Tuesday, April 5, 2011

391. Real estate. What is "failed attempt" in collective sale?

"What is the definition of 'failed attempt'"? I interrupted the lecturer of the real estate course I was attending on April 2, 2011. For 2 months, I must attend this course Monday, Wednesday and Friday from 10am to 1 pm. It is a very intensive course with lots to remember for the test in late May.

The lecturer said: "Failed attempt means that the sales committee had not been able to find a buyer for the enbloc sale of the property."

I asked: "What if the sales committee cannot get the 80% or 90% of the owners to agree to the enbloc sale? Is it considered a failed attempt?"

The students started to talk amongst themselves and the lecturer insisted on his definition. He had to speak louder and said: "Don't ask 'what if' scenarios unless you are in a position to know." He is a very good lecturer and concerned about the students ability to pass exam. Most students are in their late 20s and much older. He must have got up from the wrong side of the bed that day.

I said: "I am familiar with the Ridgewood enbloc sale as I had one to sell. As there was no 80%, the sales committee wrote to the owners that they would have to wait 2 years before another enbloc sale will be attempted."

It is tough to be a lecturer actually as there are so many rules and regulations merrily made by the Singapore bureaucrats in response to complaints and feedback.

According to his notes, the Rules for Disposal By Collective Sale stated some rules as follows:

SEP 2008 RULES

1. The Collective Sales Agreement (CSA) will LAPSE AFTER ONE YEAR if NO BUYER is forthcoming.
2. The Sales Committee CEASES to exist."

JUN 2010 RULES
1. A failed attempt "RESTRICTION PERIOD OF 2 YEARS" shall be imposed, STARTING from the date of failed attempt.
2. Within this "restriction period",
2.1 FIRST RE-TRY EGM, RE-APPOINT a sales committee.
2.2 With MORE THAN 50% by share value OR total number of owners.

3. After 2 years
3.1 EGM to appoint a sales committee.
3.2 Need 20% by share value OR 25% total number of owners.

CONCLUSION
Readers can appreciate how difficult it is to pass this exam as many rules and regulations must be memorised for the exam. 20%? 25%? Why did the regulators not just state one figure - 25% or 20%?

I asked the lecturer to look into the rules and regulations of the STB (Strata Titles Board, not Singapore Tourism Board). I sense that he was sticking to his own interpretation. "Well, you just need 50% to pass the exam," I told my lady classmate in her 40s and curly haired, sitting behind me as she said she was so confused about this definition of "failed attempt".

So, does "failed attempt" include the failure to get 80% (for properties more than 10 years old) or 90% (for properties less than 10 years old) to agree to the enbloc sale? The answer is important because if the question of failed attempt is 5 marks. Each of the 2 answers is worth 2.5 marks. If only one answer is given, the student gets 2.5 marks only, due to the "failure of the lecturer to provide 2 answers"!

P.S
I am writing this article to educate myself for the exam. It is hard to remember every fact but the exam requires such facts and figures.

Another rule for "Private Properties - Disposal by Collective Sale"
SEP 2008 RULES
1. The majority CONSENT.
80% of the building's GFA (gross floor area) + 80% of the SHARE VALUE for projects >10 years old and 90% if less than 10 years old.
4-weekly UPDATES certified by a lawyer must be provided.
2. A LAWYER must be present whenever an owner signs a CSA and to explain the terms of the agreement. He assists in VETTING the minutes of the sales committee meeting and DRAFTRS motions for the general meeting.
3. A 5-day COOL OFF PERIOD for owners who have signed the CSA.
4. Upon legal completion, the fund and sinking fund must be RETURNED to the enbloc sellers according to THEIR share value allotments.

This is only 1% of the facts and figures I must remember. 5 out of 8 questions to be answered. 15 questions for 3 days of examinations. Must pass at one sitting. Or no licence. The May 2011 exam will be the first for the RES exam. It will be a killing field as the students are mature students and many are not even in real estate.

1 comment:

  1. Very interesting blog and so much informative info about real estate. Hope to see updated post of Rules for Disposal. Thanks.

    ReplyDelete