Voices : Distribution Of Collective Sale Proceeds Should Be Based Only On Area

Source : The Straits Times, Jan 8, 2008

I SHARE the view of Mr Paul Chan Poh Hoi in the letter, 'Flaws likely if en bloc choice left to owners' (Online Forum, Jan 5).

Responses from the Singapore Institute of Surveyors and Valuers (SISV) and Law Ministry (Dec 29) contrast with the Law Minister's speech on Oct 19 at the Symposium for International Bar Association Conference: 'Especially in the implementation of principles...very much depends on a balance between individual and societal rights...how each society strikes this balance must be a function of its social, cultural and economic construct.'

The Law Minister added an important caveat that 'the contextual approach should not become an excuse for arbitrary or capricious government' and 'harmony in a diverse society cannot be achieved with a laissez-faire system'.

He concluded with essence of Rousseau and Locke: 'Free society requires rules, rules require free society.'

The SISV should review its civil society role and heed Nominated MP Siew Kum Hong's comment in the Sept 20 parliamentary debate: 'It seems to me a little irresponsible of the SISV to recommend methods of apportionment without also providing detailed guidelines on how to apply them in a fair and equitable manner.

'It is tantamount to giving a loaded gun to a soldier without also providing the necessary training and guidance in its usage.

'Is it then any wonder that the recommendations are frequently abused in such a manner as to effectively oppress minority owners?'

The Law Minister assured the House that he 'would look into this' as he took Mr Siew's point about the guidelines and have discussions with the SISV.

Mr Chan argued eloquently that the distribution of collective sales proceeds should be based only on area because 'condo units are sold by area and not by share value' and '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...'.

I agree with this school of thought, but believe 'intrinsic value' comprises two elements:

1. Core Value: Based on strata-title-area of the unit owned by subsidiary proprietors. This is factual and categorically stated in title documents. Hence, it must be key to apportionment because it underpins the very basis of collective sale in terms of land footprint.

2. Consumption Value: Based on state of affairs affecting each unit at point of purchase and 'consumed' by occupants during residency tenure. This is a facetious basis and worthless because a collective sale results in wholesale demolition/redevelopment of estate (unless it is a conservation project involving en bloc alteration and amendment works). Hence, any open vistas or preferred sun-facings are no longer relevant in a collective sale.

At the point of purchase during, say, a soft launch, the top floor unit at Level 10 may have a great view of the lake. But at the point of collective sale, that same unit may now be overlooking a neighbouring estate's garbage centre or is now overshadowed by new adjoining condo of 35 storeys.

What is a good design at one point in time may be not so great at point of collective sale as demographic/real estate trends change over time.

Consumption Value is pertinent only in an individual sale-and-purchase (for example, in a resale transaction), and not in a collective sale.

Mr Chan said that share value 'is a guide for conservancy charges calculation". This is erroneous based on Section 13(1) of the Land Titles (Strata) Act, Section 13(1) and Section 62(1) of the Building Maintenance and Strata Management Act of 2004.

It is clear from the statutory provisions the share value determines 'the undivided share of the subsidiary proprietor of that lot in the common property comprised in that strata title plan'. These statutory provisions underpin explanation of 'share values' (see www.singaporeenbloc.blogspot.com).

Tan Meng Lee