• Embed Doc
  • Copy Link
  • Readcast
  • Collections
  • CommentGo Back
Download
 
1
Parliament No: 9Session No: 1Volume No: 69Sitting No: 4Sitting Date: 1998-07-31Section Name: BILLSTitle: LAND TITLES (STRATA) (AMENDMENT) BILLMPs Speaking: Assoc. Prof. Ho Peng Kee (Minister of State for Law); Assoc. Prof. Chin Tet Yung; Dr TeoHo Pin; Mr Chiam See Tong; Mr Chng Hee Kok; Mr Chuang Shaw Peng; Mr J. B.Jeyaretnam; Mr Lew Syn Pau; Mr Shriniwas Rai; Mr Simon S. C. Tay; Mr Zulkifli BinBaharudin; Mr Tan Soo Khoon (Mr Speaker);LAND TITLES (STRATA) (AMENDMENT) BILL2.40 pm Order for Second Reading read.
The Minister of State for Law (Assoc. Prof. Ho Peng Kee)
: Mr Speaker, Sir, I beg to move, "That theBill be now read a Second time."I had informed this House on 19th November last year that Government would be amending the law tomake it easier for en-bloc sales to take place. The current position is that a single owner, for whateverreason, can oppose and thwart the sale. Government has received many appeals and feedback fromfrustrated owners whose desires to sell their flats or condominiums en-bloc have been so thwarted. As aresult, these buildings cannot take advantage of enhanced plot ratios to realise their full developmentpotential, which would have created many more housing units in prime 999-year leasehold or freeholdareas for Singaporeans. A secondary benefit is that these developments, especially the older ones, couldhave been rejuvenated through the en-bloc process.I said that the law would be amended to remove the need for unanimous consent. I highlighted the factthat such a practice would not be peculiar to Singapore, as it already exists in some American andCanadian states. I emphasised that in land-scarce Singapore, such an approach was even moreimperative as it would make available more prime land for higher-intensity development to build morequality housing in Singapore. In fact, since then, Hong Kong has also passed legislation along the samelines. In February this year, also in this House, I outlined the main features of the new scheme. Inparticular, I highlighted the fact that safeguards would be put in place to protect the interests of theminority owners.Let me now highlight the key features of the proposed new scheme.Firstly, Government will not decide which developments are ready or ripe for en-bloc redevelopment.The owners will decide that for themselves. There are too many factors at play, such as the age and stateof repairs of the development, market conditions, sentiments of the owners and the relationship amongstthem. As announced previously, what the Bill will do is peg the required majority consent to thedevelopment's age - the majority owners must account for at least 90% of the share values fordevelopments less than 10 years old, and 80% for developments 10 years or more. This approach willfacilitate the redevelopment of older buildings. It is also in line with the approach in other countries - NovaScotia, New Brunswick and Ontario in Canada (80%); British Columbia, Canada (75%); Hawaii (80%) andHong Kong (90%, but where the law also provides that the Chief Executive in Council may specify a lowerpercentage not less than 80% in certain circumstances). A higher percentage is not practical, a lowerpercentage not appropriate given the importance of the matter.The current requirement of unanimous consent is untenable. The case of Kim Lin Mansions which wasrecently highlighted in the press brings this out clearly. Community living, which is the heart of living in acondominium, all but disappears when owners have to drag out their disagreement in court, incurring
 
2
huge financial outlays in the process. There is uncertainty; there is delay; there is acrimony. Also, asmore developments age and incur large upgrading and repair bills, opting for en-bloc sale will increasinglybecome a viable option. But the existing law which requires unanimous consent makes it extremelydifficult, if not impossible, to realise en-bloc sales.Sir, the principle of majority rule is evident in other areas of shared social and corporate life. Examplesabound. They include decisions relating to managing and maintaining common areas in condominiumsunder the Land Titles Act; privatisation of HUDC flats; upgrading works under the HDB UpgradingProgramme; voluntary liquidation of a company or dissolution of a society.Developments with 10 or fewer units will still require unanimous consent. With the small numbers, it isnot possible to designate a clear 80% or 90% majority. Even if we base it on an approximation, it wouldnot be meaningful, as one owner's disagreement in such small units may constitute a large percentage.For such small developments, the owners should be able to negotiate and agree amongst themselves.Secondly, there will be adequate safeguards to protect the interests of minority owners. Thesesafeguards are found in the procedures as well as in the substantive powers of the Strata Titles Board.Let me first touch on the procedures. The majority owners will first enter into a conditional sale andpurchase agreement to sell to a purchaser, subject to their obtaining an order from the Strata TitlesBoard. Thereafter, they must give notice of the proposed en-bloc sale in the newspapers. They must alsoseparately serve notice of the proposed en-bloc sale on all interested parties, including the owners,mortgagees and chargees of the minority owners as well as on the management corporation. This noticemust be accompanied by a copy of the advertisement published in the newspapers, the conditional saleand purchase agreement, the valuation report and the buyer's statutory declaration stating hisrelationship, if any, to the owners. The conditional sale and purchase agreement must state the price andmethod of distributing the sale proceeds. The majority owners must then apply to the Strata Titles Boardfor an order of sale, enclosing the documents mentioned earlier. The minority owners and theirmortgagees or chargee would then have 21 days to file their objections, if any, with the Board.These procedures will ensure that all relevant parties will have adequate notice of the sale and itsterms, in order to decide whether or not to lodge objections with the Strata Titles Board. I should add thatno application needs to be made to the Strata Titles Board if all the owners agree to the sale. In otherwords, application to the Board is not a pre-requisite to all en-bloc sales but only when there is nounanimous consent.Let me now elaborate on the role of the Board, in particular, how it acts as a safeguard. The Board willfirst satisfy itself that the required consent has been obtained and that prescribed procedures have beencomplied with. It will not review or intervene to determine the terms of sale. Essentially, its role is todetermine that the proposed sale is bona fide and an arm's length transaction so that the proposed salecan proceed. It will do this by considering the minority's objections, the interests of all the owners, all thecircumstances of the case and the scheme and intent of the en-bloc provisions in the Bill. The Board willlook at the sale price, method of distributing the sale proceeds to ensure that the minority owners aretreated no less favourably than the majority, and the relationship of the purchaser to the owners, toensure that there is no collusion. If the Board decides that the transaction is bona fide and an arm's lengthtransaction, the sale will proceed. Otherwise, the sale cannot proceed and the majority owners wouldhave to rework their proposal if they still wish to sell en-bloc. The Board will not rewrite the agreement forthe parties.The Board will consider, as I have said, all the objections filed by the minority owners, their mortgageesand chargees. Some minority owners may raise objections which are personal in nature or peculiar totheir own circumstances, eg, he has bought his unit recently at a much higher price than that paid for bythe other owners, or he has spent a large amount on renovations. Others may raise objections based onsentimental reasons, eg, he has lived in the development for a long time and does not wish to move out.The Board will mediate in these situations. It is expected that skilful mediation will overcome many ofthese objections. If mediation fails, the sale will nevertheless proceed as long as the transaction is bona
 
3
fide and at arm's length, unless there are exceptional circumstances to warrant the Board assuming amore pro-active role; for example, the sale proceeds are lower than the purchase price he had paid forthe unit or are insufficient to redeem the outstanding mortgage or charge on the unit. This is based on theunderlying assumption that none of the owners in an en-bloc sale should lose out financially.Sir, the Board's decision will be final. An appeal can be made to the High Court only on a point of law,or where there is alleged irregularity in the process. Owners will be precluded from applying to the courtunder section 78 of the Act to terminate a strata development if they are not granted an order from theBoard for an en-bloc sale or are unable to secure the required majority consent, unless there areexceptional extenuating circumstances such as the majority owners refusing to pay for repairs to preventa building from being unsafe. In other words, section 78 will remain in the Act but is used for very specificcircumstances. There will therefore be finality.Sir, the new scheme will apply to three types of strata developments: those registered under the LandTitles (Strata) Amendment Act where the owners own their units and share in the common property,which is the vast majority; those not registered under the Land Titles (Strata) Act where the owners owntheir units and a share in the land but do not have a management corporation framework under the Act;and those not registered under the Land Titles (Strata) Act where the developer still owns the land.Sir, let me now deal quickly with a few other ancillary matters. The first is strengthening of the StrataTitles Board. The Bill provides for a number of changes to facilitate the expeditious hearing ofapplications. These include increasing the number of panel members from 20 to 24; appointing twoDeputy Presidents instead of one; empowering the Secretary of the Board, to be called the Registrar, todeal with interlocutory applications and empowering the Board to allow any person to represent anapplicant before the Board.One other noteworthy amendment, which is not related to en-bloc sales, is that the Board's jurisdictionwill be expanded to enable it to have wider powers relating to the exercise or failure to exercise a power,authority, duty or function imposed by the Act or by the by-laws. For example, it will be empowered tohear and settle disputes arising from a breach or failure to perform any statutory duty or by-laws relatingto a strata development. Currently, a subsidiary proprietor or Management Corporation must apply tocourt to enforce the performance or restrain the breach. On the other hand, the Board will no longer hearcases on the liability of a developer. Proceedings against a developer for defects are based on contract,which is a matter for the courts.Lastly, Sir, I should add that the new scheme will only apply to strata developments. It will not apply tolanded developments. Strata developments, unlike landed developments, are founded on the concept ofcommunity living, shared ownership of common property in designated values, and individual ownershipof strata title which is essentially air space. All these distinguishing features of strata developmentssupport the new approach based on majority consent for en-bloc sales.Sir, as the Bill has attracted considerable public interest, Government has decided, as suggested byseveral MPs, both in and outside the House, including the Chairman of the GPC for Law and HomeAffairs, to refer this Bill to a Select Committee. This will also enable interested members of the public toshare their views on the provisions of the Bill.Sir, I beg to move.Question proposed.
Mr Chng Hee Kok
: Mr Speaker, Sir, I rise in support of the Bill. At the peak of the property boom, thisBill or its underlying principles would have been welcomed by most. Minority subsidiary proprietors whochoose not to sell their property in en-bloc sales would have been dismayed.This Bill is controversial. Some say that it is to aid majority subsidiary proprietors who stand to makesubstantial gains when their apartments are sold en-bloc than
of 00

Leave a Comment

You must be to leave a comment.
Submit
Characters: ...
You must be to leave a comment.
Submit
Characters: ...