What Goes On In The Enbloc Sales Process and How It Will Affect You

May 25, 2021 | En Bloc

d'leedon condo

Enbloc Sales Process

Unlike a typical private resale transaction which involves a single unit and takes 12 to 14 weeks, the Enbloc Sales Process is much longer as it involves the entire development and could take from 18 months to 30 months.

Extraordinary General Meetings needs to be organized, a Collective Sales Committee elected to lead the Enbloc Sales Process who will in turn appoint a Marketing Agent and Legal Advisor, to get the requisite statutory majority consent, before proceeding to get the highest possible price for the property via Public Tender. Even after a Developer makes a successful bid, approval is required from the Strata Title Board and whose decision is final. It is only after the STB has given the Collective Sales Order is the sale finalized and sales proceed fully made to the affected Owners when they vacate their premises.

FIVE STAGES

Of Enbloc Sales Process

1. The Preparation Stage

 

1A – Requisition for EOGM

1B – 1st EOGM to approve CSC formation

2. Collective Sales Agreement (CSA) Stage

 

2A – 2nd EOGM to announce appointment of Marketing Agent, Legal Advisor & approve Collective Sales Agreement, Reserve Price, Method of Apportionment & commence CSA signing

2B – 1st EOGM to approve CSC formation

3. Tender Stage

 

3A – 3rd EOGM to update on Tender Preparations

3B – Public Tender

3C – Award Tender To Successful Developer

4 Strata Title Board (STB) Approval Stage

 

4A – STB Application

4B – STB Approval Sales Order

5. Sales Completion Stage

 

5A – Sales Completion

5B – Deliver Vacant Possession

1. PREPARATION STAGE

1A – Requisition for EOGM

Timeline: Varies

  • 1st attempt or > 2 years after last attempt requires 25% Owners or 20% Share Value consent.
  • 2nd attempt or < 2 years after last attempt requires 50% of Owners consent.
  • 3rd attempt or < 2 years after last attempt requires 80% of Owners consent.

1B – 1st EOGM to approve CSC formation

Timeline: 4 – 8 weeks

  • A quorum of at least 30% of Owners by Share Value required before the meeting can proceed.
  • Collective Sales Committee (CSC) comprising 3 to 14 members elected.

2. COLLECTIVE SALES AGREEMENT (CSA) STAGE

2A – 2nd EOGM to announce appointment of Marketing Agent, Legal Advisor & approve Collective Sales Agreement, Reserve Price, Method of Apportionment & commence CSA signing

Timeline: 4 – 12 weeks

  • The Marketing Agent has the key responsibility to recommend the Reserve Price, the Method of Apportionment, strategy to get 80% Owners to sign the CSA soonest & find the highest bidder for the development.
  • Owners are most keen to know what they will each get with most expecting significantly higher than if they were to sell individually.
  • The Legal Advisor is tasked to draft / explain the Collective Sales Agreement and witness each CSA Signing by Owners including providing regular updates of CSA consent to- date.

2B – 80% CSA Attained

Timeline: 4 – 12 months

  • Developments of 10 years and older require a minimum of 80% of owners’ consent (by share value and strata area).
  • Developments of less than 10 years require a minimum of 90% of owners’ consent (by share value and strata area).
  • Signatories are given a 5-day cooling period after signing the CSA, in the event they change their minds.
  • All Signatories must be certified by solicitors, & updated signing % to be posted on the noticeboards every 4 weeks and displayed in the 4 official languages.
  • This is one of the 3 challenging phases of the Enbloc process as those against the Enbloc, will do what they can to prevent their supporters and fence-sitters from signing the CSA.
  • The CSC, Marketing Agent & Legal Advisor will devote resources to engage with every Unit Owner in the development to get their support to sign the CSA.
  • The initial 50% to sign the CSA will be fast but getting the next 30% will test the resolve of those directly involved in the Enbloc.
  • Failure to attain the minimum within a year from the 1st CSA signing marks the end of the Enbloc exercise.

3. TENDER STAGE

Timeline: Aggregated 4 – 8 months (max 12 months)

3A – 3rd EOGM to update on Tender Preparations

  • This phase only initiated after the minimum CSA Signing for the Development is attained.
  • Legal Advisor responsible for drafting the Sales & Purchase Agreement.
  • Details of the Sales & Purchase Agreement and marketing of the Development to interested Developers be provided.

3B – Public Tender

  • Marketing Agent will put up the property for sale by Public Tender.
  • An Independent Valuer to provide a Valuation Report as at the date of the close of public tender.
  • In case there are no bids at the Tender stage, the CSC will proceed to enter into a Private Treaty with interested Developers & to complete it within maximum 10 weeks.
  • The CSC is required to get Owners’ Approval when there are no bids above the Reserve Price.
  • Setting an unrealistic Reserve Price is another major cause why some Enblocs fail.

3C – Award Tender to successful Developer

  • The CSC will sign a Sale & Purchase Agreement with the successful Developer.
  • Developer to pay Deposit which will be held in Legal Advisor’s Conveyancing Account on behalf of the Owners.

4. STRATA TITLE BOARD (STB) APPROVAL STAGE

Timeline: Aggregated 4 – 12 months

4A – STB Application

  • CSC to apply for an order of Enbloc Sale by paying an application fee of $5,000 after obtaining the requisite statutory majority consent & a Buyer is selected & sale is agreed upon.
  • Owners who do consent to the Enbloc sale can raise valid objections to the STB who will consider these objections before deciding on the outcome of the application for sale.
  • CSC to advertise in the 4 official languages of the proposed application in the local newspapers.
  • STB will mediate between the Minority Owners and the Applicants for a maximum 60-days period after the 1st Mediation.
  • If STB cannot successfully mediate, the Board will issue the Stop Order where the matter will proceed to the High Court for determination.
  • Applicants have 14 days after STB issues Stop Order to apply to the High Court for approval of the Collective Sale.
  • The decision of STB is final and binding.

4B – Public Tender

  • When there are no remaining objections (i.e., all objections withdrawn), STB will fix a hearing to consider approving the Enbloc Sale.

5. SALES COMPLETION STAGE

Timeline: Aggregated 3 – 9 months

5A – Sales Completion

  • Legal Completion is typically 3 months from the Date of Sales Contract, which is either the Date Unanimous Owners’ Consent is obtained, or the Date the STB or Higher Courts grant Approval for the Collective Sale to Proceed.
  • Owners normally receive at least 90% of their Sales Proceeds upon Sales Completion.

5B – Deliver Vacant Possession

  • Owners are normally given 3 to 6 months after Legal Completion to deliver Vacant Possession.
  • The remaining Sales Proceeds will be given upon Vacant Possession.
Get In Touch NowOne of our representative will be in touch with you.