The New Law, the CSA and You

Dear residents and owners of BGV,

We thank CBRE and John Lee for their letter dated 27 August, including a reprint of the email by John Lee as well as 2 supporting emails in favour of Mr Lee’s insight into the future. We believe strongly that it is a gross misrepresentation when the consensus level is based on partial signatures and not fully verified, completed, witnessed and legally recognised signatures.

We’re sure Mr Lee is aware of this blog and the previous posting on his email. The BGV blog is for all owners and residents, whether you agree or disagree with the sale. We aim to update the blog every few days with new comments on the en bloc sale, and we have many issues that we would like to bring to light. It remains to be seen if these issues will be addressed or ignored.

The climate for en bloc sales has changed because of two major factors totally unrelated to the financial market. First is the Horizon Towers lawsuit that is specifically directed at the majority owners who signed the Collective Sale Agreement (CSA). Second is the new Amendment Bill to the Land Titles (Strata) Act which will be made law in early October. The first is hardly mentioned in discussions around BGV sale because many people are not aware of what rights they have, and more importantly what rights they surrender or do not have when they sign the CSA. As a nominated MP said recently, “just like any other commercial transaction, there are very real commercial and legal risks in collective sales”. Every owner must be aware of the liabilities and risks involved (something the new en bloc Law plans to address). Yet, in response to the new Law, CBRE and the PSC are trying to circumvent it by pushing as hard as possible for the 80% consent to be achieved before the Amendment Bill is made law. We find this ironic - and question this hard sell and push to sign - since the new Law is specifically aimed to improve and increase transparency and accountability of the PSC to all owners. The tighter procedures are ultimately good for all owners but by hoping to avoid it, what is the message that the PSC is sending out about being transparent and accountable to all owners? Maybe it’s too much of a hassle? After all, as pointed out in today’s Business Times, while consultancies believe the new Law will make the process “time-consuming”, add costs, slow down the process, are these the central issues that should drive the sale, or should it be that owners are kept properly informed, the process is completely transparent, and the PSC accountable to all owners?

Pros and Cons of Signing Now

We would like to highlight the disadvantages of signing the CSA at this time:

• You cannot sue any member of the PSC. In fact, not only can you not sue the PSC, they are completely indemnified in the 2nd longest standing clause in the document. To rub salt to the wound, the PSC is entitled to include majority owners as co-defendants etc
• On the other hand, you as an owner who signed the CSA can be liable for anything that may cause the sale to abort. This clause is the LONGEST standing clause in the document. It shows who the lawsuit arrow may be aimed at when things get ugly
• You can’t sell your unit unless you have a buyer who must agree to the collective sale (no matter how he/she disagrees with it)
• You give the PSC rights to agree to any terms and conditions the Purchaser may require, and to approve the sale and purchase agreement on your behalf; you have no say in the eventual terms of the sale.
• You bear the costs and expenses for any legal proceedings
• You give the rights to the PSC to conduct the sale by any mode (including private treaty which often is not transparent and may not offer the best value; there’s a reason why the new Law mandates sale by public tender or auction only)
• You do not know what the outcome of BGV STB hearings and appeals will be. Look at the problems facing the majority owners at Horizon Towers now
• You will quickly realise the costs to yourselves if STB does NOT AGREE to the sale.
• You agree to pay for the STB application costs up front
• You do not know if the entire application will be dismissed by STB because the sale does not comply with the new Law (unless 80% is achieved before it commences)

Advantages of being an owner who does not sign the CSA :

• You pay nothing unless STB AGREES to the sale
• No one can sue you as you have not signed any legal document
• You can retain all the rights to your home
• You get the same sale price as everyone else if STB allows the sale

For example, you would have noticed that the agent fees have been revised from 0.3% of the old sale price to 0.38% of the new sale price. Did you know the revision is effectively an increase in the agent's fee of $834,971.73 or $75,906.52 per month over 11 months of the agent’s work (using their timeline). This is not including the % excess or GST (in excess of $55,000). Will you be able to question this?

Not under the old en bloc Law. But under the new en bloc Law, yes, since it has to be properly considered and even voted in a general meeting.

We therefore urge you to seriously consider the en bloc sale, and the agreement that they are pushing you to sign. Given the new Law, there is an element of uncertainty about the repercussions of it on BGV’s sale, and it makes more sense now to wait, see what new rights you are entitled to, and how more accountable and transparent the PSC has to be to you. Consult an independent lawyer about the terms and conditions, bearing in mind the new Law and Horizon Towers. Remember that while some of the clauses in the agreement are 'standard', that doesn't make it right or fair to owners.

Tags: taman serasi, botanic gardens view, botanic garden view, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale, collective sale, collective sales