After a developer went bankrupt, home buyers who have been left hanging will get priority claims to their incomplete homes before other unsecured creditors like contractors.
The claims of buyers of the incomplete Sycamore Tree condominium will have higher priority than other unsecured creditors, according to the ruling of the High Court. The unsecured editors include contractors who are owed money by the Astoria Development, the project’s developer. Another stalled condo development known as the 70-unit Laurel Tree project in Hillview Terrace is a project of one other developer that is linked to Astoria Development.
The existing statutory provisions such as the stipulations in the Housing and Development Act are clearly demarcated by the “precedent setting case”. A lawyer representing the majority of Sycamore Tree’s purchasers, John Sze remarked that the statutory the ownership of equitable property rights by the purchasers of uncompleted properties.
“We’ve never really had a case where we are pitting purchasers directly against other unsecured creditors,” Mr Sze of Joseph Tan Jude Benny law firm commented.
Judicial Commissioner Mavis Chionh stated in a chamber hearing last month that the claims of purchasers rank higher than the claims of general unsecured creditors. Represented by Lee Eng Beng and Chow Jie Ying from the law firm Rajah and Tann, Judicial Commissioner Mavis Chionh allowed an application by Astoria’s managers and receivers to finish the project and pass the units to their owners under certain conditions, Mr Sze remarked.
The Sycamore Tree project, a mixed-use development of 17 shop units and 96 residential units was taken over by KPMG Services, with receivers appointed by the project’s paramount mortgagee, United Overseas Bank (UOB).
A winding-up application was filed by Jay Machinery, a firm who makes and rents construction equipment in August 2019 against Astoria. Astoria owed the company S$1.3 million.
Besides Jay Machinery, Astoria also owed other related companies and de facto contactor G1 Construction several millions.
Under the insolvency law, the firm’s assets could be sold by the appointed liquidator and all the unsecured creditors could be paid equally, including home buyers, according to the proportion of debts owed.
The reason for the application was to ensure buyers receive the units once the development can be constructed to completion.
Mr Sze pointed out that the little money left in the development’s project account is another complicating situation: “If all the project monies were deemed sufficient to complete the project, the contractors or suppliers would not need to worry about being paid.”
The Straits Times understands that Sycamore Tree and Laurel Tree are still under investigation for regulatory breaches by Controller of Housing.
UOB stated in 2019 that it is willing to cover the additional expenses expected to be incurred from the project’s completion. However, buyers must agree to not hold the delay against the developers by demanding compensation against their remaining scheduled development payments.
Worried buyers who have been waiting for their units for more than three years could now breathe a sigh of relief due to the application approval. Temporary occupation permit were supposed to have been obtained by Sycamore Tree and Laurel Tree by December 2016.
The buyers are now sorting out the revised details with the receivers, a Sycamore Tree buyer Constance Lim, 49, commented.
The current worry is that a consensus cannot be reached on the purchase agreement and revised sales between buyers and receivers, she added.