Chandler works his ‘magic’ on Mascot Towers

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NSW Building Commissioner David Chandler has “pulled a very large rabbit out of a very small hat” in wrangling a deal for owners in the blighted Mascot Towers, says one housing expert close to the matter.

The deal, which involves apartment owners selling their defect-ridden apartments to a purchaser syndicate for knockdown prices, will allow the majority to walk away from the building debt-free and, in some cases, with enough capital to start again.

In the next week or so the owners will be asked to formally decide on the proposal and it seems more that the required 75 per cent of them are prepared to accept the rescue package drawn up by Mr Chandler.

Under it, owners of the 131 units and nine commercial lots in the crumbling tower in Sydney’s inner south will have their mortgages and outstanding strata levies paid out and they will then receive a proportion of what their property is now worth.

As part of the scheme mortgage lenders will forgive part of outstanding debts with the shortfall topped up by the NSW government, which has given the support plan the final go-ahead.

“David Chandler has managed to pull a very large rabbit out of a very small hat with this deal,” Shelter NSW chief executive John Engeler, told Sue Williams in Domain in the SMH.

Mr Engeler has been helping the owners navigate the deals and reach an agreement. “I think many people have concerns, but most are relieved that this nightmare could soon be over.”

There was considerable resistance to the initial rescue plan which would have seen some investors, and retired owners who’d paid off their mortgages and kept their levies up to date, end up with nothing. These anomalies now seem to have been ironed out with older, owners, especially, being better off than they would have been otherwise, subject to means testing.

“They improved their initial offer but I’m still surprised they reached a 75 per cent majority,” said one of the owners, business manager Rachel Williams, 52, told Domain.

“There’s a lot of people still missing out. People had to register for different briefings as either a ‘leaver’ or a ‘stayer’. We would love to stay but that’s too risky. You don’t know what will happen. So everyone, really, has been forced into the ‘leaver’ basket even though they might not be too happy about it and it’s financially difficult.”

Residents in the 11-year-old building near the airport were evacuated en masse in June 2019 after giant cracks appeared in the building. Since then, they’ve received $21 million in rental assistance to live elsewhere, in an agreement due to expire by June 30.

Many had been struggling under mounting debts, including repayments on a $15.3 million strata loan to pay for some remediation work, and legal costs in their court battles against developers. The NSW Supreme Court had also ruled against their bid to sell the building as a whole to a third party.

Now with this strategy based on the sale of individual lots, owners who want to sell will receive contracts, together with notification of the sum that will be paid for their units on Friday which will total $30 million across the towers.

These have to be signed and returned to the purchaser syndicate’s lawyers by March 20, with settlement expected to happen by May 3.

It’s impossible to establish who is getting what as all beneficiaries will be required to sign a confidentiality agreement. And  the word, spoken quietly but firmly in the building commission is that this is a one-off and may not be used as a precedent for other blocks, even those with significant defects.

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  • #72920
    Jimmy-T
    Keymaster

      NSW Building Commissioner David Chandler has “pulled a very large rabbit out of a very small hat” in wrangling a deal for owners in the blighted Masco
      [See the full post at: Chandler works his ‘magic’ on Mascot Towers]

      The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
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    • #72942
      TonyC
      Flatchatter

        It’s a beautiful rabbit, but not if you are an investor. Investors are being treated as second-class citizens. I know of one investor who has received a sales contract from the NSW Government to sell for the price of … $158,000. She owes $700,000 on her mortgage, and regrettably, will not be able to accept the offer. Not unnaturally, the mortgagee will not agree to the sale. Nor will the investor, who would be heading for bankruptcy if she did. I hear on the grapevine that owner occupiers with similar apartments are being offered $650,000. If investors were treated the same as owner occupiers, it would indeed be a beautiful rabbit for them.

        #72946
        Jimmy-T
        Keymaster
        Chat-starter

          I know of one investor who has received a sales contract from the NSW Government to sell for the price of … $158,000. She owes $700,000 on her mortgage, and regrettably, will not be able to accept the offer.

          It’s not good but I think it’s better than investors being completely excluded from the deal, as they were originally. Mr Chandler’s view is that property investors – those who buy in purely as an investment – are basically the same as people who buy stocks and shares.  You put your money down with no guarantee that it won’t be going into a bubble that could burst.
          The difference for property investors is that they get negative gearing if things go horribly wrong, as they have in this case.  It’s not great; it’s not even good for some, but it’s the best anyone has come up with so far.  If the property was worth much more in real terms, investors would be falling over themselves to be part of the rescue plan.

          Sounds like some creative accounting might help.

          The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
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