Minutes and Comments from the Owners' Meeting 8 September 2007

It took us a while to compare notes and compile this, but we now have what we think is a comprehensive set of minutes and comments on the 8 September 2007 meeting.

For your information, the revised RP was done after this meeting, and of course, the Parliament has now passed the new amendments, which means it is now law.

Because the document is over 6 pages long, we have decided not to include everything in here. Readers can go to scribd (an online document storage site) and download or view the entire minutes here. We have included our overall comments below instead (it is the same as the last part of the document). We suggest you read the document on scribd first.

Overall Comments

During his brief about the new amendments, Mr Gan repeatedly pointed out that the new amendments will be other than them being a hassle (waste of time, effort and money), Mr Gan neglected to mention the benefits for us owners with these EOGMs which is to discuss the selection of property consultants, lawyers with all owners, to discuss the terms and conditions of CSA and SPA, apportionment methods and so on with all owners. Thus, showing transparency and accountability and fairness. He said that if every owner agrees that the SC has been very transparent, then there should be no need to follow the new amendments. However, we question whether the SC has been transparent or not – failure to provide slides, failure to provide formula for apportionment and valuation, failure to call for a meeting with sufficient time for owners, hard push to obtain 80% rather than taking the effort to conduct matters properly.

Mr Gan finally said that if he were to speak honestly, he will not do the sale for BGV under the new amendments because it would be laborious for him – he has to witness the signing, explain and clarify to owners with queries, sign off the notice of consent level every 4 weeks. In effect, it is more work for him. If it’s more work, even discounting the new amendments, what happens when things get complicated (eg legal complications that appear)? Will he back out because it is more work and most costly? We have to seriously question the ‘honesty’ of Mr Gan as a lawyer that is committed to the sale if he can say that under new amendments he will not do the sale since it’s too much work and effort.

Mr Gan also mentioned that it is not stated in our CSA that the sinking fund and maintenance fund will be given to us rather than go with the purchaser. But in the SPA when the tender goes out, they will try. So that means it is not a guarantee we have the funds returned to us. Did you know that under the new amendments, all management and sinking funds will be returned to the owners? That we don’t have to ‘try’ but we are entitled to the funds. We believe that there’s a substantial amount left in the sinking funds, and it should be duly returned to us, especially under the new amendments.

CBRE Mr Lake spoke saying the volume of successful transactions in the last 3 months (June:20, July: 12, August: 6) have been trending downwards. Mr Lake pointed out one strategy that exists at the moment is to hit 80% at whatever price you can, then worry about price later. He raised the spectre of Pacific Mansion and Rivershire where they raised their RP but did not succeed in a bid that satisfied the RP. He said that this is not the right basis or approach. The gist of the message is to hurry because the market might be turning down. However, we would like to point out a few things:-

1. CBRE’s own report in the Straits Times on 18 September painted a very rosy outlook for the property market (“Investment Sales to hit $50B in ’07: CBRE”) where the article cited CBRE’s bullish prediction of Singapore ending the year on a strong footing with sales hitting an all time high. Residential investments (en blocs) comprise a large proportion of their prediction and target.
2. If he is disdainful of the strategy of pushing up the RP to obtain 80% as Pacific Mansion and Rivershire did, why did he approve the SC decision to raise the RP up by more than 10%? Does this not defeat Mr Lake’s careful analysis of surrounding market rates which was his justification for arriving at $2000 in the first place?
3. What if the higher RP does not achieve a successful tender? Is the SC empowered to decrease the RP (even below $2000) without the consent of the owners? The CSA is silent on this matter. After all, 5.2.1 states clearly amendments of a substantial nature must be made only with written approval by all Selling Owners, and yet we wonder if written approval was obtained for raising the RP (which the SC is entitled to under 14.(b)(ii) but it is still a substantial amendment). What if he/she does not approve of the amendment, especially if it is a downward revision of the RP? Again the CSA is silent on this matter. After all, 24.6 of the CSA states that “The Selling Owners hereby irrevocably represent agree and undertake from time to time and at all times to ratify and confirm whatsoever the Solicitors and/or the Property Consultants shall lawfully do or cause to be done by virtue of this CSA”. In other words, anyone who signs the CSA shall “ratify and confirm” anything done by virtue of the CSA. That is carte blanche to do anything they want in our books.

As a sidenote, we noticed that the new RP in Mr Lee's letter are different in 2 places. Do see if you can spot it. Some say it's a minor amount, but an error is an error.

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

Another Resident Speaks Out

This was received from another resident of BGV, who calls him/herself "BGV Resident"...! We reprint this email verbatim, and add our own comments below. It goes to show that when the Protem SC becomes pushy, rather than becoming more transparent, they are actually becoming less so. We only anonymise the newly increased reserve price (henceforth $Y).

BGV Resident writes:

"I have just read the fresh circular letter from Mr John Lee today. Funny how he says he doesn't have any problem with the new law - as if he has a choice - and goes on to say that they have been guided by the same principles of "transparency and accountability". Is that why: -

1. there was no proper survey to show whether even more than 50% owners wish to embark on the enbloc exercise?
2. there was no general meeting called to properly initiate a sales committee?
3. the self-styled protem sales committee took it upon themselves to choose for all owners, the agent and lawyer, and inform owners only after the fact?
4. we are told that one member of the sales committee is employed by a "property developer" but we do not know which developer, and cannot decide for ourselves whether there is truly no conflict of interest, as Mr Lee claimed at the August owners' meeting?
5. Mr Gan the lawyer was proudly introduced as Deputy President of the Strata Titles Board at the August meeting while he was at the same time acting for the committee to move this CSA along, as if there is no conflict of interest?
6. till this day, the slides presented at the August owners' meeting (containing vital explanations, estimates, figures and other proposed terms) have not even been circulated to all owners, even though this was requested at the meeting?
7. we have no explanation of how the figure of $Y psf ppr was decided upon, as opposed to any other figure? [The only clue in the letter is that it says Ardmore Park went for $2337 and for some reason their new figure is close to this (rather than the latest figure in the list, $1810 psf ppr for Grangeford.) What would an up-to-date valuation report of BGV say - we are way off or on the mark?]
   

I also wonder why Mr Lee is concerned about the coming legislative changes regarding EOGMs etc, since Mr Gan the lawyer was so confident in explaining during the August meeting that his drafting of the CSA (paragraph 25 on page 18) would take care of any changes to the law and that the CSA would not be badly affected.

Finally, the last page of Mr Lee's letter shows what a sad state they are in - to argue that we should move to other enbloc-possibility condos (out of the frying pan into the fire), some even older than BGV, and to even faraway Punggol 21 (forgetting the fact that we currently enjoy living near the one and only original Botanic Gardens, Tanglin Mall, Orchard Road, Bukit Timah Road and Holland Village, in a location that people would die for and is not replaceable by any of those he mentioned)! Talk about comparing apples with pears, as far as Punggol 21 is concerned."

Many thanks to BGV Resident for your honest response. We would like to add the following as well:-

1. It is really a bitter pill to swallow when Mr Lee's letter on "Where to Stay" lists out places that are condos that are ONGOING en blocs (eg Pandan Valley, Normanton, Pine Grove, Ridgewood etc), or even Punggol 21, when he himself lives in his comfortable bungalow nearby (as verified in the White Pages). It is questionable if the chairman even stays in BGV. It really doesn't matter to him if you miss Botanic Gardens because it's only a stone's throw from his home.
   
2. Is the PSC's idea of transparency one where a letter is sent out on the 4th Sep 2007 for an Owners' Meeting on 8th Sep 2007? Sure, everyone received the letter (eventually) but how many could change their appointments at the last minute, especially during the school term break, to attend an urgent meeting with Mr Gan? Less than 40 people turned up including the PSC.
3. How transparent is the PSC when they failed to inform you that URA refuses to support the PSC's application for a 10 storey redevelopment? That the maximum allowable height in the event of a total redevelopment is STILL FOUR STOREYS? We will inform you in the immediate future our own discussions with URA and what we found out (especially about the 1.4 vs 1.8 plot ratio).
4. Does the revised RP $Y mean that CBRE will benefit from the excess fee charge (since it already exceeds $X as stated in the last agreement)? Or will $Y be fixed at 0.38%?
5. Where is the calculation for valuation that is a part of the method of distribution? It was promised (along with the slides) to everyone that the valuation formula and rationale would be sent to all owners.
   

Is the sale done in 'good faith'? It is beginning to appear that good faith is beginning to go out the window in the rush to get that 80% that the PSC desperately needs.

Tags: Taman Serasi, Botanic Gardens View, en-bloc, collective sale

Owners Meeting (again) this Saturday 3pm

By now, most of you would have received yet another CBRE letter about another owners' meeting this Saturday. At such short notice, they are pulling out all stops to get you to sign the CSA as soon as possible, before the new Law kicks in. We find this strange as some of us have yet to receive the presentation slides from the first CBRE owners' meeting that was promised to everyone. When contacted, CBRE changed the story and said that they will give the slides out ONLY to owners who make the effort to contact them. I guess that's earning their $834,000+ fees for you.

They have invited Mr Gan Hiang Chye of Rajah & Tann back to address the following issues:

1. The Horizon Tower Case - What went wrong?


2. Understanding the Strata Title Board Application and avoiding its pitfalls?


3. The Amendment to the Land Titles (Strata) Act and its implication for ongoing Collective Sale.

If you don't know this, Mr Gan is a big gun in the en bloc business. Not only is he a partner with Rajah & Tann and no less, the lawyer handling our BGV en bloc, he also is the Deputy President of the Strata Titles Board! A man wearing these many hats is highly respectable and his advice will carry a lot of weight, especially if he can offer definitive answers to many concerns us owners have.

It surely must be expensive to invite him back - on a weekend no less - and we certainly hope our legal fees are not going up by the minute! Still, when you go for yet another owners' meeting (maybe they should just label the Function Room the "En Bloc Room"), do think about these:

1. So far, we've had Mr Jeremy Lake, Executive Director of CBRE and Mr Gan Hiang Chye, Deputy President of STB dropping by our humble home. Doesn't this speak very highly of our estate's super-prime value? Short of a Member of Parliament visiting to tell us how choice our location is, don't you think it's clear from their presence that there will be other boats to come by, as pointed out in the recent letter to owners?
   


2. The law firm and marketing agency are not paid the bulk of their fees unless the sale is successful. Will they be objective and fair in their representation of legal and en bloc matters? Would it not be more advisable to seek independent legal advice?
   


3. Is there a conflict of interest when a senior member of the STB, who on the one hand should be neutral, objective, and ideally not be involved in the sale process, has agreed to come to BGV to talk about vital concerns at the explicit request of the protem sales committee, who on the other hand is very obviously pushing hard to get owners to sign away their homes and investments?
   

Tags: Taman Serasi, Botanic Gardens View, Botanic Gardens Mansion, collective sales, condo, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale

Glaring Questions

Many of you have received the Collective Sale Agreement (CSA) from CB Richard Ellis by now. Isn't it really nice that a full CSA, and not a draft, has been prepared and ready for signature collection without any consultation with all owners at all? Given that they are planning to sign the CSA on the same day they present it, it almost certainly means that the PSC will not be entertaining any amendments to it.

So here are some questions you can think about, and maybe even ask at the Owners' Meeting:

1. Who is the Protem Sale Committee? A list of 8 names are provided with their business credentials. But who wants to know how rich or high up the food chain they are? What is important to owners should be: (a) Is a member an OWNER-OCCUPIER (and how long they've stayed in BGV) or is he/she an OWNER-INVESTOR (renting out their units)? (b) What enbloc experiences have they had? The Horizon Towers fiasco (as documented in Dr Minority's blog) shows very clearly a slightest technical error can undermine the entire process, so you want people who are representing you and people who know about enbloc. Not just people who are keen to sell.
2. Why is the PSC not officially nominated and elected in an EOGM? This is a requirement in the new enbloc laws and the law states very clearly (no matter how the CSA writes it) that it will apply to all enbloc cases that have not achieved 80% when it becomes gazetted. So if the PSC is not formally elected in an EOGM, things get into trouble. Now what should be of interest to owners is WHY not hold an EOGM to present, nominate, second, and ratify the PSC? An Owners' Meeting to nominate the PSC is NOT the right place because it doesn't require that everyone is informed (an EOGM does that by law) and it doesn't require that everyone attend.
3. Why is the ending of the CSA in two parts - 6 mths after the first signature and the possibility to extend the expiry date up to 12 mths after first signature? Why have 6 mths there at all? Why not leave it at 6 mths to give everyone a peace of mind (if they cannot achieve 80% in 6 mths, then the whole thing is obviously not going to happen)? Yes, legally the PSC has 12 mths to collect the 80% but one would expect the whole point of having 6 mths there is so that people will not be left 'in limbo' over the whole enbloc process!
4. Why is the method of apportionment purely by unit size ONLY and not by other methods such as 50/50 mix of unit size and share value or other valuation methods? Unit size works if most units in BGV are similar-sized but we have a mixture. The current method gives advantage to the smaller flats (ave of $2700 psf) compared to larger flats (ave of $2300 psf). The method of apportionment also ignores the fact that when the flats were purchased, the higher the flat, the more expensive it was. Now, it doesn't matter if you have a ground floor flat or a top floor flat - everyone gets the same amount!
5. Why is there no mention of the sinking fund and what is going to happen to it? For that matter, will the sinking fund be 'locked aside' which means any urgent repairs may not be possible during the entire 22 mths of enbloc process?
6. What happens if a 2nd CSA which covers collective exchanges appear? Will a person who signs the first CSA be stuck and not allowed to sign the 2nd one, even if it is a better deal?
   

There are many other glaring questions about the CSA (eg success-based fees of agents, indemnity clauses, impending legislation, RP/CSA revisions etc). It just shows that there is still a lot of consideration to be made before we jump right into signing the CSA.

Remember - once you've signed the CSA you:

• lose all rights to object to the sale during the STB mediation/hearings.
  
• lose all rights to have a say in any RP/CSA revisions
  
• give up your rights to the sales committee who can make decisions for you
• give up your ability to sign another CSA that might come along, one that might offer a better deal (eg collective exchange, higher RP)
  

Tags: Botanic Gardens View, Owners meeting, collective sale, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale