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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Suma who wrote (25788)	12/9/2004 8:15:23 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

Buying condos prior to construction (buying Stratas off-plan) has long been a popular gamble (a top punt) in Australia. People put down a modest deposit and must purchase the unit, at the previously negotiated price, when construction is completed. Before the construction is finished, a strata is often sold on to others two or three times. The initial buyer sells his position for the amount of his deposit plus any perceived appreciation. The recent down-turn in Australian real estate prices have left a number of unanswered questions to litigation. 1.) When appreciation slowed in late 2003, Australia's most popular "get rich quick through real estate" guru, Henry Kaye, took in deposits for strata projects which will never be built. This leaves the question of the bankruptcy priority of these investors. The final court ruling found the lender to be an active participant in Kaye's fraud, thus the "investors" did not have to repay their borrowings. Henry Kaye - the initial unpleasantness theage.com.au the collapse smh.com.au the final story? theage.com.au How American courts would determine this issue is unknown. 2.) Now that strata prices have fallen, off-plan buyers are obligated to purchase their units at their previously negotiated price which is perhaps 20% above market. Since no lenders can be found to lend 125% of the value (General Motors doesn't operate an Australian branch of their Ditech lending business), the buyers must come up with a 25% deposit and a 100% loan to value loan. As most cannot do so, they face bankruptcy receivership. Litigation in the state of Victoria has asserted that the real estate contract is merely a consumer finance contract unsecured by real estate (as the building did not exist at the time the contract was signed). If this is proven true, then the buyers will lose only the amount they have already paid out. Otherwise they will forfeit all of their assets in Receivership court. This issue may or may not already be determined by Florida courts. I don't know. But it would pay for you to know the answers. .

To: Suma who wrote (25788)	12/9/2004 8:31:04 PM
From: David Jones	Respond to of 306849

Sure, that's pure speculation and your prudent to understand and more importantly have the funds to go through with the purchase if needs be.