Unit owners of Horizon Towers may have won the latest battle to halt its en bloc sale — but they may be at risk of losing a whole lot more than their homes, with a potential lawsuit for breach of contract hanging over their heads. In the worst-case scenario for these sellers, the buyers — Hotel Properties Limited (HPL), Morgan Stanley Real Estate and Qatar Investment Authority — could move to claim up to $1 billion from the owners of the 173 units who signed the deal.
This works out to $5.78 million per unit — more than the $2.3 million to $4 million offered for each apartment in the en bloc deal.
"I think they are panicking — wouldn't you, if you might lose everything? If the damages are $5 million, they would have to give up the apartment and pay up to $3 million on top of it," said one party who declined to be named, as lawyers from both sides met yesterday.
The unit owners have until 3pm today to respond to the buyers — but may well miss the deadline, as the sales committee is still consulting with lawyers and will hold meetings with residents over these two days, reported Channel NewsAsia.
On Monday, the three buyers had sent a letter through law firm Allen and Gledhill to lawyers representing the sellers, alleging breach of contract. This came after the Strata Titles Board (STB) rejected an application for a collective sale order last Friday due to technical irregularities.
The sellers have at least three options: Extend the deadline for the completion of the sale by four months and file a fresh application to the STB for a collective sale order; appeal to the High Court to reconsider STB's decision; or be sued for breach of contract.
One property analyst told Today: "The buyers have deep pockets and the means to pursue a lawsuit. Are the more than hundred sellers willing to band together on a long, and possibly costly, legal process?"
Lawyer Shriniwas Rai, who represents some of the majority owners in favour of the sale, said a fourth option is to file an Originating Summons with the High Court to decide if the sales and purchase agreement is still valid — even while HPL is suing the sellers.
Unit owners who had earlier opposed the $500 million en bloc deal, however, would not be affected by the move, which is the latest twist in a long-drawn saga.
Under the deal, the 199 apartment owners would have pocketed about $2.3 million each and the 11 penthouse owners at least $4 million each.
However, some minority owners had objected to the sale, saying they were unhappy with the sales committee's performance and procedural irregularities.
As en bloc sale prices across the island skyrocketed, owners who had originally supported the deal crossed to join the dissenting voices — pointing out that the deal no longer reflected the condominium's "true value".
Months of drama ensued and, with the original sale deadline of Aug 11 looming, came the STB's ruling on Friday.
Channel NewsAsia quoted director of research and consultancy at Knight Frank, Nicholas Mak as saying: "The en bloc market is watching very closely developments in this Horizon Towers saga. The wider implication for the market is that buyers, sellers, their agents and lawyers, now have to be very, very careful. They have to look at their legal documentation, and make sure that procedures are followed very clearly." - TODAY/ra
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