En bloc sale panels should have 80% support

SOME years back, at the peak of the en bloc saga, the authorities rightfully responded to calls for more transparency in the sale process and decided that sales committees should be elected.

There were suggestions that a sales committee (SC) so elected should have the support of at least 80 per cent of eligible voters present in that meeting, thus giving the SC a clearer and stronger mandate from owners to pursue the en bloc options for their estate.

As the rules currently stand, both the management council (MC) and the SC is elected by a simple majority of voters present in a general meeting. As the MC is primarily tasked with the management and maintenance of the estate, a simple majority vote for the MC is appropriate.

The SC’s primary objective is to prepare the estate for the en bloc sale, which requires 80 per cent of all owners’ consent. Therefore, it may be inferred that the SC is deemed the elected representative of owners in favour of the sale and thus should provide justifications for expenses likely to be incurred in preparing the estate for the sale.

This way, owners not in favour of the sale would not feel short-changed, especially when the percentage of such owners is significantly higher than 20 per cent, making a successful en bloc highly unlikely. This would also address concerns by objecting owners that 50 per cent of the owners can dictate expenses for an activity that required 80 per cent of owners to proceed.

Coupled with the current rule allowing an MC member to serve in the SC as well, a pro-en bloc MC may over time be less differentiated from the SC, thus undermining the original intent of the authorities to have a committee separately elected for the purpose of en bloc work.

The obvious advantage with two distinct bodies is to provide the mechanism of checks and balances over the management of estate funds, in particular that of the SC’s en bloc expenses and processes.

In the light of the improving property markets, perhaps the authorities should pro-actively ponder the above observations and consider changes in the law governing the election of an SC.

Ong Tee Jin

Source: Straits Times, 2 Feb 2010