I've sent this out already, but this is the current iteration of the BC rules Covenant has been removed. 5% on gain on sail contribution has been removed Changes all highlighted in yellow, with removed sections in "strikethrough" format (this does not always show up in the index, so look in the body of the document) I've included changes suggested by Simon, the lawyer. The remaining items, I don't feel should be a problem for the banks - i.e. I don't think we need to cut right back to a basic template BC.
But let me know if any item stands out as potentially problematic for the banks.
Regards Min
On 9/01/2021 5:18 pm, Susan Jack wrote:
Hi all
This message came in from Stephen Edge (Kiwibank) earlier in the week
- please note that as Stephen says, he has not made any final
decisions but this is his present thinking. I imagine this topic will already be on the agenda.
Thanks,
Susan
Begin forwarded message:
*From: *Stephen Edge <Stephen.Edge@kiwibank.co.nz mailto:Stephen.Edge@kiwibank.co.nz> *Subject: **Personal Financing* *Date: *7 January 2021 at 11:36:20 AM NZDT *To: *Maria Callau <maria@sur-architecture.com mailto:maria@sur-architecture.com>, Susan Jack <susanjjack@gmail.com mailto:susanjjack@gmail.com>, Alex King <alex@king.net.nz mailto:alex@king.net.nz>, "Catherine Spencer (cmspencer.nz@zoho.com mailto:cmspencer.nz@zoho.com)" <cmspencer.nz@zoho.com mailto:cmspencer.nz@zoho.com>
Hi all,
HNY!
I haven’t made any final decisions yet but I thought I would give you a brief update on my present thinking which I have bullet pointed below:
- The Covenant and the unique Body Corporate Rules are still proving problematic.
- The idea of a running a pilot model inside Business Banking is not finding the necessary support I need.
- There’s no issue of course if people don’t need to borrow money against their units but when they do lenders can’t ignore the Covenant and the BC rules. Because these are different the bank(s) are treating them as being out of policy.
- Changing banking policy is not easy to achieve and I think this will take a lot of time, which of course we don’t have. All the major banks seem to have the same stance.
- There’s no Covenant registered against titles at Earthsong although they do have unique BC rules.
- Present thinking is the Covenant needs to be removed and the BC rules need to be simplified to standard wording only.
- Earthsong use clauses in Sale & Purchase Agreements to obligate present owners and future unit purchasers to sign a co-housing agreement. This seems to be an effective way to ensure units are sold to likeminded people but keeps the title clear of covenants and could keep the BC rules simple.
- The co-housing agreement then becomes the primary document that the community uses. The title and BC Rules are kept “simple”.
- The clause used in the Sale & Purchase Agreement could still trip people up when trying to raise mortgage finance because it will refer to the co-housing agreement but if the title and BC Rules are standard I believe this is a much simpler for lenders to deal with.
The above will give you a snap shot of what’s in my head at present but to be honest I’m still thinking it all through.
I will be back in the office from next Monday by which time I should have finalised my thoughts.
Cheers, Stephen
*Stephen Edge *
Senior Manager Property Finance
*DDI *07 571 3846 | *M *027 8395 057 | *F *07 571 3845
*www.kiwibank.co.nz http://www.kiwibank.co.nz/ *
Kiwibank Limited, Level 1, 41 The Strand, P O Box 13333, Tauranga 3110
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