A collective sale, universally called an en bloc, is the sale of every unit and all the common property in a development to a single purchaser. What makes it unusual is that a sufficient majority of owners can carry it through over the objections of the minority, who are then required to sell.
That is a serious power, and the Land Titles (Strata) Act surrounds it with conditions. The conditions are where en bloc attempts succeed or fail.
The consent thresholds
The threshold depends on the age of the development, and it has two limbs that must both be met.
| Age of development | Required consent |
|---|---|
| Less than 10 years | 90% of share values and 90% of total area of all lots |
| 10 years or more | 80% of share values and 80% of total area of all lots |
Two points that decide real cases.
Both limbs must be satisfied. Share value and floor area are different measures, and a development with a mix of unit sizes can clear one and fail the other. Accessory lot area is excluded from the area calculation.
Age is measured from the latest TOP, or, where no temporary occupation permit was issued, from the latest certificate of statutory completion, whichever is later. Not from when the units were sold, and not from when owners moved in.
The sale committee comes first
Before any owner signs the collective sale agreement, a collective sale committee has to be constituted, with members elected by the owners at a general meeting of the management corporation convened in the prescribed way.
The Act prescribes the committee’s composition, constitution and procedure in some detail. This is not a formality. A committee that was not properly constituted, or that did not follow the prescribed procedure, gives objectors a line of attack on everything that follows, after years of work.
Where the application goes
An application for a sale order must be made to a Strata Titles Board in the first instance.
If no objection is filed, the Board must approve the application and order the sale, subject to the statutory grounds for refusal below.
If objections are filed, the Board must mediate. If, at the end of 60 days from the first day set aside for mediation, or when mediation has gone as far as it reasonably can, one or more objections remain, the Board must order a discontinuance. This is a section 84A stop order.
Only then can the matter go to the General Division of the High Court, and the application must be made within 14 days of the stop order.
So objections do not merely delay a collective sale. They move it out of the Board and into court, with the cost and time that implies.
When the court or the Board must refuse
Clearing the threshold is necessary, not sufficient. An order must not be made where the Court or Board is satisfied that:
The transaction is not in good faith, taking into account only three factors:
- the sale price for the lots and common property
- the method of distributing the proceeds of sale
- the relationship of the purchaser to any of the owners
Or the sale and purchase agreement would require an owner who has not agreed in writing to be a party to any arrangement for the development of the property.
The good faith test is where most contested en bloc cases are actually fought, and the statutory list is closed. Arguments outside those three factors, however strongly felt, are not the test.
Financial loss
The statute also defines when an objecting owner is treated as having suffered financial loss, and the definition is narrower than owners expect.
An owner is taken to have incurred financial loss where the proceeds for their lot, after permitted deductions, are less than the price they paid for it.
An owner is not taken to have incurred financial loss merely because their net gain will be smaller than other owners’ gain. That is the argument objectors most often want to run, and the Act closes it expressly.
Objectors’ costs
Where the court awards a sum to objectors, the total for all objectors is paid from the sale proceeds and must not exceed the higher of 0.25% of the proceeds for each lot, or $2,000 for each lot.
That cap is worth knowing on both sides of an objection before deciding how to spend on it.
What owners should actually watch
The apportionment method. How proceeds are divided between units, whether by share value, floor area, valuation or a blend, is one of the three good faith factors and the most common source of genuine grievance. It is agreed at the outset and it is very hard to revisit.
The reserve price and the marketing. Whether the price is defensible, and whether the property was properly exposed to the market, goes to good faith.
The relationship between purchaser and owners. Also an express factor. Any connection needs to be disclosed rather than discovered.
Your own numbers. What you paid, what your outstanding mortgage is, what CPF has to be refunded, and what you will actually receive. An en bloc that looks like a windfall on the headline figure can be much less once the refunds are made.
Your position if it fails. Most en bloc attempts do not complete. Understand what you are committed to and for how long before you sign the collective sale agreement.
Both sides of it
We act on the development side, and for owners and objectors. Our development, planning and land page covers the acquisition and development work, and civil litigation covers contested proceedings.
If you are being asked to sign a collective sale agreement, the time to take advice is before you sign it. The document commits you, the thresholds are calculated on who has signed, and the terms are settled long before anyone reaches the Board.