Source : The Straits Times, Feb 5, 2008
I REFER to the report, 'CapitaLand tells Gillman Heights owners to honour sale' (ST, Feb 2). The news, like that of Horizon Towers and Regent Garden, bears similar learning lessons. They concern sellers in a collective property sale who refuse to accede to the terms of the contract they signed with the buyers. The lessons we can draw from these three examples are:
Collective sellers can disregard the terms of a signed contract by simply challenging the rules and rescinding it;
If enough sellers withdraw from a signed contract, the law may not be swift enough to give the buyers due protection as a result of the broken promise made by the sellers; and
Lawyers are the only clear winners in the arena of failed agreements between willing sellers and buyers.
A contract, in the simplest definition, is a promise enforceable by law. In the recent cases, it is crystal clear the sellers went back on their word because the agreed sale price was 'too low'. I feel the courts should have just enforced penalties here, rather than let the subsequent chain of events run.
So the buyers had to threaten these sellers with lawsuits. The latter responded with a host of 'reasons' why the sale agreement should be cancelled. Yet the courts are obliged to hear out both plaintiffs and defendants. Lawyers are hired to represent their respective clients.
All these legal disputes are counter productive, especially for the aggrieved buyers who have the commercial right to proceed with their legal suits against the sellers. Time, money and tears are shed over something that could have been easily resolved by the courts.
An agreement, commercial or social, remains an agreement. If the irresponsible party defaults on the terms of the contract so the aggrieved party takes the issue to court, the court should immediately arrive at a verdict. Penalties should be meted out swiftly against the wrongdoer.
Our society needs to be confident in carrying out the terms of commercial and social contracts. Our children and the next generation are watching us closely in the way we make just decisions. Foreign businesses and enterprises are watching us to see how we deal with simple issues such as breaking a basic contractual agreement.
In this regard, I suggest the Ministry of Education introduce a basic civics education module for students on 'Keeping one's word'. Schools should emphasise time-honoured values such as 'Integrity at all costs' to children.
George Lim Heng Chye
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Source : The Straits Times, Feb 9, 2008
Why it’s not fair to penalise those who break en-bloc contract
I REFER to Mr George Lim Heng Chye’s letter, ‘Penalise those who break en-bloc contract’ (ST, Feb 5).
I do not agree with his argument. We define en-bloc sellers, usually known as Consenting Subsidiary Proprietors (CSPs), as the owners who have agreed to sign the Collective Sale Agreement.
Needless to say, they had signed the CSA because they had been offered a good premium, usually about 50 per cent above what they would get if they were to sell their property individually in the open market. The higher the premium is, the faster and easier for a Collective Sale to get the 80 per cent threshold required by the Strata Act.
The real problem lies with how the Sales Committee awards the contract. An en-bloc process, from the beginning until a buyer is procured, will need at least six to nine months. In the event the property price escalates - and let’s assume that by the time a buyer is procured the premium left is only 10 to 15 per cent - do you think the owners will still be keen to sell? How many per cent of the CSPs will still be keen to proceed? Remember that they had agreed to sign the CSA because of the 50 per cent premium promised to them.
Therefore, in my opinion, it is very important to have the CSP meeting before the Sales Committee awards the contract, to confirm whether they still have the 80 per cent mandate. Otherwise, the 80 per cent mandate they had achieved before would only be symbolic in the number of CSA signed. In reality, the 80 per cent does not exist anymore because the owners are not interested to sell their property anymore.
So, how could you penalise these sellers? Imagine if your agent had sold your property now at a price you told him six months ago without consulting you again, and you knew the price of the property had increased. How will you react?
Hendra Gunawan
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