Hi Alex
of cause Kiwibank would settle with whatever they can get out of UCOL and chase the balance with the personal guarantees. And of cause there are the houses as an asset. The world won’t end.
The point I was wanting to make here is, that the settlement on settlement day will not happen as suggested by Garth Lucas. That Kiwibank will not do individual discharges of mortgages over each title. (we don’t have a mortgage, we have a commercial construction loan). The titles will not be issued as money arrives (e.g. 12 in the morning). There will be quite some rush in the afternoon at the lawyers! This is a different settlement day and as Stephen Edge suggested in his last email 'A larger law firm will typically have the resources to draw upon to meet the time demands involved with multiple property settlements all occurring on the same day’.
Rainer
I check my emails once a day. Please call me if you need an urgent reply.
Rainer Beneke +64 21 144 7700
www.rainerbeneke.nz
On 2/07/2019, at 10:29 PM, Alex King via Ucol-shareholders ucol-shareholders@list.king.net.nz wrote:
Rainer, I had the same understanding as you in the past, but have changed my mind after talking with Steven Edge. It is true that Kiwibank does have the legal right to hold on to titles until the construction loan is paid in full....
However, I believe if one or two don't settle on the final date, Kiwibank will still release titles to the rest of us. I asked Steven Edge that question specifically at a recent meeting (the first meeting with him onsite IIRC), and he said Kiwibank will gather in all the money it can, then chase us all for the rest.
They would release titles to allow (most of) us to get mortgages, otherwise they would not get any money at all. They would rather have the bulk of money than not. They would not release us from our personal guarantees though, and (I have not checked this but I believe) everyone who does settle and pay full price may still be liable to kiwibank if others don't settle, for the rest of it.
However, if we did have the eventuality of one or two not settling, we would not be in a bad position. As house prices are currently strong, if that continues we (UCOL) will have a very salable house worth considerably more than the remaining bank loan. So it's very likely none of us will end up being delayed or having to make other payments if someone defaults, in fact we may generate a profit (which would be distributed back to shareholders or retained for extra improvements after tax is deducted.)
Thanks, Alex
On 2/07/19 8:19 pm, Rainer Beneke wrote:
Hi Gay and all
Once again, it appears that our understanding of the facts around settlement of UCOL is different. I have doubts that you Gay, and your Lawyer have fully understood our legal agreement with Kiwibank.
Stephen Edge made it very clear at every meeting I have attended (three in person and one at a teleconference) that Kiwibank will not release any title until all of UCOL's loan (approx 7.5 million dollars) has been repaid to the bank.
item 1: individual discharges of mortgages over each title. This is NOT an option! item 5: If 12 payments (e.g.) arrive in the morning, 12 titles could be released in the morning. This is NOT the case!
To make it clear for yet another time, there are 25 settlements on the actual day. 24 individual settlements for sale and purchase between unit holder and UCOL; and 1 settlement between UCOL and Kiwibank over the repayment of the construction loan of 7.5 million dollars. Kiwibank will not release ANY title until paid in full. Most of the 24 unit holders must have paid in their balance to UCOL without having received their title yet, then Kiwibank gets paid, and only after that the 24 x 2 mouse clicks can happen. If on the day less than 7.5 million is received by UCOL, or the bank transfer to Kiwibank doesn’t happen in time, no-one will settle!
Stephen Egde understands our loan agreement well and I will follow his advice to stay with a larger law firm: When settlement time arrives for UCOL there will be a very large amount of legal work needing to be done in a very short period of time. A larger law firm will typically have the resources to draw upon to meet the time demands involved with multiple property settlements all occurring on the same day. To minimise the possibility of problems occurring at settlement time it would be my preference for a larger law firm to handle this work. Regards Stephen Edge
Regards Rainer
I check my emails once a day. Please call me if you need an urgent reply.
Rainer Beneke +64 21 144 7700
www.rainerbeneke.nz http://www.rainerbeneke.nz/
On 28/06/2019, at 5:17 PM, Gay Buckingham <gaybuckingham@tuatara.net.nz mailto:gaybuckingham@tuatara.net.nz> wrote:
I have been asked to share the notes I took from my yesterday’s meeting with Garth Lucas of Lucas & Lucas. (Garth is a senior practitioner in a highly regarded law firm with extensive conveyancing experience.)
Garth’s advice:
1: the panic is not real If one of our lawyers for any reason didn’t turn up with the last $ on 24/11/20 the buildings will still be there The cohousing bank could be asked for individual discharges of mortgages over each title – the cost would be $80 per unit
2: Everything (required for settlement on 24/11/20) can be prepared in advance. As soon as the unit title plan is available (after surveying) all the documents can be prepared. (There is communication between all conveyancers prior to settlement.) No one will have to check documents on 24/11/20
3: We (shareholders) can monitor this in advance and we should do this. Whichever lawyer we choose should be prepared to have external peer review/audit of the preparation
4: We can ask for certifications that everything is done and up to date and that undertakings are all in place – two or even three times
5: On the actual day – the bank deposits are received – the titles are released (about two mouse clicks once the lawyer is logged in) – and the accumulated money is transferred to clear the mortgage – credit the cohousing company. If 12 payments (e.g.) arrive in the morning, 12 titles could be released in the morning.
Last night there was immediate objection to the additional costs associated with peer review/auditing so I emailed him about that this morning. His reply as follows:
If you change to a law firm that operates in teams, then you are paying for team members to meet and plan things, review things, check each other’s work. That’s two people at $450 an hour, and another two at an average of $200 an hour, all meeting for 90 minutes and $2000 spent on that meeting alone plus GST, and because it’s part of what the big firm is doing, and what would be behind the banker’s recommendation that a big firm team is required.
And, yes, everything costs, and if there is legal work there is a charge.
If Helen was asked to work with another person, then, yes there may be some diplomacy required. Obviously Helen would not want someone to come in an nitpick over her work and then report on her on shortcomings to her clients. She would be much more comfortable if you said that you have a lot at stake in preparing for the settlement, and would like a joint report from her and the reviewer, or McMillans etc detailing what is done and how ready you are. Helen will understand that there are a lot of you and some know her better than others.
So, fellow shareholders, I hope that’s helpful.
Gay
Gay Buckingham +64 27 4544012
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