, enacted by Parliament on 20 September 2007, will take effect from 4 October 2007. It will affect en bloc sale projects in the following ways:

§ En bloc sale projects where the required 80% or 90% majority consent of owners (based on share value) has not been obtained as at 4 October 2007 will have to comply with the new rules.

§ En bloc sale projects where the required 80% or 90% majority of owners (based on share value) have signed the Collective Sale Agreement (CSA) will not be affected by the new ruling.

The new amendments are summarised as follows:

 (I) Additional Consent Requirement – by building’s GFA

In the past, an application for an en bloc sale can be made if there is consent from the owners holding at least 80% of share value if the development is more than 10 years old, and 90% if the development is less than 10 years old.

(1) The new rule of majority consent requires approval from owners representing at least 80% of the building's gross floor area (GFA) if the development is more than 10 years old, or 90% if it is younger than 10 years old.

 (II) Formation and Proceedings of an En Bloc Sale Committee

Previously, the law did not contain rules to govern the formation and the proceedings of an en bloc sale committee.

The new rules regulate the formation of the sale committee and the sale committee's proceedings. These rules have been adapted from the provisions in the Building Maintenance and Strata Management Act (BMSMA) 2004 in respect of the council of the management corporation. Other details include the following:

(a) Formation of Sale Committee

§ (2) A decision to form an en bloc sale committee will have to be made by ordinary resolution passed at a general meeting. There can only be one sale committee per development at any time.
§ (3) Members of the sale committee will have to be elected at the meeting. Similarly, a sale committee may be dissolved by ordinary resolution at a general meeting.
§ (4) A person standing for election to the sale committee must meet certain eligibility criteria. For example, such a person has to be an owner of a unit in the development; or be nominated by an owner which is a company; or be a member of the immediate family of the owner who is nominating him.
§ (5) A person standing for election to the sale committee must declare his interest or relationship, if any, with a property developer, property consultant, marketing agent or legal firm.

(b) Proceedings of Sale Committee

(6) The sale committee shall convene general meetings to consider key issues including the following:

§ the appointment of any lawyer;
§ the appointment of property consultant;
§ the appointment of marketing agent;
§ the apportionment of sale proceeds;
§ the terms and conditions of the Collective Sale Agreement (CSA); and,
§ the terms and conditions of the Sale and Purchase (S&P) agreement.

These changes will ensure that owners will have the opportunity to discuss such key issues before consenting to them.

§ (7) The sale committee shall keep minutes of its proceedings and must, within 7 days after each meeting, either display the minutes on the management corporation's notice board or pass the minutes to all owners.

(III) Collective Sale Agreement

Previously, the law did not regulate drafting and signing of the CSA. There are three changes made to the rules, including:

§ (8) The en bloc sale committee must provide a preface to the CSA listing the clause numbers and page numbers where important information such as reserve price, apportionment method, etc. may be found.
§ (9) When an owner signs the CSA in Singapore, the lawyer appointed for the en bloc sale will have to be present to explain the legal terms and liabilities and address any doubts that the owner may have.
§ (10) An owner can rescind his agreement to be a party to the CSA within a 5-day cooling-off period after signing the CSA for the first time.
§ (11) The Sale Committee must provide updates of the consent level every 4 weeks. The updates on the consent level must also be certified by a lawyer.
§ As it is, the CSA will lapse after one year from the first signature. When no buyer is forthcoming after that one year, the Sale Committee ceases to exist.

(IV) Mode of Sale: By Public Tender or Public Auction

Previously, the mode of sale was not regulated. Now the new rules require the mode of sale to be as follows:

§ (12) Every launch of an en bloc sale must be by public tender or auction.
§ (13) Following a tender or auction, especially one which fails to achieve the price acceptable to the sale committee, the sale committee can engage in follow-up negotiations for sale by private treaty with any bidder to get the best deal for the owners. But any sale by private treaty must be concluded within 10 weeks from the close of the tender or auction.
§ (14) The sale committee must obtain from an independent valuer a valuation report on the value of the en bloc sale site as at the date of the close of the tender or auction on the same date.
§ (15) The sale committee will be required to provide the owners with information on the bids received as soon as practicable after the close of the tender or auction or, where applicable, after the sale committee has entered into a sale by private treaty.

(V) Return of Moneys in Management Fund and Sinking Fund
Previously, the buyer-developer was entitled to the moneys remaining in the management fund and sinking fund upon the termination of the strata scheme following an en bloc sale.

(16) The new rules provide that upon the legal completion of an en bloc sale, the moneys in the management fund and sinking fund of a management corporation shall be returned to the en bloc sellers according to their shares value allotments.

Compiled by Sam Gian – Independent Real Estate Sale Consultant & Trainer