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Agents $500k out of pocket in apartment collapse

Flagstaff Team

High-rising debts… The Sargeson developer has gone into voluntary administration, leaving several Takapuna real estate agents owed $480,000 for work carried out over the past three years.

Several Takapuna real estate agents are owed almost half-a-million dollars, after the landmark Sargeson apartment building on Anzac Street has gone into voluntary administration.

The 92-apartment building is virtually completed, with 69 of the apartments already sold, 38 of those by the five or six Harcourts Cooper & Co agents who are now out of pocket by $480,000, managing director Martin Cooper says.

“The agents have been working on this for the past three years, working at weekends and giving up time with their families, and now they are not being paid, because we are unsecured creditors,” Cooper says.

The arrangement was the agents were paid half the commission on selling the apartments, with the other half due at the end of construction, Cooper says.

Now Auburn Development Ltd, with a sole director, David Oliphant of St Heliers, has gone into voluntary administration to deal with debt.

This is a way of paying as many creditors as possible, while minimising losses.

Cooper blames a combination of difficulty getting finance in New Zealand, along with building taking longer than expected, largely due to delays and hold-ups by Auckland Council. It took the developer several months to get a code of compliance for the building, while the council requested improvements to acoustics and fire-proofing.

This company was forced to go offshore to get funding from an Asian finance company that charged high interest rates.

The delays and hold-ups could have meant penalty fees for late interest payments, Cooper says.

“It all came together to make a disaster.”

Cooper says the purchasers are happy and he had bought an apartment himself in the ‘high-quality’ apartment block.

Cooper believes the Resource Management Act creates problems for developers and the council delays are a big problem.

Harcourts has been the main agency selling the apartments, although there have been others.

Cooper intends to put a caveat on future agreements, so that the agent has a legal right to be paid on settlement. He thinks the industry should change its agreements.

In 2016, the developer wrote to apartment owners and said development finance was virtually impossible to obtain and construction costs escalating, so it needed purchasers to pay more for apartments in order to cover the additional cost of using an offshore finance company (New Zealand Herald, 18 November).

Other apartment complexes were put on hold or abandoned, meaning demand for apartments was high, the letter said.

At press time, Bayleys announced the 23 remaining apartments for sale, saying it was the agent appointed by the voluntary administrator. It would accept offers for all 23 or individual apartments.

Cooper was disappointed the administrator chose a new agency rather than giving the Harcourts agents, who had sold the bulk of the apartments a chance to get at least something for their efforts. Developer Oliphant did not return calls.

This article originally appeared in the August 30 edition of the Rangitoto Observer. Download PDF.