March 1, 2012
The laws of collective sale were last amended in 2010 by the Land Titles (Strata) Amendment Act 2010. Some of the salient amendments then include more stringent requirements for sale committee members on disclosure of relevant information and changes to the role of Strata Titles Board (the "STB").
On 2nd March 2011, the Land Titles (Strata) Act (Amendment of First Schedule) Order 2011 (the "Order") came into operation. The Order does not make significant changes to the laws of collective sale but seeks to clarify the ambit of the "permitted time" given to subsidiary proprietors to execute the collective sale agreement through amendments to the First Schedule of the Land Titles (Strata) Act (the "Act").
Subsidiary proprietors (of units with the requisite share values/strata title areas) seeking to apply to the STB under section 84A of the Act for a collective sale order must, in accordance with the First Schedule of the Act, execute a collective sale agreement within the permitted time. The "permitted time" under paragraph 2 of the First Schedule refers to a period starting from the date the first subsidiary proprietor signs the collective sale agreement and ending not more than 12 months after the date the first subsidiary proprietor signs the collective sale agreement.
Separately, a subsidiary proprietor who has signed the collective sale agreement may in the circumstances and conditions stated in paragraphs 6, 7 and 8 of the First Schedule rescind his agreement to be party to the collective sale agreement.
The Order makes the following two clarifications:-
The first subsidiary proprietor who signs the collective sale agreement does not include a subsidiary proprietor who rescinds his agreement to the collective sale within the cooling-off period provided under paragraph 6 of the First Schedule to the Act. This clarifies the commencement date of the "permitted time" in a case where the first signature has been rescinded.
A subsidiary proprietor remains entitled to rescind his agreement to the collective sale agreement so long as it is still within the cooling-off period of 5 days even though the permitted time may have expired. In such a situation, the said subsidiary proprietor cannot be considered as having signed the collective sale agreement within the permitted time. This clarifies the position of a subsidiary proprietor who signs the collective sale agreement just before the expiry and then rescinds his agreement after the collective sale agreement has expired. Such subsidiary proprietor cannot be considered as part of the "majority owners" supporting the collective sale.
In our view, these amendments do not make any substantial changes to the laws of collective sale. They apply as appropriate clarifications to avert any doubt arising in the scenarios envisaged. Unfortunately, the Minster did not amend paragraph 1(a) of the First Schedule of the Act to clarify the meaning of the words "in no case not more than 12 months before the date the application is made". It should be made clear that the "12 months" period here is a period commencing from a collective sale agreement signed by the requisite number of subsidiary proprietors under the relevant section 84A/B/D/E/F/FA. In other words, the application to STB should be made no later than 12 months from the date where at least 80% (or 90% as case may be) of subsidiary proprietors of units by way of share values/strata title areas have signed the collective sale agreement.