Action Needed

Dear fellow owners,

The Sale Committee has now called for another EOGM, and is seeking proxies for its position. It would appear that they are determined to begin the collective sale process, starting off with an increase of the recommended Reserve Price (RP) to $xxx million (figures removed for confidentiality reason). This is despite some of the serious misgivings that we, and other owners, have raised in the last EOGM and through written feedback, all of which have not been addressed.

Before deciding whether to sign the Collective Sale Agreement (CSA), we urge you to consider the following issues:

1. All owners need to be aware of the contingency clause 4.1.4 which allows the Sale Committee to go for a lower sale price. In other words, it does not matter if the RP is $xxx million, or $xxx million (figures removed for confidentiality reason), or even $888 million. So long as the CSA gives the Sale Committee the power to accept a lower sale price, there is absolutely no guarantee to any owner that the amount stated in Schedule 2 (Method of Apportionment) is exactly what you will get.

2. While the contingency clause 4.1.4 might reflect ‘common practice’, it contradicts the very bullish and positive signals and rhetoric of the Sale Committee and ultimately expresses a lack of confidence in achieving the recommended RP of $xxx million. A more ‘realistic’ sale price might be offered to the Sale Committee, one that is far below $xxx million, and clause 4.1.4 gives the Sale Committee the power to accept such lower sale price. We have advocated the removal of Clause 4.1.4 from the CSA but this has been ignored.

3. We also questioned, during the last EOGM and via written feedback, the exact and detailed process by which clause 4.1.4 would be executed. What happens if a lower sale price is offered? How will owners be contacted? Who will be contacted? How will the signing of the supplemental agreement be conducted and for how long? What happens if 80% is not reached? Shouldn’t an EOGM be required? The actual process remains vague and ambiguous, which contrasts with the very precise legal nature of the rest of the CSA.

4. We understand that the proposed 60:40 method of allocation of sale proceeds is not acceptable to many owners, who want it to be on the basis of 50% strata area and 50% share value. This would be a fairer basis, as all owners have been paying the same amount towards maintenance and sinking funds all along, regardless of the size of their apartments. Again, this has been requested at the previous EOGM and in written feedback, but the Sale Committee has not acceded to owners' feedback.

5. Another major issue is the exclusion of liability and indemnity clauses in favour of the Sale Committee. These effectively provide that even if the Sale Committee makes mistakes or is negligent, it is excused from liability to the Sellers. If you sign the CSA, you will not be protected at all from any mistakes or negligence of the Sale Committee, and you will have to bear any losses or damages due to such mistakes or negligence yourself. For example, in the Horizon Towers case, when the owners who signed the collective sale agreement were sued for damages by the buyer, they had no recourse against the sale committee. We had previously asked for these provisions to be removed, for owners' protection.

These are very serious problems we have found with the CSA and with the collective sale process. We have repeatedly raised them to no avail. Whether you are for or against the sale is irrelevant when you consider the consequences of these 5 points in the event that a lower sale price is the best offer on the table, or when close legal scrutiny is made of the entire sale. If you agree with us - that the CSA is insufficient, that the conditions are not right, that you worry you might not get what is declared in the method of apportionment, that the method of apportionment of proceeds is not fair, or that there is insufficient legal protection for owners – and you are unable to attend the EOGM, then we request you respectfully to consider giving us your proxies for the EOGM. If you are unsure whether you will be able to attend the EOGM, you may wish to send us the proxy form first. In the event that you are able to attend the EOGM, your proxy will automatically be void by law, and you will be able to exercise your vote personally.

A proxy form is attached for your use. Please pass the completed and signed form to Mr Tan Lai Huat (at Blk 1 #xx-xx) or Ms Wong Hwei Ming (at Blk 9 #xx-xx) or to the Management Office at your convenience, but by no later than Wed, 1 Sep 2010 (as the forms have to be deposited at the Management Office by 2 Sep 2010).

Finally, we would respectfully urge that you take some time now to consider the effect of the CSA on your position and take any professional advice you deem appropriate, rather than wait and see what happens.

This is very important because although you may choose not to sign the CSA now, if the CSA is passed in its current form at the EOGM, and if it later becomes binding on all owners by reason of an order of the Strata Title Board, it will be too late to change any terms at that time. You will then become subject to all the terms of the CSA as it stands, including the sale price, the method of apportionment of sale proceeds, and the indemnity and exclusion of liability in favour of the Sale Committee. Please act now.

Thank you for taking the time to read and consider the points we have raised.

Tags: bgv, botanic garden, botanic gardens, botanic gardens view, en-bloc, enbloc, singapore, csa, Collective Sale Agreement, EOGM, Reserve Price, collective sales committee, sales committee, CSC, apportionment, indemnity, liability, STB

Things to Consider

Dear fellow-owners,

1 In respect of the EOGM that Mr Lee of the Sale Committee is convening, we note that under the new amendments to the Land Titles (Strata) Act both (a) the terms and conditions of the Collective Sale Agreement and (b) the method of apportionment must first be approved by the EOGM before matters can move further. Since owners of both two and three bedroom apartments are represented among the contributors to this blog, we are, in the interests of fairness and transparency, not taking a position on apportionment. But we would urge you all to examine the apportionment methods that the Sale Committee proposes, and decide for yourselves whether you think they are fair to you, given the scale of your investment in your apartment in Botanic Gardens View.

2 As for the Collective Sale Agreement, we note that Mr Lee's call for an EOGM tried to imply that changes to the Collective Sale Agreement are being made to take account of the new regulations. This is of course debatable. As you will recall, the Sale Committee made changes to the Collective Sale Agreement quite a while ago, after the Horizon Towers judgement made it clear what happens to Sale Committees that act in bad faith. These changes were all to its own benefit and to the detriment of the signatories' legal rights. We are highly doubtful that they will have had the good faith to remove these changes. We therefore urge owners in Botanic Gardens View to consider (and if you support an en-bloc sale to reconsider) carefully, with appropriate legal advice, before agreeing to an en-bloc sale. Among other things, you may wish to ask your legal advisors to:
(a) advise you on the implications of the Sale Committee's power to sell below the reserve price,
(b) the requirement that the signatories indemnify the Sale Committee for their actions, and
(c) how and whether signatories can obtain appropriate protection from the Sale Committee for any losses you may suffer in relation to the en bloc sale.
The benefits of such a sale are illusory, except to the professional speculators, but the damage to our interests and living standards will be real, permanent and irretrievable. The easiest way to protect yourself is to simply refuse to either approve or sign the Collective Sale Agreement.

3 We think it helpful, for the benefit of any newcomers among us, to remind ourselves of the many reasons why this estate has specific reasons not to succumb to the Sale Committee's determination to sell:

The most important reason first. Where do we go?

Botanic Gardens View:
- is freehold
- is in District 10
- is next to the Botanic Gardens
- is next to a major hospital
- is five minutes from Orchard Road and
- has apartments that are very spacious and well-laid-out by current standards

No matter how high a price we get for our homes (and remember that under the most recent version of the Collective Sale Agreement, the Reserve Price may not be the price we sell at as there is provision made for a lower Sale Price), there is no way in the near or distant future that we will be able to afford replacement apartments with all these qualities. None of us will be able to afford to live in the city centre once we are driven from Botanic Gardens View. Most of us who live here do not own more than one property, unlike some members of the Sale Committee.

We have been told ad nauseum over the last few years that for the money we get we can buy brand new apartments with fancy facilities. It was seldom mentioned that at Singapore prices these would all have to be far away in outlying districts. We ask, and keep asking: why should we sacrifice everything that we have now for less? Small flats at higher prices, far from the centre, with far higher conservancy charges,with unnecessary facilities that most of us will not need or use but will still have to pay for? And it is clear that given the housing market in Singapore, most of us will not even have any nest-egg left over, once we have been forced to spend the proceeds of Botanic Gardens View on inferior, substitute accommodation.

4 As the above list reveals, Botanic Gardens View is a unique site. Its long-term value will not go down. Why should a developer reap the benefits of this? We know who will own our estate if we sell, and it will not be ordinary Singaporeans such as ourselves. We consider our homes here to be long-term investments, and we see no reason to throw them away simply so that quick profits can be made at our expense.

Tags: bgv, botanic garden, botanic gardens, botanic gardens view, condo, en bloc, en-bloc, enbloc, singapore, CSC, sales committee, CSA, Collective Sales Agreement, apportionment, EOGM