En bloc Sales Process starts off officially with he forming off the Collective Sales Committee (CSC). A minimum of 20% of the share values or owners comprising 25% of the total number of subsidiary proprietors’ votes.
Owners of developments which had failed in an earlier round of En bloc sales in Singapore needs wait 2 years before re-starting the En Bloc sales process by proceeding to obtain a higher threshold of 50% of the share values or 50% of the subsidiary proprietors’ votes before calling for an Extra-ordinary General Meeting (EOGM).
All or any potential candidates running for En bloc sales collective sales committee (CSC) must then make full disclosure of any actual or potential conflicts of interest.
En bloc sales process: Triggering the 1st Extra-ordinary General Meeting (EOGM) to set up the Collective Sales Committee (CSC)
- 20% of Share values or owners comprising 25% of the total number of subsidiary proprietors votes.
- 50% of share values or owners comprising 50% of the total number of subsidiary proprietors votes if an earlier En Bloc collective sales attempt failed. There is a waiting time of 2 years before re-starting the En Bloc process.
- Call for the 1st Extra-ordinary General Meeting (EOGM) to appoint the Collective Sales Committee (CSC).
A responsible collective sales committee should have owner representation from a variety of different sizes of the units within the Strata development.
En Bloc Sales Process – Age of Condominium or strata titled development
In the case of an En bloc sale where there is less than 100% consent, it is governed under the Strata Titles (Strata) Act, Section 84A.
- Developments less than 10 years will require 90% consent by share value as well as strata area.
- Developments older than 10 years will require 80% consent by share value as well as strata area.
The age of a development is counted from the date when the development obtains its temporary occupation permit (TOP), or if no TOP was issued, from the date of the Certificate of Statutory Completion (CSC).
When to Appoint Property Consultants, Lawyers and valuers – usually 2nd EOGM
The Collective Sales Committee (CSC) could be empowered If such mandate is not given, the appointment of lawyers and property consultants will be decided at the 2nd Extra-Ordinary General Meeting (EOGM).
En bloc Sales Process – Method of Apportionment
This is usually done at the 2nd EOGM or after 2nd EOGM. This is usually discussed along with the Collective sales agreement (CSA) terms and conditions. The property consultants or valuers could have inputs to how to apportion the sales proceeds fairly. Typically the sales proceeds can be apportioned by ways of share value as well as strata built-up size. Of course more complex methods can also be proposed if they can be easily administered and explained.
Many home owner are blissfully unaware of the En bloc sales process and hence are really not in a position to know if it is a fair deal or not. They tend to say, “We will go with the majority”. Often it is the Minority that set the stage for the majority to follow and then when the numbers are reached, the majority would have been guided by the minority, the rest of the clueless minority often blindly follow along in the en bloc sales process.
En Bloc sales committee – To decide the Collective Sales Agreement reserve price – Usually at 3rd EOGM
If the Reserve Price and valuation is not decided and confirmed at the 2nd EOGM, this will be discussed at the 3rd EOGM. The valuer’s report and justifications for the valuation will be presented at the 3rd EOGM for approval. Terms and conditions of the Collective sales agreement (CSA) is discussed in this meeting.
The discussion of the reserve price usually takes into consideration (but not limited to) the following: –
- Current land plot ratio baseline based on URA zoning.
- Actual built plot ratio.
- Development charge (DC) if any for land use intensification what the developer has to pay.
- Differential Premium (DP) for topping up the land lease (if any).
- Surrounding En Bloc sales launch and successful prices achieved.
- Potential development of the plot of the land.
- Nearby older estate price trend.
- URA master plan and other factors such as LTA road plans, possible encroachment or future government land requirement which could result in loss of land via the land acquisition act, thereby affecting the value of the development.
- Current construction cost, labour and ability of developers to price the properties.
- Price trend movement as En bloc sales process takes easily 18 to 40 months to complete. In a rising market, the prices of properties could easily have risen by 5 to 10% a year, rendering the premium obtained from En Bloc not worth it.
Hence, the owners can then estimate what price would be reasonable for the developers to bid and yet make a profit. This price must also be fair to the owners.
Not many have considered a profit sharing arrangement with the developers.
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