Some further background information regarding the covenant for those who want to consider it, before our meeting on Monday.  This information is to help the legally minded among us to understand what documents need to be changed to remove (or modify) the covenant, should we want or need to do that, to make it easier to get mortgages.  Not everyone needs to read this if you don't want to.

I also did a quick review of the Body Corporate rules, and I didn't see any reference to the covenant there, i.e. nothing to be changed.   We may still consider modifying the BC rules to make them more "standard" with the expectation that may be more palatable to the banks.  That should be straightforward because we recently adopted them at a group meeting, so we could just adopt a new modified set.

By way of background, the covenant was adopted because we wanted to ensure we continue to be a cohousing community into the future.  Also our resource consent requires "the residents shall be actively engaged in a cohousing scheme" as you can see below. The key parts of the covenant in my view are the cohousing kaupapa and the 5% capital gain payment.  So if we want to remove the covenant to suit the banks, we probably want to consider how else we can meet those objectives.

The practical  process involved in modifying these agreements would be the legal drafting, then getting everyone to sign the new documents again.  e.g. on the shareholders agreement, there are 4 directors signatures for the company, and 34 signatures for the 22 other parties. This involves some organizing, and more so for people not able to attend to sign (e.g. out of Dunedin)  To make that easier we might be able to delay the signing of the modified documents until settlement day, or there might be other ways of doing it which we will discuss with the lawyer before the meeting tomorrow.

From our resource consent

General conditions:

2. The residents shall be actively engaged in a cohousing scheme as defined by the document, 'Creating Cohousing: Building Sustainable Communities,' by Kathryn McCamant and Charles Durrett, 2011.  The Dunedin City Council considers thta the primary principles of a cohousing development include:

* Participatory process in terms of planning, decisions, etc. * Designs which facilitate a mixed-aged, inwardly supportive but outwardly focussed community. * Extensive common facilities which are available at all times for use of residents. * Complete resident management. * Non-hierarchical structure.

Common House

27. The common house shall be used by the residents and their guests for meals and gatherings, but shall not be made available for the use of outside parties for regular or one-off activities, whether a financial or any form of trade agreement is involved in the transaction for its use or not i.e. the common house is not to be hired out for the purpose of raising finances for the cohousing group. This space shall be ancillary to the cohousing style of living.

28. The common house shall have no more than two guest rooms and hte use of these shall be confined to guests of the residents. The maximum length of stay of any one guest or party of guests shall be two weeks or the guest rooms and common house will be considered a residence and will require additional resource consent.  If more than five paying guests in total are accommodated within the two guest rooms on any occasion, this will be a breach of this resource consent.  The activity will be considered a commercial residential activity and will require an application for an additional resource consent.

From our Covenant

See the attached document. The covenant covers (summarized):

* 1.1 The Kaupapa (principles) and Group Decision Making Process (communication guidelines and coloured card process) * 1.2 Payment of 5% of capital gain to the commons development fund on sale of the unit. * 1.3 Payment of Body Corporate fees. * 1.4 & 1.5 Making sure the covenant is included in future resales.

From our Sale and Purchase agreement

Further terms of sale

19 Settlement Preconditions

19.1 ... as a precondition of settlement:

(b) Enter into a Deed of Covenant to be bound by the principles of the HSC Agreement such Deed of Covenant to be in the form attached as Schedule 10, and arrange for delivery of an original signed copy to the Vendor.

From our High Street Cohousing Shareholders' agreement

13. Co-Housing Covenant

13.1 The agreement for Sale and Purchase shall require all Unit Purchasers to enter into a Cohousing Deed of Covenant which will be registered on each Unit Title.  The Covenant requires the Unit Purchaser to comply with the provisions of this Agreement.

13.2 Unit purchasers, excluding local authorities, who are not yet parties to this Agreement will enter into this Agreement on or before entering into an Agreement for Sale and Purchase.

18 Sale of Units

Principle

It is intended that all uits in the Project will be sold by the Company as soon as practicable with settlement immediately following completion and the issue of separate unit titles which each have a Cohousing Covenant.

28 Amendment

28.1 This Agreement cannot be altered except in writing as approved through the Group Decision Making Process signed by the parties or their authorised representatives.

On 19/12/20 11:07 pm, Anne Thomson wrote:

Hi all,

The directors, Maria and Rainer had a conference call with Stephen Edge yesterday to clarify the possible next steps to make it possible for UCOL shareholders to get mortgages to settle their unit purchases.

Attached are notes of that meeting.

You are invited to 25 Pacific St on Monday 21 December at 7,30pm, particularly if you are in this position personally, to discuss what has been happening, to share the information people have gathered from their various sources, particularly with banks, and to think about how we work through this. Earlier on Monday, at 2pm,there will be a meeting with Simon Milne, from McMillan & Co

There will not be any formal decisions made on Monday night - for that we need a full shareholders meeting with adequate notice, etc.

I will set up Zoom for those who cannot be present but would be able to Zoom in.

Let me know if you will be coming in person, or if you want to Zoom. Anne

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