The Tangled Tales Of En Bloc Sales

Source : TODAY, Friday, September 21, 2007

MPs call for more measures to reduce acrimony, protect elderly as new law passed

ONE described it as a “tangled tale of greed, fear, love and betrayal”. Another likened it to a soap opera with a combustible mix of “squabbling neighbours, legal suits, money — and sometimes lots of it”.

Yesterday, as Parliament passed new laws to regulate en bloc sales which were threatening to get out of hand, Members of Parliament (MPs) expressed concerns over the social repercussion of such deals: How they were breaking up communities and wreaking havoc on the lives of not just Singaporeans but expatriates as well.

Observing that the en bloc trend “seems to bring out the worst in some people”, Tampines GRC MP Irene Ng said she knew of “at least one case where a middle-aged couple divorced as a result of the en bloc sale of their estate”.

Nominated MP Kalyani Mehta cited “heartbroken” older residents forced to cut ties to their homes. “Is it a case of economic gain but social destruction? Whole communities that have been built over decades are literally destroyed overnight,” she said.

The new laws were finalised after a month-long public consultation that threw up over 400 suggestions.

Among others things, the new regime allows a five-day cooling-off period during which an owner can change his mind after signing the collective sale agreement (CSA). The members of the sale committee must also be elected at a general meeting, not just convened freely.

While MPs applauded the legislation — aimed at injecting “transparency and order”, in the words of Law Minister S Jayakumar — the MPs urged the Government to put in place more measures to reduce the acrimony and give more protection to elderly owners living on their own.

Noting the greying population, Ang Mo Kio GRC’s Ellen Lee said: There will be many more elderly Singaporeans living alone without trusted or sound counsel at such critical time when the loss of their homes is imminent.”

While the new laws would require lawyers to explain the CSA terms to every resident, Ms Lee suggested the Government go further by requiring developers to offer a one-for-one exchange — a unit in the new development — to elderly owners.

This would allow such owners to “stay in the same locality … and minimise the trauma of uprooting”, Ms Lee added.

Recognising the many concerns, Prof Jayakumar took on board a handful of MPs’ suggestions while assuring the rest that their feedback could be incorporated in future.

For instance, Ms Kalyani noted, the impasse of blockbuster deals such as Horizon Towers and Gillman Heights has caught many families in a liquidity squeeze possibly running “into millions”.

Hong Kah GRC MP Alvin Yeo’s law firm is representing one of the consortium members which is suing the Horizon Towers majority owners for failing to make a proper sale application. Mr Yeo, a senior counsel, felt that for future en bloc sales, the duties and liabilities of the sale committee should be clearly spelt out.

“Does the committee act an agent, or is its role more akin to a board of directors? Do they owe fiduciary duties and can they be sued?” asked Mr Yeo. Even with the new laws, too much latitude is given to the sale committee, the property agents and the lawyers, he added.

Practices within the property industry must also be better policed, said NMP Siew Kum Hong. He noted that some property agents approach their “regular” surveyors who would blindly approve the methods of apportioning the proceeds, without an independent and critical evaluation.

The en bloc story has turned out to be a tangled tale of greed, fear, love and betrayal, with poignant twists and turns, as some people become rich and elated while others homeless and somewhat depressed. — Tampines GRC MP Irene Ng

Prof Jayakumar said the Law Ministry would look into this. It would also take up the MPs’ suggestions of coming up with a best practices guide and more standardised forms to “assist the practitioners”. This will be discussed with the Strata Titles Board and the Law Society, he added.

But he rejected Ms Kalyani’s suggestion — aimed at deterring fly-by-night investors — of imposing a minimum period of residence of two years before an owner can stand for election to a sale committee.

Doing so, Prof Jayakumar said, would “taint” the intention of anyone who wished to participate in an en bloc sale within two years of residence.

He added that the Government did consider making it mandatory for developers to offer a one-for-one exchange. But there were many practical constraints that could “complicate matters” and bring down the purchase price.

Nevertheless, Prof Jayakumar assured the House that the Law Ministry was not going to “close shop and forget about the en bloc process” after the laws come into effect.

Stressing that the review was an ongoing process, he said the ministry and the relevant agencies would “monitor very closely the operations of these new provisions”.

Said Prof Jayakumar: “It is my hope that they will eradicate, or if not, significantly minimise complaints of harassment, unfairness and lack of transparency. But if it’s necessary to make further amendments, then we have no hesitation to do so.”