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En bloc sales without tears

SELLERS both eager and reluctant in collective property deals will find out in time if the legislative changes Deputy Prime Minister and Law Minister S. Jayakumar tabled in Parliament on Monday balance their competing interests. What the latest draft amendments to the Land Titles (Strata) Act will do, as much as they can do for the time being, is to provide more safeguards and make the process more transparent for both groups. These will go a long way to helping them avoid doubt and dispute that could lead to drawn-out and costly litigation, such as in the current Horizon Towers case. The proposed changes could not have come sooner. They strengthen the practice in the crucible of a booming property market. Many – sellers, buyers, realtors and lawyers as well as the authorities – have learnt much in the last few months of en bloc frenzy.

More than 100 people recently made over 400 suggestions in six weeks of public consultation that resulted in more than 30 proposed measures. The intensive and extensive exercise appears to have thrown up fixes that are sorely needed. Up to now, no rules exist governing the establishment and conduct of an en bloc sales committee. With the changes, the decision to set one up and the consideration of its proposals will lie with the management corporation, thus effectively safeguarding owners from any sharp practices outsiders may have in mind. The requirement that a sale must be launched through public tender or auction will help ensure the best price. The five-day cooling-off provision will protect sellers from making a hasty decision. The presence of a lawyer to witness documents and to clarify terms will increase everyone’s comfort level while guarding the deal from technical pitfalls.

Another significant change is that the consent owners must give for an en bloc sale will relate to the size as well as the share value of their property. The additional condition is a sensible attempt to deal with the concerns of owners of residential properties, which generally have a smaller share value than offices or shops in a mixed development. Beyond that, the 80 per cent and 90 per cent owner consent requirement will be left untouched for developments more than 10 years old and less than 10 years old respectively. It is probably felt that increasing the percentages will make such deals unduly onerous. If the proposals make possible en bloc sales without tears while encouraging urban renewal at an optimal pace, an objective not to be lost sight of, they will have done their job. If not, further tweaks can always be made.

 

Source: The Straits Times 30 Aug 07

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