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Space Macquarie up in the air

By johnboy 11 February 2013 12

The ABC has the confused tale of what awaits the 213 depositors in the ongoing eyesore that used to be the Jamison Hotel:

The secured creditor BankWest has sold the large parcel of land for an undisclosed amount to recover their debt.

Any financial return to unsecured creditors is dependant on the bank debt being repaid in full, and other secured creditors claims being met.

However the majority of people who paid deposits for units off-the-plan may have their funds assigned to the new buyer of the land should the development go ahead – or their money could be returned.

Good luck to them!


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Space Macquarie up in the air
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dungfungus 9:05 pm 11 Feb 13

JC said :

dungfungus said :

So, is the development company in administration or liquidation? If there is any speculation that there won’t be enough left over to pay unsecured creditors automatically means they insolvent.
As you correctly say, a very confused tale.

The original company went tits up, but I thought it was reported recently that the Morris Property Group (my old boss when he owned Mobil Braddon) had brought it with demolition of the old inn to start soon. Indeed went past at lunch time today and there was a small group of ‘workers’

I would have thought any purchase would have included looking after those that had already paid deposits.

More confusion; but deposits are usually held in escrow by a third party (Liquidator) and are refunded following submission of a proof of debt.
BTW I recall that the Finnish Club (reputed to be the club that was the biggest consumer of beer in Australia in it’s heyday) just down the road was auctioned about 20 years ago by a mortgagee in possession. It was apparently purchased by a Chinese syndicate who were planning to convert it to a Chinese club.
It all went up in smoke soon after.
Jamison must have been the hangover capital of Australia when both the club and the Jamo were trading concurrently.

JC 7:19 pm 11 Feb 13

dungfungus said :

So, is the development company in administration or liquidation? If there is any speculation that there won’t be enough left over to pay unsecured creditors automatically means they insolvent.
As you correctly say, a very confused tale.

The original company went tits up, but I thought it was reported recently that the Morris Property Group (my old boss when he owned Mobil Braddon) had brought it with demolition of the old inn to start soon. Indeed went past at lunch time today and there was a small group of ‘workers’

I would have thought any purchase would have included looking after those that had already paid deposits.

cranky 6:54 pm 11 Feb 13

Hopefully some legal eagle will weigh in with an opinion. I would have thought any deposit paid would be deposited into a real estate agents trust account, and NOBODY could touch it until handover of the completed property.

And being charged stamp duty and rates on a hypothetical property is criminal. Again, I would love to see legal opinion on this government theft.

dungfungus 6:25 pm 11 Feb 13

frg1978 said :

As a purchaser of a unit in this development, we have been told since the development went into voluntary administration that our deposits are safe. In January we were advised the contracts were being withdrawn and the deposits returned this month. I hope that is still the case. The block was sold to another developer who is still building units but not to the same plans as Space so the apartment we had purchased will not exist anyway.
The real estate agent who was selling them, and who was therefore holding the deposits, however has advised that these were not put into an interest bearing account and my $25,000 has done nothing for the 2 years they have had it while this whole sorry saga was played out. A little lesson learnt the hard way on buying off the plan. Especially a unit in Canberra where stamp duty on the total amount of the purchase price ($485,000) was due 12 months ago (12 months after exchanging contracts), despite that fact that the development had not even been approved with ACTPLA and so no building work had commenced so the value of the contract was really only worth our portion of the land value which considering there were 322 units would not be much.
There was a court case in 2010 challenging the legality of charging stamp duty on something that does not exist which was successful, however the current advice from The ACT Revenue Office’s website dated 1 December 2010 is that they were appealing the decision and no changes would be made until they outcome of the appeal would be known. A good way for them to keep collecting extra money in the meantime.

This debacle could be the ACT minority Labor government’s version of the Federal Labor minority Green/Independent government’s MRRT namely both governments were expecting the revenue that hasn’t materialised and yet they have already spent it. You can guarantee that ACT Revenue will be knocking on your door for all they can screw you for. Paying stamp duty and rates for something that doesn’t exist is tantamount to paying three times your rates on something that does.
Where have I heard that prediction before?
Whatever the outcome, good luck to you.

frg1978 5:01 pm 11 Feb 13

As a purchaser of a unit in this development, we have been told since the development went into voluntary administration that our deposits are safe. In January we were advised the contracts were being withdrawn and the deposits returned this month. I hope that is still the case. The block was sold to another developer who is still building units but not to the same plans as Space so the apartment we had purchased will not exist anyway.
The real estate agent who was selling them, and who was therefore holding the deposits, however has advised that these were not put into an interest bearing account and my $25,000 has done nothing for the 2 years they have had it while this whole sorry saga was played out. A little lesson learnt the hard way on buying off the plan. Especially a unit in Canberra where stamp duty on the total amount of the purchase price ($485,000) was due 12 months ago (12 months after exchanging contracts), despite that fact that the development had not even been approved with ACTPLA and so no building work had commenced so the value of the contract was really only worth our portion of the land value which considering there were 322 units would not be much.
There was a court case in 2010 challenging the legality of charging stamp duty on something that does not exist which was successful, however the current advice from The ACT Revenue Office’s website dated 1 December 2010 is that they were appealing the decision and no changes would be made until they outcome of the appeal would be known. A good way for them to keep collecting extra money in the meantime.

dungfungus 4:18 pm 11 Feb 13

So, is the development company in administration or liquidation? If there is any speculation that there won’t be enough left over to pay unsecured creditors automatically means they insolvent.
As you correctly say, a very confused tale.

Ben_Dover 3:22 pm 11 Feb 13

Dear bank, please lend me $$$$ Millions to build apartments in Jammo. Apartments in Canberra are in such short supply at the moment they will sell like hot cakes.

Honest.

gazket 3:09 pm 11 Feb 13

two words here” may and could” sounds like the ACC drugs in sport shame.

dtc 2:47 pm 11 Feb 13

What usually happens is:

– developer borrows to buy land (secured by the land)
– developer markets pre sales
– when sufficient pre sales are in place, bank will lend money to fund construction

What can happen is that pre sales are so slow that developer cannot fund the initial loan (or loans it also has on other developments). I would have thought 213 pre sales from a total of 332 units was probably enough to start construction, so possibly the losses were from other projects

shirty_bear 2:12 pm 11 Feb 13

Huh … had no idea. Goes a long way towards explaining the constant reports we hear of shoddy build quality and crappy remediation in unit blocks … they’ve already got your $$ so why would they put in any more than absolute bare minimum effort?

Grrrr 11:59 am 11 Feb 13

Not that brave – that’s how the majority of new apartments are purchased, seeing as developers don’t start building until they’ve sold the majority of apartments in the block.

shirty_bear 11:35 am 11 Feb 13

How brave do you have to be to fat up $$ before they’ve even commenced building, much less looking like finishing?

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