The proposed amendments to the Land Titles (Strata) Act, which was introduced in Parliament yesterday, may likely put an end to the long-drawn conflicts arising from en bloc property transactions. The changes are expected to take effect in June 2010.
According to the Ministry of Law, the proposed changes in the Land Titles (Strata) Act are expected to provide greater transparency and streamline procedures for collective sales. It received feedback and consulted industry experts to review its current regulations, which had last been amended in 2007.
Key among the recommendations is the role of the Strata Titles Board (STB) as a mediator for collective deals and the disclosure requirements for sales committees.
When Horizon Towers condo was launched for en bloc sale in 2007, it triggered a legal saga for two years. It ended when the Court of Appeal ruled in favour of the owners, who objected to the $500-million deal.
With the proposed changes to the law, owners may be prevented from being caught in a similar long-drawn process.
The role of the STB will be refined to concentrate on mediation. It will be empowered to issue a "stop order" to end mediation if the owners decide to bring the case to court.
The STB currently mediates and judges on objections filed by minority owners in collective sales. The proposed changes could help cut the costs and time taken to resolve more controversial en bloc applications. The maximum time period spent on mediation will be set at 60 days to prevent undue delays. Presently, no time limit has been set.
The person standing in en bloc sales committees will also be required to reveal the extent of his or his kin’s ownership in the development and get at least one signature for the collective sale agreement or risk its termination.
The sales committee can vote off a non-consenting member through a simple majority when an application for the sale has been made to the STB in order to speed up the process.
The proposal on imposing a restriction period of two years on collective properties that fail to sell is one that has so far earned mixed reactions from industry players.
To deter further attempts when there is insufficient level of interest, those who wanted to restart the sales process during the restriction period will also have to abide by the stricter rules. The draw down of the management committee funds where Extraordinary General Meetings (EOGMs) are convened incessantly will also be prevented by this measure.
In the first re-try to convene an EOGM to reappoint a sale committee, a requisition threshold of 50 percent by total number of owners or share value must be met. For subsequent attempts to convene an EOGM during the two-year period, this threshold will be raised to 80 percent.
The current requisition threshold is set at 25 percent of the total number of owners, or 20 percent by share value.
The two-year restriction should not pose a threat for home owners, as obtaining a 50-percent share value or number of units is possible in a property upswing, said Mr. Tan Hong Boon, deputy managing director of Credo Real Estate.
“A shorter process is good for the sellers as they would get their money earlier to find a replacement property as well as sell it for an optimal price in a property upturn,” he added.
However, others disagree. Ms. Christina Sim, investment director of Cushman & Wakefield, said that properties with an 80- to 90-percent sale approval but are unable to find a buyer should be given more leeway.
“This is a huge source of land bank for developers. We have to allow these people to have a second try because the market has trended upwards. To wait another two years we don’t know how the market is going to be,” she said.