Tuesday, April 27, 2010

Govt proposes changes to en bloc sale rules

COLLECTIVE property sales will be streamlined under proposed changes unveiled in Parliament yesterday, in the wake of a number of highly contentious drawn-out legal disputes.

At the same time, new checks and balances will be added into the legislation to ensure that the process is fair, and that unwilling sellers are not unduly harassed.

The Government proposes that if one attempt at an en bloc sale fails, then a two-year restricted period will apply, during which it will be far tougher to try again.

This is meant to discourage repeated attempts to sell when there is insufficient support among owners.

The proposals also aim to strip out some of the potentially time-wasting legal hurdles that may impede a sale.

Some recent attempted en bloc sales, such as Horizon Towers and Gillman Heights, have become bogged down in acrimonious disputes that have dragged on for some two years or more.

To speed up the process, the Strata Titles Board (STB) will be stripped of its role of making rulings in disputed cases.

The STB will continue its mediation role, but this will be limited to 60 days, again to expedite the resolution of disputes over contentious sales.

In other words, warring parties can head to the High Court earlier in the process to have their disputes resolved.

This will help reduce costs and time taken in resolving the more contentious cases, said the Law Ministry.

Government data shows that from 2006 to now, about 10 per cent of the 124 en bloc sale applications that went to the STB ended up in the High Court.

All these proposed changes were introduced in a Bill in Parliament yesterday, following feedback the Ministry of Law received on the Land Titles (Strata) Act.

The latest major overhaul of collective sale rules, aimed at achieving greater transparency, took effect in 2007.

Some of the recent en bloc sale disputes have centred on the role and motives of sales committee members.

The Government proposes that committee members be subject to stricter disclosure requirements. They will have to declare the extent to which they, their immediate family members and related firms have interests in the strata development and the date of purchase of the units.

This, said the Law Ministry, will allow owners to make a more informed choice on who they want to elect.

The proposals also aim to streamline the en bloc sale process at the stage of holding extraordinary general meetings (EGMs) of owners.

The Government proposes doing away with some EGM requirements, which industry experts applaud as a practical move. For instance, EGMs will not have to be called to update owners on consent levels, sales proposals, bid amounts received, or the terms and conditions of the sale and purchase agreement (when the developer buys the site).

This information can be supplied at regular meetings, which are easier to call as no decision-making is required from owners on these matters.

EGMs would still be required to appoint lawyers, consultants, approve the apportionment method, and the terms and conditions of the collective sale agreement (when owners agree to sell).

The two-year restricted period addresses complaints of owners who say a small number of keen sellers can cause trouble by repeatedly trying to sell, thereby wasting management funds.

During these two years, the first retry to convene an EGM to reappoint a sales committee will require the agreement of 50 per cent of the owners, up from the usual level of 20 per cent by share value or 25 per cent by the total number of owners.

Any subsequent attempts to convene EGMs within this period will need 80 per cent. If there is another failed attempt, the stricter rules will apply for another two years.

One critic of this proposal is Credo Real Estate managing director Karamjit Singh, who said this is 'a hindrance to majority owners seeking to reinitiate a sale in a booming market, as they may miss the sale opportunity'.

Said law firm Rodyk & Davidson partner Norman Ho: 'The changes tidy up the whole process. Frivolous cases where people try and try can be avoided, and EGMs can be cut down from at least four currently to two, making the process easier to handle.'

These proposed changes are expected to take effect in June this year.

Source: Straits Times, 27 Apr 2010

No comments:

Post a Comment