Source : The Straits Times, Dec 29, 2007
IN REPLY to Mr Alex Cheong's letter, 'En bloc sales: Find fairer way to compensate all' (ST, Dec 17) on the method of distributing sale proceeds to owners in a collective property sale, the Singapore Institute of Surveyors and Valuers (SISV) would like to clarify its guidelines on the various methods of distribution.
As guidelines, they are meant to assist owners in selecting the distribution method suitable for their development. The recommended methods (based on share value, strata area, valuation or a combination of them) have been used in many successful collective sale applications made to the Strata Titles Board. However, the institute appreciates that there could be specific situations, for example, due to some unique or peculiar aspect of the development where the strict application of the guidelines may be viewed by some to be unfair. This is why there can be no single prescribed method of distribution, and the majority owners will have to decide the best method that will be acceptable to all owners.
Mr Cheong suggested an 85 or 90 per cent strata floor area and 15 or 10 per cent share value as a fair method of distribution instead of the fixed 50 per cent for both. We would like to clarify that using 50 per cent area and 50 per cent share value is just a guide based on the various formulations used in past collective sales. Under the law, it is for the owners themselves to choose a method and proportion. In addition, anyone who is aggrieved with the proposed method of distribution may file an objection with the Strata Titles Board.
The issue of the method of distribution is now better addressed with the amendments to the Land Titles (Strata) Act, which came into operation on Oct 4. Under the amended legislation, the collective sale committee has to convene a general meeting for all owners to consider the method of distribution of the sale proceeds.
The Ministry of Law and SISV will continue to work together to further refine the guidelines where necessary.
Janet Han (Ms)
Secretary
Singapore Institute of Surveyors and Valuers
Radha S. Khoo (Ms)
Head, Corporate Communications
Ministry of Law
Source : The Straits Times, Jan 05, 2008
ReplyDeleteFlaws likely if en bloc choice left to owners
I REFER to the letter, 'Owners decide what is fair compensation in en bloc sales' by Ms Janet Han of the Singapore Institute of Surveyors & Valuers and Ms Radha S. Khoo of the Ministry of Law (ST, Dec 29), and regret that both writers overlook the potential flaws of leaving it to owners rather than lawmakers to decide.
Distribution of collective property sale proceeds based on area is fundamentally fair because every square foot counts. Especially when the intrinsic value of each square foot is computed as an aggregate of area, premium for high floor level, unit design, open view and so on.
This computation could be further translated into a fraction of 100 per cent value of the condo development at first launch. The denominator shall form the basis of each unit expressed as 0.0012345678 per cent of total. This constant shall become the thumbprint of intrinsic value of that unit for future distribution.
Placing 50 per cent weight on share value goes against the principle of fair distribution of assets. It is a guide for conservancy charges calculation. Moreover, it is too coarse a unit compared to a square foot basis for reverse computation. Condo units are sold by area and not by share value.
The criteria that constitute the value of each property unit should remain integral with the condo. For example, an 1,100 square foot unit at the second floor facing the road costs less than a similar unit on the 28th floor facing a swimming pool or with a sea view. The differential in values of similar area units in a condo development should not disappear in collective sales.
We can see the flaws in these examples when owners follow the guideline of 50-50 on area and share value. Should owners of second floor units get the same amount of proceeds as owners of 28th floor units in a collective sale?
We should not allow the dynamics of property prices to distort the intrinsic value further with owners coming into the fray.
When the law says compensation of collective sales should be based on the thumbprint of each unit, at least one bone of contention is gone.
Paul Chan Poh Hoi