Battle over failed sales in Mermaid Beach building
A STOUSH has broken out between the developer of a luxury Mermaid Beach apartment complex and buyers over contracts and deposits.
Sydney residents Simon Nakhla and Amir Brikha signed contracts last year for units in the Neo building in Mermaid Beach with an agreed purchase price of $590,000 and $450,000 respectively.
They claim the building was incomplete and finishes were below standard at the time settlement was called in January, which they said had led to valuations lower than the purchase price. As a result, both men claim they were unable to settle on time, had their contracts cancelled and lost deposits of $59,000 and $22,500.
However, Cru Collective, which developed the building through the Peerless Ave Unit Trust, rejected the accusations and said the building was complete at the time of settlement with all finishes in accordance with the contracts.
"We cannot comment on valuations obtained by individual buyers," Cru Collective director Chris Bolger said.
"However, we note that 90 per cent of buyers settled. Without knowing details, we assume that tightening lender requirements and external market conditions may have impacted upon some buyers' ability to borrow funds for settlement."
Mr Nakhla and Mr Brikha are part of a buyers' group that purchased 19 out of 32 apartments in the Neo project. The group is led by real estate author and consultant Wade Burns.
He said the group wants the cancelled contracts reinstated to allow both men to settle. Mr Burns says they are prepared to hire a mediator in an attempt to solve unresolved issues.
Buyers who own 13 units in Neo have signed a petition in support of the two men.
Mr Nakhla, who signed a contract in March last year for a two-bedroom, two-bathroom unit on the fourth level at $590,000, said it was his dream to move to the Gold Coast and set up his cleaning business on the Glitter Strip.
He said the failure to purchase the Neo unit has left him devastated.
"I feel gutted, embarrassed to be honest," he said.
"I blame the developer for the low valuation, they called settlement too early. That was proved by the difference in valuations. The first one came in at $520,000 and we did another one month ago that was $565,000."
Mr Nakhla said after settlement was called on January 17, he visited the building and said he found it far from complete. He claims the lift was not working, hoardings were up around the building, landscaping was not finished, and the finishes were not what he signed up for.
Mr Nakhla said the valuation came back "crazy low" at $520,000 and he was forced to scramble to come up with the difference. The bank would only lend 90 per cent loan-to-value ratio.
He said the contract was cancelled before he could settle. He said he is still paying back $2000 every week on the money he borrowed for the $59,000 deposit bond.
Mr Brikha, who works as a project engineer, bought a unit in Neo as an investment property.
He said he struggled to obtain finance after the valuation came in $60,000 below purchase price. He too blames the valuation on settlement being called too early.
"That was the feedback I got from my broker who talked to the valuer. I was on a tight time frame so my broker secured me a loan at 7 per cent interest."
However, Mr Brikha claims after securing an initial extension from Cru the contract was cancelled.
"The biggest shock was after wasting my time getting everything ready for funding and finding out the contract had already been canned."
Mr Bolger said all buyers who failed to settle were given multiple extensions.
"The buyers whose deposits were forfeited failed to comply with their contractual obligations despite us working with them over a number of weeks, in some cases months, to assist them to settle," he said.
The Neo brawl follows the Bulletin reporting last month concerns from real estate veteran Chris Litfin that conservative valuers in the industry generally were damaging the market by lowballing apartment prices.
Mr Litfin said valuations were coming in up to $60,000 below purchases prices in some cases.