An en bloc sale! The collective / combined sale of two or more units, at once, to a common purchaser. Most commonly the sale of all units in a strata development, and sometimes the sale of an entire row of landed houses.
For developers, the land value and/or redevelopment potential needs to be higher than the total value of units combined.
- Master Plan has re-zoned the land use
- Master Plan increased plot ratio
- existing development has not used up allowable plot ratio
For owners, they may profit more selling as a group than selling piecemeal.
For tenants, they have to move out when vacant possession is given to the en bloc buyer.
The en bloc sales process is governed by the Land Titles (Strata) Act, with applications going to the Strata Titles Board, and High Court if there are objections not settled at the Board.
En Bloc (Sales) Process
Phase 1: Pre-sale preparation.
Owners come together and sign Collective Sale Agreement
Starts with an owner making enquiries of their neighbours if they support an en bloc sale. If yes(es):
- Pro tem committee
- formed to rally support for en bloc sale
- with sufficient interest
- submit requisition — written request —
- signed by 25% or more of total subsidiary proprietors OR
- signed by enough owners to form at least 20% of total share value
- to Management Corporation (MCST [with Strata Title])
- to hold an Extraordinary General Meeting (EOGM)
- submit requisition — written request —
A quorum of subsidiary proprietors (or by proxy)
— owning at least 30% of total share value —
must be present at a general meeting for any business to be transacted.
[I am assuming the same applies for EOGM.]
- 1st Extraordinary General Meeting (EOGM)
- form a Collective Sale Committee
- 2nd EOGM
- appoint Collective Sale Committee members
- three or more members OR
- more than 14 members who are natural persons
- appoint Collective Sale Committee members
- Collective Sale Committee
- obtain from independent valuer
- valuation report for whole development
- proposed method of distributing sales proceeds
- appoint no more than three owners to represent majority in majority consent (for phase 4)
- advertise in the local newspapers
- development name, land lot number, address
- sale proposal brief details
- place where documents for en bloc sale can be inspected
- prepare application to Strata Titles Board
- serve notice to owners, banks, CPF, anyone with an interest on the unit or land, by registered post.
- obtain from independent valuer
- Select property consultants and lawyers
- 3rd EOGM
- approve property consultants and lawyers
- 4th EOGM
- approve method of money apportionment, etc
- Start signing of Collective Sale Agreement
- Owners’ meeting
- pre-marketing update on Collective Sale Agreement and sales process
Phase 2: Public tender stage.
Project up for public tender and developers and buyers submit bids.
- Owners’ meeting to update offers and consider terms of SPA (??)
- Marketing campaign.
Phase 3: Post-tender evaluation
- Close tender
- Evaluate bids
- Negotiate with developers if necessary
Phase 4: Legal completion
- Application of Order of Sales
- Distribution of sales proceeds on legal completion
- Majority consent
- At least 90% of share value and strata area for developments less than 10 years old
- At least 80% of share value and strata area for developments 10 years and older.
- If majority consent but not 100%:
- no more than three owners are appointed from the Collective Sale Committee
- apply to Strata Titles Board for Order For Sale
- granted if minority do not have valid grounds of objections
- takes another three months to complete en bloc sales process
Then, owners can:
- hand over units with vacant possession in exchange for 100% sales proceeds OR
- stay for up to six months from date of completion of en bloc sale
- 95% sale proceeds now
- 5% upon delivery of vacant possession of unit.
Objection!
An owner, bank, or anyone with an interest in the estate may, in 21 days of notice for the en bloc sale, file an objection in a prescribed form with the Strata Titles Board.
Strata Titles Board will forward a copy to majority owner representatives and lawyers in five days by registered post.
Approval/Disapproval
If there are no objections, the Strata Titles Board will approve an application based on:
- transaction in good faith
- sale price
- sale proceeds distribution methods
- relationship of purchaser to any of the flat owners.
An application isn’t approved when:
- an owner objecting to the sale will suffer a financial loss OR
- sales proceeds minus approved deductions are less than what was paid for the unit (bought before the Collective Sale Committee signed the agreement to sell)
- the sales proceeds is insufficient to redeem any mortgage or charge against the flat.
Allowable deductions
- stamp duty
- legal fees
- costs related to privatisation of land
- costs of collective sale, shared by all proprietors.
Attempt failed?
A two-year restriction period where subsidiary proprietors are not allowed to re-start the en bloc process, unless:
- at least 50% of total subsidiary proprietors agree to submit a second requisition for EOGM
- [versus 25% the first time]
- at least 80% of total subsidiary proprietors agree for the third try.
Phew.
❤️🌧️
