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How to convince developers to restructure the installments?


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  #1  
Old 03-12-2008, 08:12 AM
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Question How to convince developers to restructure the installments?

Hello there,
I have 2 off-plan properties in Ajman, and the project has not been started yet, and the developer is stuck to payment schedule regardless of current crisis in financial market and recession, which affected a lot of people including myself. I am aware from legal point of view, developer can refer its right to the contract, but actually customers and buyers facing trouble in the market which eventually the consequences could back-fire to the developers. Thus it seems that both sides should reach to certain degree o f understanding, up-dating the contracts, installments, delay and so on, according to current situation. How we can convince developers to put a hold on not-started pojects or re-structuring the payments? Anyone has any idea to share?
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Old 04-12-2008, 04:19 AM
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The only suggestion I have - is if you can get a significant amount of buyers.

1) You can ask nicely. If you represent enough buying power, they may take you seriously. Afterall, the developers that haven't even started construction - shouldn't be needing the 40% and above payments.

2) Consider initiating a discussion on excercising the default option in significant numbers - no developer would want that. For those that are wiring in the money, it'll be easy. For those that have post dated cheques outstanding, they'll need lawyers, and it will take time and more money.

Alternatively, all of you could join together and litigate - again, time consuming - and no guarantees. Even a simple demand letter from a lawyer may urge the developer to consider. There are laws on the books (Ajman escrow, construction start regulations) that are supposed to help you - but those laws themselves don't seem to have an implementation date. I guess it depends on the perspective of a lawyer - and then the perspective of the court.

By the way, gathering buyers will not be that easy. For instance, those that bought 1 year after you, probably have a payment plan that stretches out 1 year more than yours ... and thus won't have the same sense of urgency.

I bought into an off plan, which was widely advertising milestone payment. The contract came very late and when it showed up was simply calendar based. Now walking away.... 35% paid...50% cancellation charge as I am more worried about the developer's flight risk, or equally bad just dragging it on and on.
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Old 04-12-2008, 10:17 PM
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Quote:
Originally Posted by Ajmanprop View Post
The only suggestion I have - is if you can get a significant amount of buyers.

1) You can ask nicely. If you represent enough buying power, they may take you seriously. Afterall, the developers that haven't even started construction - shouldn't be needing the 40% and above payments.

2) Consider initiating a discussion on excercising the default option in significant numbers - no developer would want that. For those that are wiring in the money, it'll be easy. For those that have post dated cheques outstanding, they'll need lawyers, and it will take time and more money.

Alternatively, all of you could join together and litigate - again, time consuming - and no guarantees. Even a simple demand letter from a lawyer may urge the developer to consider. There are laws on the books (Ajman escrow, construction start regulations) that are supposed to help you - but those laws themselves don't seem to have an implementation date. I guess it depends on the perspective of a lawyer - and then the perspective of the court.

By the way, gathering buyers will not be that easy. For instance, those that bought 1 year after you, probably have a payment plan that stretches out 1 year more than yours ... and thus won't have the same sense of urgency.

I bought into an off plan, which was widely advertising milestone payment. The contract came very late and when it showed up was simply calendar based. Now walking away.... 35% paid...50% cancellation charge as I am more worried about the developer's flight risk, or equally bad just dragging it on and on.
Thanks for your helpful post. I am trying to call the broker who bought these for me, and get to learn more about the buyers who share the same feeling with me. I'm not sure if the broker is ready to let go some information about buyers or not.
Otherwise I have to take stand individually which may look weaker but still have free hands to make decision.
If you live in UAE, you may have a better image about the general mentality of people these days. Are they optimist about the near future, or just waiting for worse things that have still to come?
If the market doesn't look to change for better soon, then there is a slim chance for people like me, to stay in roll and developer is not going to cancel the contract, cause there is nobody else to fill the place.
Anyhow, I try to find a lawyer in UAE and see what happens next. ofcourse even if I manage to get 70% of my money back, I'll be very happy.
  #4  
Old 04-12-2008, 11:03 PM
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Green_age:

Great idea. This is a good opportunity for some of the more honest brokers to salvage their reputation and do the right thing - that is if they have a long term mentality. On your part, you may need to think about what's in it for the broker...and find a way to motivate - eg. some fee contigent on a successful outcome. Your broker may have some clout with the developer - esp. if they helped sell a number and may want to see if they can intercede on your behalf. Nothing to loose, worth a try. If you can, a face to face meeting to brainstorm with the broker may be good.

You may want to google your projects - eg. skyscraper city - has a thread on almost every project that has been launched. In other cases, buyers have also launched independent online forums to discuss their projects. Now, getting even some of them together for legal action will be a massive challenge - you usually find eternal optimists, eternal pessimists...and a variety strewn inbetween. Even most that want to litigate will be in denial and won't actually start. If time is of the essence, get started by yourself. You can then ask someone else if they want to join. I am not a lawyer etc. but have not determined that having multiple parties to a case is of any added benefit in the court system other than sharing expenses. I don't know if there is US style class action. Of course, several litigants will make the developer take you more seriously.

I don't live in the UAE. I have no feel for the markets, but can guarantee that unless the regulatory regime becomes transparent and the authorities truly independent arbitrators, experience will be more "luck" based. Today, the developers are seen as the investors. End consumers seen as just that.

This is a system that most developers have gamed - through vapor projects, each one helping to sustain the previous one and also relies on masses of new buyers, walking in. Just like in a down stock market, there are stocks that do well, I am sure there are projects that will do well.

I myself am getting out at a 50% loss... having paid 35% for zero construction. The developer has gamed the system every step of the way, I see now reason why he would change. The process seems to be drawn out. Working against the clock, because each day delayed, means another check cashed by the developer. Each check he cashes, means I loose 50% of that amount too.

My fear for those staying in - for projects that show no sign of construction etc.. is that on a collective basis, the beast is getting too big to tame. Look at the total off plan, where no construction has begun, vs. the GDP.
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Old 06-12-2008, 12:51 AM
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Hi Guys,

I (Inscape Property)represent developers in the UAE and I'm totally on board with restructuring the payment schemes given the current climate. I try and only work with one developer at a time as you wouldn't believe the effort that goes into making sure a professional on going service is provided to customers such as yourself. It's Fortune Park Tower incase you're wondering. (Couldn't help the plug!)

I've encouraged the management company to talk to the master developer and to be honest they have been really responsive. After all they they want sales and if you appeal to their bottom line they'll do pretty much anything.

Right now we have negotiated 20% and then NOTHING until completion when buying floors. How does this help you?

Well, firstly it makes a floor affordable for more people. Obviously you have to sell it before completion, but thet shouldn't be a problem considering how low Ajman prices are right now (450 AED).

Secondly this means that agents who do buy wholesale to sell onto you guys can be more flexible with the payment schemes they offer you. Hopefully they will pass the benefits down to you. That's the idea anyway.

If you buy retail direct from the developer right now it costs 525 AED with a payment scheme of 5% deposit, 10% after the first month, 9 payments of 7% every 3 months and then 22% upon completion. We're trying to push through a scheme of pooling retail purchases so they can effectively be made at wholesale prices, but we are meeting some resistance on this. Construction is due to kick off by April latest so I can understand this to an extent.

If you guys have any other ideas on restructuring retail sales I'd be happy to put them forward when I next meet with the developers at the end of December. Hopefully this will encourage others to follow suit.

Incase you're wondering we are intentionally trying to keep the prices down but I'm not sure how long we can keep them this low as prices in Park View City have already exceeded these prices by quite a margin.

I look forward to hearing you throughts on this.
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Old 16-12-2008, 07:38 PM
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Hi there,
I have managed to contact a group of buyers and we are going to send a cosigned letter, asking developer to restructure the payments and wait untill the market revokes. I have also in contact with a lawyer who works with different parties in property biz. I was told, in first quarter of 2009, serious decisions will be taken to ease the situation for buyers and reassure them.
Lets see what happens and I'll let you know about my share of progress
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Old 05-02-2009, 05:26 PM
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Interesting reading... I need advice too - I have invested in Solitaire, Al Reem Island Abu Dhabi (Damac) - paid 35%, with another 10% due in March. Construction hasn't started yet, as Damac haven't got the land from the master developer. As such I only have the reservation form with Damac and nothing else. The contract has nothing about delays/completion dates etc. Damac refuse a refund

I'm told unofficially 2012 completion but rumours are soming of a further delay! only bright side is my next payment after march is due when construction starts so maybe I can sell before then (assuming things have truned around) - is there anyway anyone can think of how to get out of this ????

Any help would be greatly appreciated.

thx
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Old 06-02-2009, 08:11 PM
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Quote:
Originally Posted by Ajmanprop View Post
The only suggestion I have - is if you can get a significant amount of buyers.

1) You can ask nicely. If you represent enough buying power, they may take you seriously. Afterall, the developers that haven't even started construction - shouldn't be needing the 40% and above payments.

2) Consider initiating a discussion on excercising the default option in significant numbers - no developer would want that. For those that are wiring in the money, it'll be easy. For those that have post dated cheques outstanding, they'll need lawyers, and it will take time and more money.

Alternatively, all of you could join together and litigate - again, time consuming - and no guarantees. Even a simple demand letter from a lawyer may urge the developer to consider. There are laws on the books (Ajman escrow, construction start regulations) that are supposed to help you - but those laws themselves don't seem to have an implementation date. I guess it depends on the perspective of a lawyer - and then the perspective of the court.

By the way, gathering buyers will not be that easy. For instance, those that bought 1 year after you, probably have a payment plan that stretches out 1 year more than yours ... and thus won't have the same sense of urgency.

I bought into an off plan, which was widely advertising milestone payment. The contract came very late and when it showed up was simply calendar based. Now walking away.... 35% paid...50% cancellation charge as I am more worried about the developer's flight risk, or equally bad just dragging it on and on.
Hi Ajmanprop

I also invested in an off plan in Emirate lake towers-Ajman
also worried if project will ever go ahead
You say cancellation penalty would be 50% of what you paid to date ??
or 50% of total unit price ??
I paid 20% and cancellation fee is 30%
can they ask to pay 10% more at cancellation ?
contract is under Ajman law- invalid in UK where I live, in case they would want to persist !
your advice is appreciated, thanks
v
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Old 06-02-2009, 08:19 PM
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Quote:
Originally Posted by Green_age View Post
Hi there,
I have managed to contact a group of buyers and we are going to send a cosigned letter, asking developer to restructure the payments and wait untill the market revokes. I have also in contact with a lawyer who works with different parties in property biz. I was told, in first quarter of 2009, serious decisions will be taken to ease the situation for buyers and reassure them.
Lets see what happens and I'll let you know about my share of progress
Hi Greenage

Is the project you invested in 'Lake Signature 1' in Emirate lake towers- Ajman ?
is where I invested and also looking foe other buyers there
thanks
v
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Old 06-02-2009, 09:17 PM
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Ok people i'm not sure how to start a new thread so i'm just going to ask on this one. i started investing (not sure i'd call it that now though!!!!) a year ago or more bought into five projects with acw holdings all of them were in JV but two were in dubailand anyway had to drop the two in dubai land because i could not pay . but the 3 in JV i have paid all but the last and al through i kept saying why do i have to pay if you haven' started the work and all i got was if you don't you will loose these so after taking loans here i did. now some one has told me that you only have to pay 30% of any project untill they start the project and this a RERA ruling. Is this correct? does anyone now for sure ?

And if you defult on your payments can you expect to get anything back ? we were told no acw ont the two dubai land ones.
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