s letter, 'He stood to lose if collective sale had gone through' (ST, Nov 18), Mr Tan Koh Young's letter, 'Apartment owners in this mixed development lose out' (ST, Nov 18), Mr Adrian Tan Beng Kiat's letter, 'Authorities should clarify stance' (ST, Nov 25) and Mr Robert Stone's letter, '40% floor area but 5% share values' (ST, Nov 25). Under the law, the Strata Titles Board (STB) can disapprove an en-bloc sale application if an objecting owner can show that he will suffer financial loss or that the proceeds of sale are insufficient to redeem any mortgage or charge in respect of his unit.
The Land Titles (Strata) Act (available at http://statutes.agc.gov.sg/) provides that an owner would be considered to have suffered a financial loss if the proceeds of sale for his unit, after any deduction allowed by the STB, are less than the price he had paid for the unit.
The stamp duty and legal fees which an owner incurs when he purchases his unit have been permitted as deductions by the STB.
An owner could furnish to the STB evidence of relevant expenditures incurred in relation to the unit for the board to decide what it will allow as deductibles.
The law does not specify how the sale proceeds should be distributed among the unit owners. The distribution method is to be determined by those who sign the collective-sale agreement, i.e., the majority owners, usually in consultation with their property consultants.
Nevertheless, the STB hearing the en-bloc sale application has to be satisfied that the transaction was made in good faith, taking into consideration, among other things, the method of distributing the proceeds of sale.
Mr Adrian Tan asked how the Singapore Land Authority (SLA) arrives at a decision to allow for the lease on leasehold properties to be topped up. SLA will look at several factors, principally as to whether the landowner's proposal would result in land optimisation and whether it is in line with the Government's long-term planning intention.
Mr Tan Koh Young and Mr Stone do not agree that share value should be used to determine voting rights for purposes of an en-bloc sale. They suggest that floor area be used instead. This matter is not so straightforward. For example, the owner of a shop in a mixed development may argue that the use of floor area is unfair to him as he had paid several times more for his shop on a per-square-foot basis, compared to a residential unit.
In deciding on the method to determine voting rights, the Government had considered the experiences and practices of other jurisdictions and adopted share value as the basis. This approach has generally worked well. Nevertheless, we will take into account feedback as we review this and other aspects of en-bloc sales in the light of our own experience.
Radha S. Khoo (Ms)
Head
(Corporate Communications)
Ministry of Law
