Loomio
Mon 25 Feb 2019 7:14AM

Collectively discuss the offer put by Dean Cameron by email to members for settlement

S Sun Public Seen by 6

It is important to get participation on this vote, and I have created a thread to help bring clarity to the discussion.
Kim requires his loan back before before July 1st so that the loan is not considered as a business income on his bookwork. This is so that he can be eligible for the pension; if he is still receiving payments in this way he would not be eligible for the pension. He also wants the money to help restart his life after a big personal transition. His original agreement was for Dean to repay the loan within 4 to 5 years. August 2019 will be the completion of 4 years.

A similar house on a slightly smaller block in Eudlo that is 11 years younger in much better shape including 4 bay shed and dam is listed for sale @ $520k on realestate.com.au. IMO it is unlikely that the property will sell within 3 months above $480k. In the event of a sale to 3rd party everyone would lose their investment and Dean would obviously lose the most and I assume nobody wants to see that.

Dean has approached Monique to go as guarantor for a loan to pay out Kim's loan and Luciano's loan to honour his agreement with them. The concern that Monique and Dean have on encumbering themselves to the title of the property is the possibility that ELF members may seek payment of a recorded equity share after the title transfer which would leave both Monique and Dean liable for further outlays on top of the refinancing. To prevent this Dean has assessed what he'd be prepared to pay everyone once the loan has been approved. With Monique's very good credit rating and a large percentage of equity already belonging to Dean it is highly likely that this loan would be approved (which is great because I don't want to see Dean lose a big chunk of his superannuation (losses expected at $238k).

Before accepting Dean's offer as the final settlement agreement I would like to create a discussion for everyone to participate on what they believe is fair and equitable for everyone involved. Please try to be objective in this and compassionate for your fellow brothers and sisters here.

Aside from Dean the collective residents payment of loan principal from (rental income) is $22,642.
Aside from Dean and Monique the total members AUD contribution to the property is $42,552.
The total AUD contribution to capital improvements and paying down mortgage principal is $65,194.

In the event that Dean and Monique are successful in refinancing Dean would benefit financially by a figure of about $45,595 ($65,194 less pay outs as per Deans proposal + $1,500 for concrete saw and $3500 for rock breaker). This does not account for any labour contributions, but I encourage you all to consider labour as an in kind donation.

Dean and Monique applying for a loan would only be possible if they and everyone else in this group comes to a final settlement figure for all stakeholders, as I understand they wish to prevent future claims on equity after title transfer, and I see it as completely reasonable that they seek this reassurance for themselves.

In the event of forced sale no body wins.
In the event that Dean and Monique refinance, and the agreement we have had about paying a contribution to mortgage, rates & maintenance above the market rental rate rent is forgotten then there is a figure of $65,194 that needs to be negotiated and agreed upon.

Please look at the offer Dean has made to you and communicate your thoughts, whether you agree to this or wish to revise the offer. It is important to gain clarity on where you stand and what your settlement agreement looks like so that Dean and Monique can move forward with feeling comfortable about seeking finance and loan payout before June 30.

@rodneywhitman @pospi @tom120 @nicolehinton @deancameron

RW

Rodney Whitman Mon 25 Feb 2019 7:32AM

Acknowledged

S

Sun Mon 25 Feb 2019 7:59AM

Considering the above more deeply after my earlier email and with the intention of honouring Dean's request to make a legally binding settlement to supersede the ELF member/directors agreement I present the following;

In the event that finance is approved and the title is transferred from the Trust to Dean and Monique I am happy to forego my $9,912.50 labour contribution and would like to know if a further negotiation on the $5,819.63 mortgage principal payments and $9,601 AUD direct input for materials and machinery parts would be considered by Dean and Monique. For what I feel would be fair in this situation I would seek the $5,819 principal payment and $8,000 of the capital investment (reduced for maintenance items and circumstantial discounted offer). So my settlement offer that I see as fair in the event that the property title is transferred would be $13,800.

I appreciate that downstairs is a liability and there is risk in taking over the title, but I only agreed to funding and labouring for it's progress after the footings had already been exposed to a point where the project had to continue, a conundrum arising from starting projects before a proper joint decision making process on assessing our needs and the many ways they could have been met. Very glad we learnt that lesson before further repeats.

I also acknowledge that the market has slumped and to sell in this market is madness although we must find a way to get the business income off Kim's books. This property was always a longterm project and I feel the AUD value of what we have contributed will surely return in the near future (coming few years).

@deancameron I really want your refinancing to proceed for your interests, I also felt to express my thoughts around it and push for feedback from others on your offer. I think it best @tom120 @rodneywhitman @pospi reply to your offer so that they either accept your offer or you can consider what they propose themselves. I do want to talk with you about this once I understand how others feel about your offer and the information I have provided here (along with anything else you think I have missed).

DC

Dean Cameron Mon 25 Feb 2019 8:06AM

that is a pretty good summary but the thing that has not been emphasised is that although I do benefit by 45k in this offer, I am also offering possibly up to 100K more than you have acknowledged we could get in a forced sale. Which means I'm taking a risk on about 55k in addition to the losses I take on all the cash from super and inheritance and 67K of actual cash contributed. So its really not so much a benefit as a minimisation of my disproportionate loss. I feel so very grateful that Monique is prepared to help me secure a loan to keep the property at least until the property down turn recovers if and when that may be. I'm offering this proposal to benefit all of us because if it has to go to a forced sale it is likely that none of our equity will be recovered and I may not even recover all of the loan from my super. Thanks Sun for engaging on this publicly. I'm glad our finances have all transparent because everyone can see how much financial pain each of us is taking, not to mention the emotional pain of the dream failing.

RW

Rodney Whitman Mon 25 Feb 2019 8:19AM

I have already agreed to the proposal via the vote in loomio. I can't say I donate my labour really though because that's basically everything I was to the project. If my labour becomes donation I think I'll get ten bucks out of the deal. I really don't think there is much to argue right now because I can't help the situation. If elf is in the future and needs me to help on a job I may ask for my hourly wage to be 6k an hour to make up the loss. :thinking:

DC

Dean Cameron Mon 25 Feb 2019 8:40AM

I have just read your second message Sun. I know you would all like more but what that means for me is that your payout offer I have made has to be part of the refinance as well. that means what ever I pay total I have to borrow and with interest it will cost me more than twice what you all get and I also have to carry the period where we dont yet have renters and then on top of that I still need the extra to finish down stairs. If you all make that argument for why your equity is worth 3.4 times more than offered then I would need to borrow 385k when the transfer duty from the trust to me is taken into account. I may not be able to get a loan over 30 years based on my age so if I can only get a 20 year loan my mortgage repayments could be over 2400. And I will also have to carry the 12 months until the apartments are finished. Frankly I'm 62 this year and don't want to be entering mortgage stress as I enter retirement. I would rather take a bigger hit up front and just live simply off the land on Monique's place. Sorry Sun but that counter offer just isn't attractive given the circumstances. I have already psychologically prepared myself for a forced sale as the bottom line. I have put my life and savings into this and am already feeling like if others who claimed to share the dream and genuinely committed to make it happen we would not be discussing this now. I don't feel betrayed as I know there was goodwill to the project but in the end, it takes more than goodwill. I don't think I could have put in more effort or money and still kept my sanity. My original offer still stands but if people feel its unfair then I will go with that vote too. At this stage, I'm just over it. Talk it over amongst yourselves and your advisors and then vote on it. I can't lift my offer sorry.

S

Sun Mon 25 Feb 2019 9:55AM

I appreciate your response Dean, in retrospect its sad that at the time I was able and could have been willing to refinance I didn't know there was an upcoming need to do so. It was only after my work situation changed that I knew it was a short term arrangement. Not at all blaming lack of communication just reflecting on the silly predicament we are in now given the missed opportunity.

DC

Dean Cameron Mon 25 Feb 2019 11:57AM

Yes Sun, I too wish it were other than what it is. I know you are not the type to blame Sun. I really thought everyone knew we had to refinance as I have been bringing this up in meetings and on spreadsheets in the finance drive for at least 2 years. Part of our problem was we were all seduced into thinking ether would just keep going up and thought it was better to invest in it rather than refinance with a view to cashing in and paying off the loan but we all know how that turned out for us. Thankfully I only invested in about 6.5K worth of crypto but it seemed perfectly logical when it was worth 80k to keep it there. My little nest egg that could build a lifebubble or pay a share of the loan off is now worth under 4K. Our greed blinded us I guess you could say. But it did feel good at the time to be mocking the establishment!