Sunday Times: Mad dash before new en bloc rules took effect

Oct 7, 2007
Mad dash before new en bloc rules took effect
With just one day’s notice of the start of new rules, agents scrambled to secure last few owners’ signatures to seal collective sales By Melissa Sim

IT WAS real estate’s version of The Amazing Race: In just five frantic hours on Wednesday, Mr Jeffrey Goh had to convince eight people at three different properties to back a collective sale. Fall short and months of hard slog by the head of investment sales at Newman & Goh would have been for nothing.

With the clock ticking down to midnight – when new collective-sale rules would be enforced requiring uncompleted sales to be restarted -Mr Goh and his team scrambled like fighter pilots.

Mr Goh worked the phones from the office, concentrating mainly on a conference call with an owner based in Shanghai, while his colleagues fanned out to the other locations on a charm offensive.

At 10.45pm, the last owner from a River Valley estate gave his consent.

At 11.30pm, the Newton Lodge owner in Shanghai faxed the collective-sale agreement with his signature on the dotted line.

There was still a hold-out at an Orchard Road estate but, finally, the word came through – it was a ‘yes’!

Said Mr Goh: ‘You won’t believe it, we got that signature at 11.35pm.’

By midnight, they had secured the required 80 per cent owners’ consent for all three properties.

The mad dash was triggered by the surprise announcement last Wednesday that new collective-sale rules, which were passed by Parliament two weeks ago, would take effect the next day.

The new rules make the collective-sale process more transparent. For example, members of a sale committee have to be elected at a general meeting, and the sale agreement must be signed by owners in the presence of a lawyer.

But it also meant that those who had not gathered consent from the required number of owners – 80 per cent of owners by share value, or 90 per cent for estates less than 10 years old – would have to restart the entire process.

The lack of much notice about the start date for the new rules caught out many in the industry.

‘It came as a total surprise,’ said Mr Goh, who found out only at 5pm on Wednesday about the new laws kicking in. ‘We thought it was going to be in mid- or late October.’

Marketing agents were knocking on doors, cajoling owners right up to the last minute.

‘We had to go over matters of apportionment again and slowly explain to owners why things were done in a certain way,’ said Mr Goh.

Credo managing director Karamjit Singh said:

‘For the last few signatures, it’s about going and reaching out on a personalised basis.’

His company was hoping to close six deals in the last few months. Four made the deadline.

Among them was Chestnut Ville in Upper Bukit Timah where the last signature was secured at 10pm on Wednesday.

Sale committee chairman Tan Bak Choon, 59, was relieved that they made it.

With the new rules, he said, ‘lawyers and agents are definitely going to charge more’.

Some estates, such as Robin Court in Bukit Timah, did not take any chances. Mr Ivan Chua, 36, chairman of its sale committee, said the last signature was secured on Sept 20, when the amendment Bill was being pushed through Parliament.

He had been working for two years to get the sale of the 15-unit estate through and reckons it was the impending change that finally tipped the scales.

The Sunday Times has learnt that at least five properties made the midnight deadline – but others fell short.

Mr Steven Ming, director of investment sales at Savills Singapore, said his team missed out on a couple of signatures for one development despite working up to midnight.

‘We were one or two units shy. It was very disappointing,’ he said. He declined to name the development.

But for Mr Goh, the adrenalin rush in the hour leading to midnight was one to savour: ‘It was nerve-wracking and exciting. Just like the last 50m dash in a race.’

They made it in time:
- Robin Court
- Newton Lodge
- Amber Park
- Thomson View
- Villa delle Rose

They missed out:
- Clementi Park
- Pine Grove
- Botanic Gardens View

__________________________________________________________________________________
That personal touch

‘For the last few signatures, it’s about going and reaching out on a personalised basis.’

MR KARAMJIT SINGH, managing director of Credo, which was hoping to close six deals in the last few months. Four made the deadline. The last signature was secured at 10pm on Wednesday

Narrow miss

‘We were one or two units shy. It was very disappointing.’ MR STEVEN MING, director of investment sales at Savills Singapore, whose team missed out on a couple of signatures for one development despite working up to midnight

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RACE AGAINST TIME

Mr Jeffrey Goh, head of investment sales at Newman & Goh, found out only at 5pm on Wednesday about the new laws on collective sales kicking in the next day. He had three deals to tie up.

10.45pm
The last owner from a River Valley estate gives his consent for a collective sale.

11.30pm
The Newton Lodge owner in Shanghai faxes the collective- sale agreement with his signature.

11.35pm
A hold-out at an Orchard Road estate finally says ‘yes’ – less than half an hour before the deadline.

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Sunday Times: Ang Mo Kio attracting many suitors, high prices

Oct 7, 2007
Ang Mo Kio attracting many suitors, high prices
District now a top draw for its accessibility, amenities and job opportunities nearby By Tan Hui Yee, Housing Correspondent

A RECENT battle over a condominium site should silence those who still doubt whether Ang Mo Kio is becoming a property hot spot.

The land attracted 14 suitors and eventually went for more than $200 million – probably a record bid for a suburban district plot.

Such is the growing appeal of the district. Homes in Ang Mo Kio, well positioned just north of central Singapore, command a premium compared to those further out.

Four-room resale flats sold at a median price of $260,000 in the April-June period, 30 per cent higher than those in Yishun.

ERA Singapore’s assistant vice-president, Mr Eugene Lim, estimates that prices of resale Housing Board (HDB) flats in Ang Mo Kio have grown 10 to 20 per cent so far this year.

Private housing is thriving as well.

Consultancy Knight Frank said prices at Castle Green condo along Yio Chu Kang Road grew 39 per cent this year to hit $584 per sq ft (psf) in the July-September period, while Grandeur 8 in Ang Mo Kio Central 3 rose 26.8 per cent to $606 psf.

It is a sign of things to come, given the advantages Ang Mo Kio has to offer.

Key among these advantages is Ang Mo Kio Hub, a mall in the heart of town that is integrated with an air-conditioned bus interchange. It was completed last year and sits just across the road from the Ang Mo Kio MRT station.

Knight Frank’s director of research and consultancy, Mr Nicholas Mak, puts that development on par with major regional retail centres like Causeway Point, Tampines Mall and Jurong Point.

Ang Mo Kio Hub even has an edge over them, as it is far closer to the central business district – about 15 minutes by train from Orchard Road.

This means good demand from tenants wanting to be in flats close to the action. Four-room flats rented for a median $1,000 from April to June, while five-room units went for $1,300.

Upcoming developments may add more vibrancy to the area. The HDB last month put up for sale a plum 1.7ha plot along Ang Mo Kio Street 52, which private developers can use to build about 550 homes.

Private companies are being involved in designing, building and selling public housing in two other projects elsewhere in Singapore -and the idea looks a winner.

The first consisted of condominium-like flats in Tampines that sold like hot cakes last year, while the second, in Boon Keng, is expected to be equally well-received.

The Ang Mo Kio plot is expected to get just as enthusiastic a response.

Add to this the dogfight over a 0.6ha private condominium plot near Ang Mo Kio Hub along Ang Mo Kio Avenue 8.

Far East Organization trumped 13 rivals with a record bid of $202.9 million, or $601 psf per plot ratio.

Far East’s break-even cost is estimated to be around $900 to $1,000 psf, which means apartments will likely be priced at a record $1,100 to $1,200 psf.

Savills Singapore director of marketing and business development Ku Swee Yong believes this could lead to higher prices in the area if sellers use future condo units there as a pricing benchmark.

All in, Ang Mo Kio is ‘one of the few housing estates in Singapore’ that is accessible, has well-developed amenities and job
opportunities in clean and well-organised industrial estates nearby, says Mr Mak.

PropNex senior associate manager Lester Tan and ERA’s Mr Lim expect HDB prices in the area to rise by 10 to 20 per cent by the end of next year.

Mr Mak, meanwhile, expects condo prices to grow by 25 to 30 per cent this year and by 15 to 20 per cent next year.

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Sunday Times Forum: Can mum block sale of jointly owned home?

Oct 7, 2007
YOUR PERSONAL ADVISER: FINANCE
Can mum block sale of jointly owned home?

Question:

I MARRIED recently and I am trying to move out of a home that I bought with my mother. The property was purchased for $800,000 and we recently entered into an agreement to sell it for $600,000. The buyer has already exercised his option to purchase.

My mother is having second thoughts and might try to block the sale. She contributed to the initial 20 per cent down payment, while I took a loan and was solely responsible for servicing this loan. I also took care of all the related expenses for the property, such as utilities and maintenance fees.

In terms of ownership, my wife has a 1 per cent share, while my mother and I have a joint tenancy agreement.

1) If my mother refuses to sell, what can I do besides getting a court order? Now that the buyer has exercised the option, what is the next step to completion? Do I still need my mother’s signature?

2) In terms of property division, how is any profit or loss calculated? Which of the following items need to be taken into
account?
- My mother’s cash contribution
- My Central Provident Fund (CPF) contribution
- Payment to the bank for the loan
- Renovations to the home
- Stamp duties
- Bank penalties for redemption of the loan

There will be no cash proceeds from the sale. The bank will take the first charge to redeem the outstanding loan. The remainder will be paid back into my CPF account.

3) What is the next thing I should do to ensure that the sale goes through?

Answer:

ONCE the option is exercised by the buyer, the agreement becomes binding on the sellers, who are obliged to proceed with the sale.

There is probably only one other document that needs to be signed before completion can take place: the transfer document in favour of the buyer. All the three sellers – you, your wife and your mother – need to sign this document to effectively transfer ownership of the property to the buyer. If your mother refuses to sign, the right accrues to the buyer to obtain a court order directing her to do so.

The option is an agreement that governs the rights and liabilities between seller and buyer; it is not an agreement between the three sellers vis-a-vis each other. Thus, it is the buyer, not you, who will have the right to get a court order for your mother’s signature.

Your lawyers will help you to ascertain the amount that will have to be paid to the bank and to the CPF Board, and what additional sums will be payable by the sellers on completion, if any.

The sale proceeds will cover only the bank loan and the refund to the CPF Board. Your mother’s cash contribution and any money paid for stamp duties and renovations to the home are ‘monies lost’, and the three of you will have to resolve among yourselves how to settle this loss.

In my opinion, you have no recourse against each other for apportionment of the loss. The three sellers will have to prepare money for the payment of any bank penalties, which will be payable on or before completion.

You might try persuading your mother to proceed with the sale by explaining to her the possible consequences if she chooses to back out.

She needs to understand that the sale is subject to the terms laid out under the Law Society of Singapore Conditions of Sale 1999. One of the conditions of sale provides that if the sellers fail and/or refuse to proceed with the sale, then the buyer can elect to obtain either a court order to force the sellers to complete the sale, or an order against the sellers for an award of damages.

If the buyer elects to claim for damages, the measure of damages payable by the sellers to him will be assessed by the court. This will mainly be the difference between the market value of the property on the date that the buyer elects the remedy of damages and the sale price of $600,000.

It would therefore not be profitable at all for your mother to back out of the sale. In fact, she might get into an unnecessary legal entanglement that could result in losses for and damages against all three of you.

Lie Chin Chin
Managing Director
Characterist LLC (incorporating Lie Kee Pong Partnership)

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Sunday Times: THE HORIZON TOWERS SHOW

Oct 7, 2007
THE HORIZON TOWERS SHOW
Starring five legal eagles and a cast of residents
By Ben Nadarajan

PUT five senior counsel in one courtroom and you can be sure that sparks will fly.

Add personal relationships into the mix and you will get one heck of a fireworks display.

Over the past week, five legal heavyweights have been cooped up in Court 4B of the Supreme Court building, arguing over a multi-million-dollar collective sale gone wrong.

The star-studded line-up has, at times, led to fiery spats among the opposing counsel, with the presiding judge, Justice Choo Han Teck, having to step in to play peacemaker.

The case itself is interesting enough without the lawyers’ witty and caustic remarks.

The Strata Titles Board (STB) rarely disallows a collective sale, but it did just that for Horizon Towers after a defective
application put paid to the $500 million deal.

Now the buyer, Horizon Partners Private Limited (HPPL), a consortium led by Hotel Properties Limited, is suing the owners for up to $1 billion.

The courtroom was packed every day. At any one time, there were at least 20 lawyers from six different firms before Justice Choo and extra seats had to be wheeled in for them.

The list of lead counsel read like a Who’s Who of the legal community: Mr K. Shanmugam, one of the youngest senior counsel appointed in 1998; Mr K.S. Rajah and Mr Michael Hwang, who were among the first 12 senior counsel appointed in 1997; Mr Chelva Rajah and Mr Andre Yeap.

Considering that there are only 32 senior counsel who are practising lawyers, having five in one case is rare.

Widely regarded as one of the country’s top litigators, Allen & Gledhill’s Mr Shanmugam, 48, appeared to be receiving the brunt of the throwaway remarks from opposing counsel which have littered the hearing.

This was not surprising, considering that his client, the buyer, is being seen as the bad guy by the other parties – the majority owners, who are being sued for up to $1 billion, and the minority owners, who do not want to sell.

Another sticking point is the relationship between Mr Shanmugam and two other senior counsel involved in the case.

Representing four minority owners is his former father-in-law, Mr K.S. Rajah.

And his ex-boss at Allen & Gledhill, Mr Hwang, acts for another minority owner.

On the first day of the hearing, Mr Shanmugam obtained permission from the court to air his client’s case even though buyers are usually not heard in hearings on whether a collective sale should go through or not.

That prompted Mr K.S. Rajah to comment that ‘all and sundry’ should not be allowed to ‘do this and that’.

Mr Shanmugam shot back: ‘Firstly, I am not all and sundry. Next, I’m not doing this and that. I’ve a graver interest in the matter than he does.’

On another day, Mr Shanmugam claimed that Mr K.S. Rajah and his clients were engaging in delaying tactics.

Mr K.S. Rajah retorted: ‘I hate to interrupt my learned friend in full flight, in all his investigative work. But what has all this got to do with the appeal?’

The 77-year-old later added: ‘While we are all here talking about the appeal, all my learned friend is concerned with is HPPL’s case.’

Mr Hwang was no less cutting to Mr Shanmugam. The two had worked together in Allen & Gledhill for many years until Mr Hwang, now 63, left in 2003 after 34 years at the firm.

Now running his own firm, Mr Hwang has moved on to focus on arbitration work. But the talk then was that Allen & Gledhill was not big enough for both of them.

In court, Mr Hwang said Mr Shanmugam had ‘overstayed his welcome’ in the hearing by giving a ’shopping list’ of what the court should order.

Not taking this lying down, Mr Shanmugam later said that Mr Hwang was ‘fully capable’ of conjuring up an argument in ‘his silken ways’.

‘And I meant that as a compliment,’ he added as an aside.

Mr Hwang shrugged off those comments and, after a while, got up to leave. This prompted Mr Shanmugam to quip: ‘See? Mr Michael Hwang is leaving. He must be upset by my insults.’

When Mr Shanmugam asked to be allowed to speak after Mr Chelva Rajah on Wednesday, Mr Hwang was the first to object, followed by Mr K.S. Rajah.

Mr Hwang felt Mr Shanmugam should not get a ’second bite of the cherry’.

If Mr Shanmugam got another go, he said, then all the other lawyers should also be given another chance to respond as well.

And even when Justice Choo gave the lawyers two options for how they wanted to respond – either each would get five minutes more time to talk or would respond in writing – the two men could not see eye to eye.

Mr Hwang wanted written submissions; Mr Shanmugam wanted to do it orally. The former won this round because he had the other lawyers on his side.

But despite the excellent show put on by the lawyers, the lead actors in this matter were really the 210 occupants of Horizon Towers.

Every day, at least 50 of them would fill up the public gallery at the back of the court.

On the first day, there were more residents who turned up than seats and some were not allowed in. Many of them turned up on all four days, staying right through the proceedings. And they did not sit impassively.

Once, when Mr Shanmugam was about to interject, Justice Choo stopped him before he could start, leading to mutterings from the crowd: ‘Yes, sit down!’

Mr Shanmugam then asked the judge to remind the public gallery that ‘this is not a circus’.

There were also audible sneers from the crowd when Mr Shanmugam declared that his client was ‘not in the business of suing’.

Each time a decision went against Mr Shanmugam, they would cheer and hushed exclamations of ‘Yes!’ would ring out.

One resident who did not sign the en bloc agreement said it was not personal.

‘Our ‘cheers’ during the hearing are the reaction of the average layman who feel they have been wrongly pushed into a corner by a large corporation,’ he said.

Instead of making $2.3 million to $4 million each from the en bloc sale, Horizon Towers occupants may have to pay out double that amount if the buyer wins the lawsuit.

But a housewife, who sat through all four days of hearings, said she enjoyed the face-off and witty exchanges between the senior lawyers.

‘We are glad we have so many other senior counsel facing Mr Shanmugam as we have heard how good he is,’ she said.

‘Can you imagine a young lawyer doing it? He would have been slaughtered.’

But now, the time for theatrics is over.

The lawyers have had their say in court and it is now down to the judge to make a cool decision.

And he is unlikely to decide this based on which lawyer produced better theatre.

For those who have been entertained, the issue is this: Did it matter that the application to the STB did not contain the
signatures of three majority owners when even without them, the minimum 80 per cent of residents’ approval had been obtained?

The Horizon Towers finale will be staged early this week. Watch for the reviews.

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