Concerned Resident wrote:
"I am a resident in BGV.
I am surprised and disappointed that the previous sale committee has decided to re-start the en bloc sale process again, after their previous attempt failed to get majority support.
I have serious doubts about whether the same committee will be able to carry out their responsibilities effectively, based on what happened with the previous Collective Sale Agreement, where:
(a) the committee agreed to the commission of the property agent on a so-called "reduced" basis, while at the same time setting a reserve price and agreeing to an incentive commission rate which in fact increased the commission from 0.30% to a blended rate of 0.59% - nearly double the original rate! This was not spotted by the committee - the property agent only admitted this after an astute resident pointed it out at the 1st meeting! I don't know how the committee could still claim at the meeting that they had worked on the CSA very carefully for months to achieve the best agreement for residents.
(b) the committee agreed to the property agents' commission rate on the basis of $1,500 psfppr, and at the same time set a reserve price of $2,000 psfppr and agreed to an incentive rate of 1.5% for prices above $1,500. This meant that the property agents did not need to do anything to "earn" the incentive commission for the amount between $1,500 and $2,000! Again, pointed out by a resident.
(c) despite repeated questioning at the 1st and subsequent meetings, the CSA did not contain the formula for apportionment of the sale proceeds to owners. Even though it was said to be set out in the 5th schedule, there was no such formula in that schedule. This was not amended, even up to the very last meeting (2 months after the 1st meeting!), where the lawyer admitted that it had not been done. Again, this point was brought up by residents. It was not spotted by the committee, neither did the committee follow up to correct this critical error, after it had been pointed out at the 1st meeting! And apportionment of the sale proceeds is such a fundamental issue.
Saying that the committee members are volunteers doing this on their own time (as was done at one meeting) is not good enough - committee members who accept the position owe fiduciary duties to the owners, as well as a duty to owners not to be negligent, and to do a good job. The basic, fundamental errors mentioned above were pointed out by owners and not spotted by the committee members. Who knows what other errors were in the CSA which had not been spotted or pointed out?
If owners had suffered losses due to such errors or negligence, the committee members should be held accountable, and they should be required to indemnify owners against such consequences. As agents of the owners, the committee members owe fiduciary duties to the owners and should be held to the highest standards. Instead, the CSA contained provisions to excuse them from all liability!
If there is to be a new CSA, owners should insist that to protect their interests, the CSA should include an indemnity from the committee members jointly and severally. Also, the CSA should not contain any clauses that exculpate the committee members from errors or negligence. The Horizon Towers saga should serve as an instructive warning to owners of what could happen if things go wrong. In such a situation, owners should have recourse against the committee members who put them in trouble.
Further, in order to have a better assurance that the sale committee will be able to carry out their responsibilities and to answer for their liabilities if anything should go wrong, much more information should be provided about the members of the committee. There should be full and frank disclosure of their backgrounds, relevant experience, whether they are residents, how long they have been owners, and any current or potential conflicts of interest. Just knowing their names, addresses and occupations is not enough, especially when owners give the committee such great powers under the CSA to deal with such an expensive asset as their home."
"The previous attempt for an en bloc sale of BGV failed without getting anywhere near the required consent level. This was despite a last minute attempt to get owners to sign the collective sale agreement by:
(a) increasing the reserve price sharply: and
(b) arguing that the property bubble was about to burst, and owners had to sell at that point in time, or they would miss the peak.
In response to these:
(a) The sale price is not within the control of the sale committee. It is a result of market forces. And the sharp increase in the reserve price, coming less than 2 months after the sale committee set the original reserve price, calls into question what the actual achievable price for BGV should be, and what advice had been given by the property agents in relation to the initial reserve price and the increased reserve price. If a sufficient majority had signed the CSA based on the original reserve price, owners would have missed out on the nearly 20% "increase"!
(b) since the sale did not go through at that time, according to the committee's own argument, this would mean that owners have already missed the peak. So why is the committee still trying to do an en bloc sale now? Are they simply trying to get a quick return on their en-bloc investment, at whatever price they can get? This would explain why the original sale price was set at a lower level, as it would facilitate a quick sale, rather than trying to get a sale at the best price.
Selling at this time would mean that owners who have a long-term view would lose out, as BGV, by virtue of its location, will always be valuable as a super-pime location, and its value will inevitably increase over time. BGV is like a New York condo overlooking Central Park, or a London home next to Holland Park - the location will ensure its increasing value in the long run.
Also, and as important, having an en bloc sale would ignore the effects that it would have on residents' lives, such as those with children going to schools in the neighbourhood, or elderly residents who enjoy the Botanic Gardens and the security of a familiar environment. Why should owners who choose to live in BGV, with all its convenience and advantages, be forced by others to sell out at a time not of their own choosing, and to re-locate, probably to locations which are less convenient and less desirable?
For the reasons above, I am totally against the en bloc attempt. And as a resident, I will object to any use of the Management Corporation funds for the en bloc process, when the EOGM can be requisitioned by only 20% of the owners. The use of the MC funds should only be allowed if approved by the necessary majority at a duly convened General Meeting."
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