Thanks alex. Yes two things going on here. the waiting list and the process for selling a unit after all units have sale and purchase agreements in place. Which effectively is a wee while back.
People can read what alex is saying but a couple of points. One is that none of us knows what tomorrow brings and, as alex has pointed out, genuinely interested people who signed up for units because they wanted to be part of cohousing, may wake up tomorrow and find cohousing for them is no longer an option. And over a two year build someone is bound to have a life changing event.
Secondly, last spreadsheet I looked at our original money was still against M2 but our share of the deposit for H2 was down as a loan from wilson. We left the money there but it wasn’t intended as a loan, it was going to go towards M2. So no interest for us on the $60k thanks.
Sometime we do need to discuss the waiting list, maybe when we have nothing else to talk about? And selling units before settlement will happen and we will need to work out then how to handle it. it should work fine with no involvement from ucol. Regds roz
From: Ucol-shareholders <ucol-shareholders-bounces@list.king.net.nz> On Behalf Of Alex King via Ucol-shareholders
Sent: Monday, 17 June 2019 1:41 p.m.
To: ucol-shareholders@list.king.net.nz
Subject: [Ucol-shareholders] Selling houses and waiting list/ Outside loans
Roz: Is it still OK to charge people $5000 for the waiting list? My opinion is yes, as long as we are clear with people about the nature of the waiting list, that there is little chance a unit will come available.
Min: I would think 1. as you say we could make arrangements for a subsequent buyer to be included in the group. 2. A subsequent buyer would not impact UCOL, the bank or the build at all. Stephen Edge told us he prefers a subsequent agreement rather than the process we are going through now of re-doing the UCOL agreement.
Marianne: It is possible to on-sell our units now, without the approval of UCOL. Whether that is bypassing the legal agreements or appropriate is a matter of opinion and judgment. We talked about people making a quick profit and included the 5% capital gain rule to cover that.
Whether taking the quick buck is appropriate depends on our reasons for joining in the first place. For most of us it's because we want to be in cohousing not to make money. So the possibility of making money is not going to cause us to sell up now. After all most people don't sell their houses whenever the market goes up and there is a potential for a profit, after all we need somewhere to live.
Rainer: 26. ASSIGNMENT... A subsequent sale would not be an assignment of the agreement, hence UCOL's consent is not required.
One thing that concerns me is that people still don't appreciate that any of us could decide to sell up now, and it doesn't need the approval of UCOL nor to sell to someone on the waiting list.
UCOL and the buyers are in the incredibly fortunate position of having a buoyant Dunedin market. Prices have risen 13% in the last year (from https://www.qv.co.nz/property-trends/residential-house-values, March 2018 - March 2019). So a house you signed to buy at $350,000 could now be worth $395,500. That is a good part of the reason we have buyers queuing up to buy the remaining units, we are now potentially selling them at below market rates.
If something were to happen that required us to sell (death, change in family circumstances, illness, decision to make a quick buck), we (or our estate) would have at least 3 options:
1. Sell through the UCOL/waiting list process, which would take maybe 2 months and your money will be refunded in full. Advantage: you are free of any further responsibilities and obligations to UCOL/Kiwibank
2. Sell now, with a settlement date when the build completes. You would sign a contract with a buyer who would pay you a deposit and the balance on settlement. You remain the shareholder, remain in the UCOL agreement, leave your loans with the company and remain liable to Kiwibank for the bank guarantee. You might structure the sale and purchase agreement so the buyer takes on some risk of price escalation. Legal work required is between you and the buyer and does not involve UCOL. Advantage: In return for the hassle and risk involved with staying involved, you stand to make a reasonable gain (less 5% to UCOL on the capital gain.)
3. Sell once the units are finished or nearly finished. Same as above except you don't get a deposit in the mean time and are at the mercy of the market for that time... If the market were to rise again (likely) you could make an even greater gain (less the 5%.)
Now if your circumstances changed and you needed to sell, what would you do? You would likely need the assistance of a lawyer, and any lawyer who did not point out the true value of your property would be a poor one. I don't see much of a reason to sell through the UCOL process. UCOL is actually better off if you sell privately since the extra cost of the unit is borne by the purchaser and the 5% goes to UCOL. And UCOL avoids the extra legal and bank hassle. The only reason for using the UCOL process that I can see, (given we can work out a process for the buyer to participate in group meetings,) is if you want to be free of commitments to UCOL/Kiwibank before the build is complete.
All this is to say, it is unlikely that any further units will be sold through the UCOL/waiting list process unless the Dunedin market falls back to below what it was when we signed up.
Therefore we need to be upfront with people on the waiting list about this.
Regarding outside loans.... I think being uncomfortable with holding on to outside people's money at no interest, we should consider budgeting 5% interest for those loans. Primarily Nancy, but also the Upton family trust. The interest payment would be made after settlement when the company is being wound up, subject to funds available. The money would come from unspent contingency.
Thanks,
Alex
On 16/06/19 10:17 am, Rainer Beneke wrote: