Navigating Collective Sales and Litigation in Singapore: The Importance of Property Valuation

The collective sale is indeed uniquely Singaporean, as it cannot be found in other jurisdictions in the world. In fact, the Singapore Government has a specific piece of legislation in the Land Titles (Strata) Act governing the process of collective sale and presenting opportunities for urban renewal, gentrification and land banking. Developers also benefit from these sales as they can expand their land banks beyond the Government Land Sale (GLS) programme. 

While beneficial, the collective sale process is intricate and involves multiple stakeholders from property owners to developers, as well as legal and financial challenges. Valuation plays a crucial role in this process, from determining property value to aiding in legal disputes. Here’s a closer look at how valuation fits into collective sales and litigation resolution. 

Understanding the Collective Sale Process

The typical collective sale process involves the concerted effort of property owners within a strata-titled development to sell their properties as a collective entity. Key steps include:

1.Formation of a Collective Sales Committee (CSC): Property owners appoint a CSC to manage the collective sale, including engaging valuers, solicitors, and marketing agents.

2.Appointment of a Valuer: One of the initial and critical steps in a collective sale is the appointment of a qualified valuer. The valuer assesses the market value of the development, which will help determine baseline for the sale price. 

3.Marketing and Tender Process: The CSC, with guidance from the appointed marketing agent and solicitor, conducts a marketing campaign to attract potential buyers. A reserve price is established, and tenders are invited from interested parties.

4.Approval by Owners: Collective sales require the consent of the majority of property owners to proceed. For older developments - 10 years or more, at least 80% of owners (by share value and strata area) must agree, while newer developments require 90% consent.

The Vital Role of Valuation in Collective Sales

Valuation is instrumental in the collective sale process, as it ensures a fair and accurate market value for properties involved. The valuer’s role includes:

1.Objective Property Valuation: The valuer provides an independent and objective assessment of the property's market value as a redevelopment site. This assessment is crucial as it sets the vital reference point for the collective sale, and also ensures that all stakeholders are working with a clear understanding of the property’s potential.

2.Expertise in Market Trends: Valuers contribute by staying informed on the latest market knowledge and trends such as town planning regulations, construction costs, and real estate finance, statutory tax regime developments and more. Their expertise ensures that valuations are reflective of current market conditions.

3.Advisory Services: In addition, valuers may provide advisory services to help with apportionment of the sale proceeds, offering an independent view on whether the distribution among property owners is fair.

The Valuer's Role in Legal Disputes

Sometimes, collective sales lead to disagreements, especially from minority property owners who may not agree with the sale. When disputes result in legal action, valuers can be called upon to provide expert testimony. Their impartial and objective analysis helps the courts understand complex valuation issues and ensures that the final judgment is based on accurate financial data.

Valuers also play a role in analysing complex scenarios, providing evidence that can clarify or resolve contentious aspects of the sale.

Ensuring Fairness in the Process

At the heart of the collective sale process is a need for fairness and transparency. Valuation is not just about determining a sale price, but about ensuring that all parties have access to an objective assessment. Whether facilitating a collective sale or assisting in legal disputes, valuers contribute by offering impartiality and expertise, essential for a smooth and fair transaction.

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