Here is the response from our lawyer to the questions I sent. You don't necessarily need to read it all, but here are some of the key points:
Subject: | RE: Timing of Toiora Cohousing units settlement |
---|---|
Date: | Mon, 30 Nov 2020 01:16:01 +0000 |
From: | Simon Milne <simon@mcmillanco.nz> |
To: | Alex King <alex@king.net.nz> |
CC: | UCOL Directors <ucol-directors@list.king.net.nz> |
Hi Alex,
Thank you for
your email below and plaese see my comments in blue below.
Thanks
Regards
Simon
|
From: Alex King <alex@king.net.nz>
Sent: Monday, 23 November 2020 11:21 AM
To: Simon Milne <simon@mcmillanco.nz>
Cc: UCOL Directors <ucol-directors@list.king.net.nz>
Subject: Timing of Toiora Cohousing units
settlement
Dear Simon,
I am writing to give you an idea of some of our current
thinking regarding the project. I ask a few questions in my
text below. Hopefully they are straightforward, but let us
know if they are complex and a meeting would be a more
efficient?
Our S&P
agreements (clause 23 in further terms) state settlement will
take place on the 10th working day after the later of notice
of title and code of compliance are issued. But this may be
varied by agreement.
Contractually, the builders have until late February to
complete the project, but indications from the build are that
the work will be largely finished prior to Christmas.
Should building be successfully completed then and Code of
Compliance be issued without problems, we would like to be in
a position to settle according to the following programme:
Our project manager assures us that the
documentation required for code compliance is relatively
straightforward.
We plan to have a followup meeting with our planner to refresh
our understanding of our resource consent conditions, in case
anything remains that may hold up subdivision approval. (We
are meeting onsite at midday 25th November).
We also plan to check with the surveyor to check progress on
the subdivision.
Assuming a successful build completion by December 24th and
Code of compliance issued by 3rd February, is this a realistic
timetable to enable issue of title and a 5th of February
settlement?
Yes this
timetable is possibly realistic but it obviously depends
upon timing of a number of different factors as you have
noted above. Therefore at this stage we cannot give any
guarantees around the timeframes you are suggesting. The
reason for having a 10 day settlement timeframe after
issue of the CCC and the Titles is to enable purchasers
through their solicitors time to organise themselves for
settlement which will usually also require obtaining loan
documents from their bank etc. Some purchasers may be able
to settle earlier than the 10 working day timeframe others
may require all of that time. My suggestion is that once
we are in a position to be able to give the 10 working day
notice of settlement we then invite any purchasers via
their solicitors to settle earlier if they are in a
position to do so.
Some of our purchasers' banks have raised the following
points when approached for mortgages:
Yes correct
– as noted above once Titles issue that will enable
purchasers to then provide their bank with a copy of the
new Title and will enable their bank to issue loan
instructions. All banks are aware of this process when it
is a development/subdivision where new titles are to
issue.
Yes we would envisage that this
guarantee could be released on settlement which is when the
Kiwibank loan will be repaid ( from the sale proceeds of all
24 Units).
Please note
that most if not all of the purchasers solicitors should
already be holding a signed copy of the Agreement. We have
had a request from one solicitor for a copy of the signed
Agreement which we have provided and if any other
purchasers solicitors request a copy we can easily provide
that.
The directors and group are keen to allow prospective
purchasers to use their units after building completion but
prior to settlement for the following purposes:
We would require a legal agreement, perhaps a standard
residential tenancy agreement, to set out expectations and
particularly liability for damage. We would want the
purchaser to agree that any damage occurring to the property
as a result of the tenancy would not be a reason not to
settle, and also if the purchaser fails to settle, they would
be liable to fix any such damage.
We don't need this drafted yet, but would instruct you next
year should it be needed.
We would also communicate with Kiwibank who have an interest
in our property before letting it.
I would not
recommend allowing purchasers occupation prior to
settlement being completed as this can be problematic. It
can cause issues around insurance, will likely be an issue
for Kiwibank, could be an issue for contractors who may
need access to complete last minute works in order for the
CCC to issue. If any purchaser was desperately requiring
to move in or store items prior to settlement then yes
this could be dealt with by way of a temporary residential
tenancy but I would not recommend that as an option
available to purchasers. It would be far cleaner if
settlement ( and possession) is given on the settlement
date which is when settlement funds are received.
We require
insurance from the date of building completion, when the
building insurance lapses. Our broker indicates the insurance
company will cover us from that date under the same policy
that the body corporate will have once we move in.
Yes correct and noted.
Assuming the timeline above, what is the likely date of the
deposit of plan under section 17 of the unit titles act, when
the body corporate will come into existence? Is that likely
before or after completion of the build?
The plan
will deposit prior to completion of the build. It will be
a matter of you liaising with the builders and your
insurer as to exactly when your insurance needs to be put
into place and the building insurance lapses.
If the body corporate is not formed before completion of the
build, the company (UCOL) will take up the insurance in the
first instance and transfer it to the body corporate at a
later date.
Yes correct and noted.
Thank you for your consideration.
Yours sincerely,
Alex King,
Director, UCOL