Enbloc legislation

           The Land Titles (Strata) (Amendment) Bill was tabled for First Reading in Parliament by Deputy Prime Minister and Minister for Law Professor S Jayakumar today.

2          In March this year, Professor S. Jayakumar had outlined some proposed changes to the en bloc sale legislation at the Committee of Supply debate. Subsequently, MinLaw released a public consultation paper containing the proposed changes for consultation from 2 April 2007 to 12 May 2007.  From the public consultation, we received over 400 suggestions from more than 100 respondents.  The vast majority of the suggestions were on making the en bloc sale process clearer, fairer and more transparent.  MinLaw also held expert group discussions with about 40 industry players[1][1] experienced in handling en bloc sales to seek their views on MinLaw's proposed changes in the consultation paper as well as some suggestions arising from the public consultation.  Further input was also sought from the Strata Titles Board (STB).

3          MinLaw has completed the review of the en bloc sale legislation and has proposed amendments to the LT(S)A to give effect to the finalised changes.  We are proceeding with all the proposed changes presented in the consultation paper, with an amendment to the proposed change regarding the additional consent requirement.  We are also proposing further changes based on some of the suggestions received during the public consultation and the expert group discussions.

Key Amendments to LT(S)A

Additional consent requirement

4          Currently, an application for 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. 

5          The initial proposed change, as stated in the consultation paper, was to add a second condition of requiring consent from the owners of units forming at least 80% of units if the development is more than 10 years and 90% if the development is less than 10 years.  However, arising from feedback received during the public consultation and expert group discussions, we are proposing that the second condition be based on area instead of units.  From the feedback received, a second consent requirement based on area will mitigate the biasness of consent by share value against residential owners in a mixed development but not to the extent of biasing against the commercial owners, especially those owning units with much larger areas. 

6          Section 84A(1) will be amended to add a second requirement that for developments that are less than 10 years old, subsidiary proprietors with at least 90% of the total area of all the lots as shown in the subsidiary strata certificates of title must agree to a collective sale before an application for such sale may be made to a Board.  Similarly, for developments that are 10 years old and above, there will be a second requirement that subsidiary proprietors with at least 80% of the total area of all the lots as shown in the subsidiary strata certificates of title must agree to a collective sale before an application for such sale may be made to a Board.

Formation of en bloc sale committee

7          Currently, the formation of an en bloc sale committee is not regulated.  There are also no rules to govern the proceedings of the sale committee.  

8          To enhance procedural clarity, transparency and accountability, we have added a Second Schedule and a Third Schedule to provide for rules to regulate the formation of the sale committee and sale committee proceedings.   We have adapted the provisions in the Building Maintenance and Strata Management Act 2004 in respect of the council of the management corporation.  One such adaption is that a sale committee shall be constituted, and its members elected, at a general meeting of the management corporation before the signing of a collective sale agreement (CSA) can commence.  Additionally, a person standing for election to the sale committee must meet certain eligibility criteria, eg. he must be a subsidiary proprietor, or nominated by a subsidiary proprietor which is a company. If he has an interest that could conflict with the proper performance of his functions as a member of the sale committee, then he must disclose the nature of that interest.  The sale committee will be required to convene general meetings of the management corporation to consider key issues such as the appointment of lawyer, property consultant or marketing agent, the apportionment of sale proceeds, the terms and conditions of the CSA, and the terms and conditions of the sale and purchase agreement.

Collective Sale Agreement

9          Currently, the drafting and signing of the CSA are not regulated.

10        Arising from feedback from the public consultation and the expert group discussions, we will be making three changes.  First, 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.  Second, the sale committee shall provide a preface to the CSA listing the clause numbers and page numbers where important information such as reserve price, apportionment method, may be found.  Third, 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. 

Mode of sale: by public tender or public auction

11        Currently, the mode of sale is not regulated. 

12        Arising from feedback from the public consultation and the expert group discussions, we will be introducing three changes.  First, for transparency, we will require that every launch for en bloc sale must be by public tender or auction.  However, the sale committee can engage in follow-up negotiations with any bidder, especially if the public tender/auction fails to achieve the price acceptable to the sale committee, to get the best deal for the owners.  A sale by private treaty must be concluded within 10 weeks of the close of the tender/auction.  Second, we will require the sale committee to obtain from an independent valuer, on the date of the close of the tender or auction a valuation report on the worth of the en bloc sale site as at that date.  Third, we will require the sale committee 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 private treaty.

STB to be empowered to increase proceeds

13        As outlined in the consultation paper, the STB will be empowered, in certain cases, to increase the sale proceeds to be received by minority owners who have filed valid objections to an applicati*on for en bloc sale of the development which the STB approves, and the STB finds that they have not been treated fairly or equitably in the distribution of the total sale proceeds.. 

14        The increase in sale proceeds to these minority owners will be funded from a pool which will be constituted from contributions made by all owners in the development.  The contribution required from each owner will be either 0.25% of the sale proceeds of his unit or $2,000, whichever is higher.

Return of moneys in management fund and sinking fund

15        Under the current law, the buyer-developer is 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        Arising from feedback from the public consultation and the expert group discussions, we will be making a related amendment to the Building Maintenance and Strata Management Act (BMSMA) to 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 as soon as practicable to the owners of the lots in the development, in shares proportional to the contributions levied on the owners by the management corporation.

17        The full list of amendments is attached.

Effective date

18        As indicated in the consultation paper, the amendments to the LT(S)A will apply to all projects except those where the 80% / 90% required majority of subsidiary proprietors (based on share value) have signed the CSA as at the date of the commencement of the amended Act.

Issued by Ministry of Law

27 August 2007