes in the current downturn. They helped push condo sales to a record high of 1,825 last month.

Their migration is part of a longer- term trend, with the proportion of private apartments in Singapore growing from 9.4 per cent to 14.9 per cent between 1998 and last year.

Although increasing numbers hanker after the private pools, 24-hour security, well-maintained gardens and the status of a condominium, they seem to be pretty clueless about what it takes to run these developments successfully.

Amazingly, says Mr Ngiam, 'some people even think that the management council is run by the Government'.

Small-scale democracy

UNLIKE public housing estates, where common areas are managed by quasi-government town councils, private condominiums are managed by the owners' collective, called the management corporation. Every year, the collective holds a meeting to elect a management council from among the owners. But with attendance often at the bare minimum, residents are sometimes reduced to voting for neighbours who are not necessarily the most qualified for the role.

Glendale Park chairman Wee Yew Beng, 47, quips: 'If you speak loud, speak fast, make a lot of noise, then by default you are the chairman.'

The often haphazard nature of such elections does not do justice to the power that elected councils wield. The selected group of home owners calls the shots on house rules, the contractors hired and upgrading work. It also manages funds that invariably run into millions of dollars.

For this reason, 80 per cent of 1,900 private residential developments here hire professional managing agents to oversee the day-to-day management of their estates.

This arrangement comes with its own set of risks though, given that managing agents are not regulated. Four condominiums - including three in the upmarket Mount Sophia Road area - found out the hard way how appointing a managing agent can be far from risk-free.

In 2007, at least $200,000 was reported missing from their accounts in total, and the person in charge of managing all four condos disappeared.

Other incidents involving smaller sums have gone unreported.

The managing director of management firm Knight Frank Estate Management, Mr Jordan Neo, who oversees about 100 condos in Singapore, admits that the incidence of theft in this industry is very high, with the bigger firms working harder to police it.

This is despite the fact that the Association of Property and Facility Managers - a trade body for such professionals - runs a voluntary accreditation programme with the Singapore Institute of Surveyors and Valuers. But only 29 of the estimated 200 managing agents here have signed up to the programme, which ties them to a code of conduct.

Lawyer Lim Tat, 46, chairman of Yong An Park, a condominium in River Valley Road, believes councils are not inquisitive enough. 'Most councils rely on their managing agents to bring them the cheques to sign, to tell about areas (which need looking into). Not many bother getting their hands dirty, to ask the right questions.'

Such lax attitudes leave condos open to questionable conduct on the part of managing agents, contractors and even developers.

According to Mr Teo Poh Siang, who heads estate management firm Wisely 98, the owners of a new 300-unit condo discovered some years ago that the developer had used close to $100,000 of the maintenance fund to buy poolside chairs and tables for the estate. But the furniture was to have been provided by the developer as part of the original sale agreement. The developer repaid the sum after the discrepancy was uncovered.

When expectations clash

ADDED to the complexities involved in running a condo are home owners' expectations about condo living.

According to Mr Chan Kok Hong, managing director of CKH Strata Management which looks after 95 condos, the moment people move into a condo, they become less tolerant of bad behaviour, more demanding, and very protective of their rights.

Clashes of lifestyle are harder to mitigate and the hanging of laundry is a case in point. Under the Building Maintenance and Strata Management Act, home owners are not allowed to hang their laundry in public view, as this could be unsightly and possibly devalue the property. But try telling that to HDB upgraders long used to the freedom of drying their linen on bamboo poles hung outside their homes.

The council of a Simei condominium was forced to send a legal letter to a property owner whose tenant hung laundry from the window ledge. The owner had to pay the management corporation back hundreds of dollars in legal fees and later decided to evict his tenant.

CKH Strata Management's Mr Chan recalls an occasion when he had to make a housecall to a laundry offender.

'The woman was adamant that was the only way to dry clothes. And she said she would face court action if necessary.'

Such tensions can skew the make-up of management councils.

Mr Poh Teng Ban, director of managing firm Ace Body Corporate Management, thinks that one of the weaknesses of the management corporation system is that a small number of people can hold a whole group to ransom.

The home owner with an axe to grind is always more motivated to canvass for support than those who do not have one.

With low turnouts a common feature at annual general meetings, a disgruntled and organised group can easily hijack proceedings and throw out a council so that things are done their way.

Residents who attend such meetings can also find themselves electing those with personal agendas.

Knight Frank's Mr Neo says: 'Some council members come in with the intention to do good, some come because they are a nobody at the workplace and think 'this is my castle and I want to be king'.'

Ms Julie Yeo, a businesswoman in her 60s who sat on the council of a small condo in the central area for three years, recalls how a fellow council member refused to pay the monthly $65 fee levied on those who park their second car in the estate. 'Word got around and the other owners, who were not on the council, refused to pay the fee as well,' she says.

There is still a stalemate, with the only people paying the fee being the condo's tenants.

Lawyer Amolat Singh, 53, who was a council member of Kentish Green in Oxford Road for six years, recounts how a council member gave guards trouble because they did not greet him whenever he went in and out of the estate.

He adds: 'There was another council member who wanted to store his spare furniture in the electrical room and, when told that he could not, blurted out 'then what is the point of being in the council?'.'

Creating awareness

ONE way to counter apathy and abuse is to clearly flag any emerging issues.

National University of Singapore real estate associate professor Alice Christudason suggests councils issue bi-monthly newsletters detailing problems on an estate and what they are doing about them.

'In this way, the home owners can gain a better understanding about the way the estate is being managed. They will be then more cooperative in relation to the actions being taken by the council,' she adds.

Given the diversity of opinions within each council, members could also appoint an individual spokesman from their ranks, suggests Mr Albert Cheng, 56, chairman of The Serenade@Holland condo council. This would mean only one person giving instructions to the managing agent, so that it can better deal with the contractors providing services to the estate.

This approach is best when it comes to balancing competing interests.

Take the case of The Tropica in Tampines. In recent years, residents of ground-floor units have erected trellises over their patios, citing safety concerns about litter dropped from higher floors. But this worried second-floor residents who felt the trellises could help intruders break into their units.

According to chairman Kenny Khoo, 40, the management council found the trellises could be deemed to breach building guidelines. But rather than force the removal of the trellises immediately, the council set up a question-and-answer session last week with a lawyer present, allowing residents to have their questions addressed.

Another suggestion being looked at is to get councils to share information more so that, for example, rogue contractors have fewer places to hide and best practices can be more widely adopted.

There has been limited progress made in this area though.

Amcis was formed in 2002 by a group of 200 estates banding together for economies of scale. And by 2006, it has about 300 estates.

The same year, however, it became entangled in an ugly dispute over its own financial management. Founder Francis Zhan, 65, was eventually fined $2,000 over forged signatures on cheques. Another council member, Mrs Constance Ames, suggests something more radical - that council duty be rotated among all home owners.

The retiree in her 50s is a council member of St Martin's Apartments off Orchard Road and also a council member of a Hong Kong development. The Hong Kong condo requires all home owners to take turns running the council for two years at a time.

'That is fair. It'd be good for smaller developments. They get to know one another, and also what problems the estate faces,' she says.

With few willing to step forward, council members have no choice but to stay on. The job, almost all say, is a thankless one.

Parc Oasis chairman Lim Taik Leong, 50, acts like a talent scout, seeking out neighbours to persuade them to try for a council post. Stepping down is out of the question until the condo is in safe hands.

'The council members have all known one another for a long time. We are friends. If you step down, it's like letting your friends down,' says Mr Lim.

'And if you step down, other people will step down.'

Source: Straits Times, 1 Aug 2009

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