Laragan customers lose their deposits

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Brendan Burgess

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95 people who had paid €20,000 to Laragan have lost their deposits according to an article in today's Irish Times.

But they will be released from their contracts to buy.

They really are lucky but they are up in arms about losing their deposits and apparently, as creditors, will vote against the restructuring proposals.

What do they want? That someone rescues the company and forces them to complete the purchases at prices around 40% (?) above the current market prices?

Brendan
 
G

Guest116

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Yeah, maybe some of them do. Some may prefer to buy and in the longterm hope the prices come back up rather than loosing 15-20k of a deposit.
 

DrMoriarty

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IIRC, those Leopardstown units were selling at around the €550K mark two years ago(?)
A €15K~€20K loss is nothing compared to the negative equity the buyers would face if the contracts were enforced.

More from the SBP.
 

Howitzer

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Is the issue not that the HomeBond guarantee expires after 2 years, and in effect was worthless given that the original completion date had a 30 month lead in?

I agree they are lucky as far as the market is concerned, but forget about the market rising or falling - as we are often reminded on this site - what are the rights of buyers when the developer goes bust? What is the value of the HomeBond guarantee? Should the funds be released to the developer atall or held in escrow until completion?

Not everything should be a lottery predicated upon how the market performs. In a functioning market checks and guanantee are put in place to protect consumers. Where is the consumer protection in the Irish housing market?
 

jack2009

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I appreciate the fact/opinion that if the apartments were to be bought at their original price that it would create negative equity. However, many people just dont have another 15k to 20k sitting in their back pocket and therefore cannot get onto the property market now even if the prices have reduced!!!

Why is the company even in Examinership, is it to avoid any investigation into the actions of the directors who allowed this to happen?
 

sadie

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Why does this process differ from buying a house already built?
I thought your 10% deposit was held by the seller's solicitor at contract signing stage, and therefore not the property of the seller, until the entire transaction is completed.
Why is this different when buying property off plans, why does the deposit become the property of the seller straightaway, and not held by a solicitor?
 

andycole

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Brendan -

As had been pointed out in one of the following posts - one big issue is to do with the Homebond guarantee - or lack of now. These contracts had completion periods ranging in numbers - 18 months - 24 months - and in my case - 30 months.

I am one of those buyers.

I am surprised about the Homebond expiration period of 24 months from date of purchase.

But why was a Homebond guarantee given to me when my contract had a 30 month completion period? I hope to get a clear answer from my own solictor. I will add to this post any feedback that I receive.

There is a startling lack of legal regulation for people who buy off the plans - first time buyers like myself saved for about 1 year for that €15,000. I have been offered €150 refund through the Scheme of Arrangement which is put forward by the Examiner, Mr. Paul McCann of Grant Thornton.

The fact that the property market rises or falls is only a distraction - the real issue is the conduct of the builder Alan Hanly and his subsidiary Laragan Developments Ltd.

At the creditors meeting yesterday - there were some people who were buying a home - not a investment property. They want to live in Milners Square because of its location, modern design, ease of living due to lack of stairs within their apartments, landscaped gardens etc.. - for some they have been living in and around Santry for their whole lives. And why are they wrong to insist on trying to hold Alan Hanly to their contracts which he signed? Its a valid contract! They have bought a home from Alan Hanly. Why should he be able to walk away from this contract, to be able to breach a valid contract and also to have €14,850 Euro in his back pocket?

And then to be able to call in an examiner - a process through which his company, Laragan Developments Ltd may be able to write off large debts if this scheme is approved by the High Court - and at some point in the near future to continue building at the Milners Square Complex and to be able to put them back onto the market - even though most of this property has already been sold.

A lot of people have had to continue to rent throughout this period as well - and will have to continue to do so for the foreseeable future. Some people needed a wheelchair accessible bathroom and home as well - and therefore they bought in Milners Square.

These are just some of the issues that have arisen with the Milners Square Development - don't just focus on the headline grabbing stuff - property bubbles, negative equity etc..These issues mostly only affect people who are selling homes, people who are involved in property investment.
 

Brendan Burgess

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They want to live in Milners Square because of its location, modern design, etc
Milners Square will get built at some stage and you and the others will be able to buy the houses on the market then at 40% less than you had already legally contracted to buy them.

If you have a contract to buy something at €500k and you can exit this contract for €20,000 and buy the same product for €300k, you are €180k better off. This is true whether it was a proposed investment or a proposed home.

There are many posts on Askaboutmoney where people are contractually obliged to buy a home and the lender is now refusing them the mortgage as the house is worth a lot less than the mortgage. The builder is now legally pursuing them.

You are extremely lucky that you are getting out of this deal. Be careful about what you wish for. The examiner might well change heart and insist that you complete the contract.

Brendan
 

Howitzer

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The fact that prices have fallen since has absolutely nothing to do with this. It's a consumer rights issue. Developers go bust all the time, it just so happens that in this case prices have fallen in the intervening period - what if they'd risen?.

Telling the buyer that they're lucky - what's that got to do with consumer protection? The idea that someone signs a half million euro contract and has to rely on luck for delivery of that contract, what kind of cowboy country is this?

Are you seriuously telling me that as a former member of the FR Consumer Panel that that is good enough?
 

andycole

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Hi Brendan - I accept your points about the purchase prices probably going to be 40% cheaper. But the fact that Homebond expires after 24 months of date of purchase - and still Laragan offers contracts with 30 months completion periods that states Homebond protection is something that is wrong.

Sure he could only do something like this because of lack of legal protection, or an existing legal framework based around consumer rights. I think that these developers are seriously concerned about any legal court case that will be heard against them. They are afraid of any legal precedence being established.
 

foxylady

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95 people who had paid €20,000 to Laragan have lost their deposits according to an article in today's Irish Times.

But they will be released from their contracts to buy.

They really are lucky but they are up in arms about losing their deposits and apparently, as creditors, will vote against the restructuring proposals.

What do they want? That someone rescues the company and forces them to complete the purchases at prices around 40% (?) above the current market prices?

Brendan
Brendan

I am gobsmacked as to how you can think these people lucky to be screwed out of 15k( I myself am one of them). I also wonder would you think the same if it happened to you , people have also lost all the time they ahve been waiting around on this, and its attitudes like yours that allows people like this get away this behaviour. :mad:
 

foxylady

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You are extremely lucky that you are getting out of this deal. Be careful about what you wish for. The examiner might well change heart and insist that you complete the contract.

Brendan[/quote]

These people would not be able to hold anyone to these contracts as they have been blatantly breached by exceeding times by 18 months in some cases
 

jack2009

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Brendan, I appreciate your view that perhaps this is a lucky escape for the depositors of Laragan.

However, I too am more interested in the system that has left these people in a very awkward position. The only saving grace they possibly have is that the markets are declining but what position will the markets be in 6 months or 6 years time? Some of these people will possibly still be saving for the deposit of their first home!!!

The negative equity of an investment/asset means very little if you are not looking to dispose of it in the near future.

I dont suppose anyone has a copy of the scheme proposed by Mr Paul McCann of Grant Thornton!
 

andycole

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Jack -

I do not think it's legal to put the information contained within the Scheme of Arrangement onto a website / bulletin board system like this one.
It was marked confidential when addressed to the creditors.
Perhaps its better to wait until the High Court makes a judgement on this Scheme of Arrangement in 7 days time before anyone starts putting this information onto a public website - or also emailing this information to people who are not creditors.

Please for any creditor who is reading this post - please do not email or put any information that is contained in the Scheme of Arrangement into the public domain - or email somebody / anybody. Emails and their content is not secure.
 

foxylady

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Jack -

I do not think it's legal to put the information contained within the Scheme of Arrangement onto a website / bulletin board system like this one.
It was marked confidential when addressed to the creditors.
Perhaps its better to wait until the High Court makes a judgement on this Scheme of Arrangement in 7 days time before anyone starts putting this information onto a public website - or also emailing this information to people who are not creditors.

Please for any creditor who is reading this post - please do not email or put any information that is contained in the Scheme of Arrangement into the public domain - or email somebody / anybody. Emails and their content is not secure.
I dont remember if Mine was marked private and confidential but i do know that this was quoted in the times today and it was part of the agreement

" He noted the 95 individuals or couples who had put deposits on the properties would “suffer an immediate impairment”, but they would also receive a “substantial benefit” as they would be released from their contracts and could acquire alternative properties at a “substantial discount” in the current market."
 

andycole

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Hi foxylady -

this sounds like a quote that a journalist took when perhaps interviewing somebody. but still who knows who is sending emails/requests asking for people for a copy of the scheme. i got one myself. a request has been made here. don't email anything.




I dont remember if Mine was marked private and confidential but i do know that this was quoted in the times today and it was part of the agreement

" He noted the 95 individuals or couples who had put deposits on the properties would “suffer an immediate impairment”, but they would also receive a “substantial benefit” as they would be released from their contracts and could acquire alternative properties at a “substantial discount” in the current market."
 

foxylady

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Jack -

I do not think it's legal to put the information contained within the Scheme of Arrangement onto a website / bulletin board system like this one.
It was marked confidential when addressed to the creditors.
Perhaps its better to wait until the High Court makes a judgement on this Scheme of Arrangement in 7 days time before anyone starts putting this information onto a public website - or also emailing this information to people who are not creditors.

Please for any creditor who is reading this post - please do not email or put any information that is contained in the Scheme of Arrangement into the public domain - or email somebody / anybody. Emails and their content is not secure.
Andy

This might be of interest

You might be interested in this http://www.irishtimes.com/newspaper/breaking/2009/0624/breaking57_pf.html
 

samanthajane

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foxylady i thought you would be happy about this as you have been fighting for a long time to get out of the contract.

I can understand your fustration of losing 15k/20k but you are winning. You getting out of being in negative equity for 10 years at least if not more!!!

I'm not in your position and i wouldn't ever want to be but i would be doing a little merry dance at the moment if it was me!
 

foxylady

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foxylady i thought you would be happy about this as you have been fighting for a long time to get out of the contract.

I can understand your fustration of losing 15k/20k but you are winning. You getting out of being in negative equity for 10 years at least if not more!!!

I'm not in your position and i wouldn't ever want to be but i would be doing a little merry dance at the moment if it was me!
Why on earth would I be dancing around after being screwed out of 15k. I wanted out of the contract because it had been breached
 
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