You have every right to sell. But, if Atria is the only home for you and your family, what would you have to do between signing the CSA and the final completion?
“No choice” Option 1
Start looking for another home now, and commit to the purchase before you get the en-bloc money.
“No choice” Option 2
You are aware of the above, and choose to wait till the deal is confirmed before committing to another property.
“No choice” Option 1
Start looking for another home now, and commit to the purchase before you get the en-bloc money.
What if the en bloc deal does not go through?
There are real-life examples of this, and genuine home buyers do get caught.
Even if it does, how much would you get?
(No, the projected amount means just that -- projected, that is, not a guarantee).
Again, there are real-life examples.
And, when would you get your money?
In the best case scenario, it could be at least 9 mths. In the worst-case and very realistic scenario, it could be up to 30 mths (ie 2 ½ years or more).
Can you afford the uncertainty, and the wait?
Yes, there is a minimum reserve price. Yes, there would a 3rd-party valuation before the final tender. Yes, the CSC has to call for a meeting to meet all sellers to obtain their approval to lower the Atria sale price, if the valuation or market falls below $500m.
But please note:
a) The minimum reserve price is only a number. The only people to whom this number really matters is you and me, the owners.
“How much” do you think it matters to:
Those hired to work on this, who are paid a percentage of the sale?
The speculators, especially those who may have bought unit(s) specifically to benefit from an en-bloc? (In any en bloc push there are likely to be a few speculators. They choose a “worthwhile to enbloc” unit (or units) carefully, service the mortgage for only a short time, and enjoy the windfall.). Atria is not likely to be a serious home or (only property) for them.
The developer-buyer? Important question. But that would have to be the subject of another post.
b) Valuation is an art, not a science. It is at least partly subjective. And the valuer can be recommended by the agent and appointed by the CSC.
c) If the market or valuation is lower than $500m, and you are already committed to another mortgage, are you really in a position to say “no” a lower reserve price, esp if your new mortgage were based on the $500m “reserve price”?
“No choice” Option 2
You are aware of the above, and choose to wait till the deal is confirmed before committing to another property.
If the market goes up, which means it is more likely that the deal would go through, how much would you have to pay for your replacement home? Even if you were planning to downgrade -- how much would it cost then? how much cash were you counting on in your downgrade sacrifice?
Sent Packing in a hurry?
If the en bloc deal goes through, you have only 7-9 months (Including the 6-month Vacant Possession period) to find somewhere else to live. Time is not on your side-- but finding a property takes time, and having secured it at last, the paperwork would also ake time (not to mention renovations).
And you would not be the only owner displaced by en bloc(s) who is looking, and desperate.
Do you want to be rushed into such an important decision? Once you sign, it is irrevocable and irreversible. Those who have signed will have no rights to raise any objections to STB or High Court. You will have to act on the 2 above “no choice” options and their consequences (except for the 5-day cooling-off period after signing).
Would you let anyone rush you into signing a contract to sell your house without knowing
how much you will get,
and when you will get it?
Do you want to be left with “No choice” and no time, and for the wrong reasons? If you have no time to think through now, when 80% have signed the CSA, you would have even less time.
NOW TIME IS ON YOUR SIDE. YOU STILL HAVE TIME, no matter what anyone tells you.
Please take time to think about these very important and real considerations for you and your family BEFORE you sign. Signing the CSA is irreversible and irrevocable.
My friend from Gillman Heights signed the CSA and discovered that he is barred by law to lodge any objections to Strata Titles Board and to court even though he was not willing to sell.
ReplyDeleteAnother friend from Horizon Towers showed me how the valuation upon close of tender does NOT work for the Owners' interest, esp when the property market is volatile.
Eg, if the market starts rocketing upwards, the public tender could have closed just before this bull run-up. The valuation would reflect the out-of-date low value.
Having bought real estate before, you'd know that valuation is an art, not a science. Even bankers shop around for a valuer to give them the "preferred" valuation. BTW, how "independent" is the valuer?
Also, it takes time for the caveats of recent transactions to be lodged. Then it takes time for URA to consolidate and produce statistics on the Property Price Index. So there is also a lag time that will affect even an independent valuation.
The Sale Committee has 10 weeks after public tender to (i) negotiate private treaty sale and (ii) commit to sign a Sale and Purchase Agreement with a specific Developer-buyer WITHOUT consulting the Owners. Will this be the first time that our Sale Committee members will be signing a multi-million dollar deal?
If, say, the market ramps up in the 10 weeks after tender close, Sale Com could be selling (A) at the Valuation Price which may be identical to Reserve Price and (B) on same terms and conditions previously agreed - what are you going to do? That's what happened to my friend at Horizon Towers.
You can't even file an Objection because you have already signed Collective Sale Agreement!
Since the lawyer from Legal 21 said that the Sale Committee is given 12 MONTHS to find a developer-buyer from the date that 80% Majority Consent is hit, then why can't the Owners be given, say, 3 WEEKS after the Sale Committee has given an option to a specific Developer-buyer?
Is it proper for the Sale Committee to sign a Sale and Purchase Agreement with a developer-buyer WITHOUT the knowledge and go-ahead of the other Owners?
They can take (A) up to 12 months to collect signatures and (B) up to another 12 months to find a developer-buyer but they can't even wait for a mere 3 weeks for the Owners - esp when the market is NOT STATIC for up to 24 months?
C'mmon!
I guess if one has an option to sign anytime within 12 months, then why rush? The election is around the corner, may be those who consented may change their minds post election? Why? Market will certain drop. Even if prices hold, more measures will be introduced by the govt to cool the market.
ReplyDeleteI agree, we can wait and see.
ReplyDeleteThis is a very informative site.
I think since we have time, let's wait, and sign later if we want, better than sign now, and cannot back out later! At least hear more facts first.
This post gives rise to two questions in my mind about timing. Under No Choice option 1, there is reference to the payout taking 9-30 months. When exactly does this period start? Under No Choice Option 2, there is reference to a ‘6-month vacant possession’ period. What’s that all about? If I have tenants on 2-year leases in The Atria, do either of these options mean I am faced with the possibility of having to break the lease? Am I even allowed to do that without penalty applied by my tenant? Or does all the uncertainty surrounding this en bloc exercise mean that I am supposed to leave the unit vacant until there is some definite decision point? That would mean that what I might gain on the en bloc could be at least partially offset by what I might lose in rental income.
ReplyDeleteTo reply Not-so-fast: The period starts from the day the first signature was collected. I believe the first signature was collected in April 2011, during the enbloc meeting at the carpark. This was announced in one of the letters to residents.
ReplyDeleteYes, in my opinion, the prudent and wise thing to do is to wait for 6 months from today, before thinking about whether to sign/ not to sign. Even if you sign today, the CSC has another 11 months to collect signatures (meaning you bind down yourself for 11 months for nothing).
The current CSA has a serious loophole: It states the committee has 12 months to collect signatures, and a further 12 months to find a developer. This means you are binding yourself down for a maximum period of 24 months. Imagine, developers are not stupid people. If we bind ourselves down to a price for 24 months, developers can wait and see: If market dips, then they can choose not to buy our sitel. If market goes up, then our 500 million price (24 months later) might be very "cheap" and the developer decides to take advantage of the price we locked ourselves into. Under such a long 24month timeline, we are locking ourselves down into a draw or lose situation. We dont get to win.
What i feel is fair and reasonable, is for the CSA to allow for 6 months to collect signatures, and 6 months to get a developer. 12months + 12months is a loophole that puts us as sitting ducks (developers choose to buy only if market goes up and 500 million is exploitatively cheap).
If the CSA incorporates 12months + 12 months, then the minimum reserve price has to be priced forward (maybe 10% more), rather than the current reserve price.
Bear in mind that URA will next release its Master Plan in 2013 (i'm not sure which month). Then, the plot ratio for Atria might increase further (i believe the plot ratio was last adjusted upwards by 10% or so). Previous plot ratio for Makena was 2.4 (thereabout), and is now 2.8. So imagine, if Atria's plot ratio is increased from 2.8 to 3.5 in 2013, and market goes up, developer gets to wait and see and exploit our "backdated" reserve price of 500 million. This is a no-win situation for us. 12 months + 12 months is a definate loophole against our interests.
For the record, i am pro-enbloc. BUT, i have not signed the CSC yet, for reasons stated above. If the developer gets 24 months to wait and see, i want to wait and see as well. This is only fair and reasonable.