Buyers lose 99% of €20,000 deposit as developer collapses

gurramok

http://www.irishtimes.com/newspaper/frontpage/2009/0624/1224249417030.html?via=mr

ALMOST 100 homebuyers are to lose more than €1.5 million in deposits after the collapse of property company Laragan Developments.

The prospective buyers, who paid deposits on apartments in Santry, north Dublin, and in Carrickmines, south Dublin, were told at a creditors’ meeting yesterday they would get back only 1 per cent of their deposits. They had put down €15,000 or €20,000 for the apartments.

The company has been placed in examinership, and under the examiner’s proposals, depositors will receive €150 or €200 each.

The deposits for Milner’s Square, Santry, and Carrickmines Green, Carrickmines, were paid over two years ago and so are not protected by the Homebond insurance scheme, which guarantees deposits for 24 months. Both developments are partially built with some apartments occupied.

Crazy stuff.

Think i had read on neighbours.ie about this developement taking years to build, as if the developers were in difficulty since they started building the things.

Since day 1 i've always maintained to buy 2nd hand(even if its only a year old as long as its built and furnished), at least you see what you get.

snubbleste

They'd be far worse off than €20k in equity terms if they had bought!

gurramok

Very true, they saved alot more if they were forced to buy now on a depreciating asset.

ntlbell

blessing in disguise.

i think the deposits were put down in 06 they prob would be in 45k+ negative equity

El Stuntman

gurramok wrote: »

Very true, they saved alot more if they were forced to buy now on a depreciating asset.

yeah but that doesn't fit with the mainstream media agenda so cue outrage from the usual suspects (take a bow Mr Duffy)

I'd love it if he got one of these buyers on his show, popped some champagne and said 'congrats, you just saved yourself 150k in negative equity and the same again in interest payments over the life of a mortgage. How does it feel to be the luckiest person in Ireland?'

:pac:

ntlbell

El Stuntman wrote: »

yeah but that doesn't fit with the mainstream media agenda so cue outrage from the usual suspects (take a bow Mr Duffy)

I'd love it if he got one of these buyers on his show, popped some champagne and said 'congrats, you just saved yourself 150k in negative equity and the same again in interest payments over the life of a mortgage. How does it feel to be the luckiest person in Ireland?'

:pac:

Ivan and that awful presenter claire byrne had one of them on this morning on newstalk

she just didn't get it.

NewFrockTuesday

So lucky escape do you think? Id be raging I think.

Say I saved for years to get the deposit ready for my apartment. It still was my chance to own my home be I in negative equity or not.


The deposits were paid in 2004? Wold that not set your alarms off if 2 or 3 years later youre still waiting? It would mine I would hope.

ntlbell

Deepsense wrote: »

So lucky escape do you think? Id be raging I think.

absoloultley.

15k-20k is a very small price to pay to get out of that mess

NewFrockTuesday

ntlbell wrote: »

absoloultley.

15k-20k is a very small price to pay to get out of that mess

Yah. I just feel for those who wont get another 20g togeather to deposit on a place of their own. Anyone know how much they were costing to buy?

EKRIUQ

I don't care, €20,000 is a lot to lose for anybody and anyone telling you your better off is not going to help. Give back the €20,000 now that would help alot more.

professore

What a crazy way of looking at it.

Yes they were lucky, but it's now somehow OK for a builder to disappear 20 K of consumer's money that was a DEPOSIT (i.e. to be held aside and returned at a later date if the contract is not fulfilled ???) What happened to that money ???? These guys should go to jail.

D3PO

sounds bad but they dodged a bullet given the depreciation of the asset since they paid the deposit.

D3PO

professore wrote: »

What a crazy way of looking at it.

Yes they were lucky, but it's now somehow OK for a builder to disappear 20 K of consumer's money that was a DEPOSIT (i.e. to be held aside and returned at a later date if the contract is not fulfilled ???) What happened to that money ???? These guys should go to jail.

I dont know the ins and outs but surely a holding desposit should be held by the solicitor of the builder and not the builder. Is it possible the solicitor should be libel for refunding these deposits ?

ntlbell

Deepsense wrote: »

Yah. I just feel for those who wont get another 20g togeather to deposit on a place of their own. Anyone know how much they were costing to buy?

I didn't get that really, if they can't afford to get up 20k they probably couldn't afford the mortgage anyway?

rent is falling through the floor if they rent somewhere cheap for a year or so they should be able to get up a decent deposit pretty quickly, if they can't they probably wouldn't have been able to make the re-payments anyway

ntlbell

D3PO wrote: »

I dont know the ins and outs but surely a holding desposit should be held by the solicitor of the builder and not the builder. Is it possible the solicitor should be libel for refunding these deposits ?

only on second hand home's apparently

professore

From the article:

The deposits for Milner’s Square, Santry, and Carrickmines Green, Carrickmines, were paid over two years ago and so are not protected by the Homebond insurance scheme, which guarantees deposits for 24 months.

So:

1. The homebond scheme is a load of rubbish as basically it says as a developer if you can hang on to the deposits more than 2 years you can keep them, and
2. The developers knew this full well so waited for the 2 years before saying anything.

It's even possible that they would be better off with no homebond guarantee as then at least they could put up a legal challenge to the deposit.

If I had a deposit on any property in this country for more than a year I would be demanding it back right now with a solicitors letter.

El Stuntman

EKRIUQ wrote: »

I don't care, €20,000 is a lot to lose for anybody and anyone telling you your better off is not going to help.

no, but it might soften the blow (if you can manage to remove the emotion from the situation)

EKRIUQ wrote: »

Give back the €20,000 now that would help alot more.

if the Govt had got its Homebond act together, that's exactly what would have happened....but competence is something we have long since learnt not to expect from FF

El Stuntman

professore wrote: »

What happened to that money ????

probably spent in various tents at the Galway races

ntlbell

professore wrote: »

What a crazy way of looking at it.

Yes they were lucky, but it's now somehow OK for a builder to disappear 20 K of consumer's money that was a DEPOSIT (i.e. to be held aside and returned at a later date if the contract is not fulfilled ???) What happened to that money ???? These guys should go to jail.

How deposits are kept should change and be the same across the board.

problem would have never reared it's head.

D3PO

ntlbell wrote: »

How deposits are kept should change and be the same across the board.

problem would have never reared it's head.

agreed.

mathie

Lets consider a hypothetical ...

The property market is still on the way up and no sign of a crash.

Now how would people feel about the situation?

JJJJNR

It took me and my wife years to build up our 10% deposit, I really feel for those people.

I feel lucky that I bought when I did when there was little risk involved.

Its really evil the way some people are looking down their nose at this.

El Stuntman

JJJJNR wrote: »

Its really evil the way some people are looking down their nose at this.

'evil' :eek:

Hitler was evil, Joseph Fritzl was evil, paedophile priests were evil

people pointing out that there is a silver lining to this particular cloud are 'evil'?

get a grip pal, you've lost the plot entirely

JJJJNR

El Stuntman wrote: »

'evil' :eek:

Hitler was evil, Joseph Fritzl was evil, paedophile priests were evil

people pointing out that there is a silver lining to this particular cloud are 'evil'?

get a grip pal, you've lost the plot entirely

Typical A&P they are being cruel, unjust, and selfish.

D3PO

mathie wrote: »

Lets consider a hypothetical ...

The property market is still on the way up and no sign of a crash.

Now how would people feel about the situation?

if the market was on its way up the builders wouldnt be on their knees so the situation wouldnt happen

D3PO

JJJJNR wrote: »

Its really evil the way some people are looking down their nose at this.

show me one post where people are looking down thieir noses here ? Is pointing out that once you remove the emotion from the situation that financially the buyers are actually financially in a better situation looking down your nose at somebody ?

NewFrockTuesday

I do feel really sorry for them lucky escape or not. I would think most of them are thinking not. Being stung for 20 big ones is an incredibly bitter pill to swallow and no ammount of lucky escape patter would sweeten it for me. Id punch the patronising git straight between the eyes if it were suggested to me aftr me losing a huge ammount of money. Id come round though I think....eventually. Just not today. Id be getting steaming drunk right now.

Hagar

But and wouldn't they be better off if the builder had their deposits secure in a bank and could give it back?

Gurgle

El Stuntman wrote: »

people pointing out that there is a silver lining to this particular cloud are 'evil'?

Not evil, just stupid and inconsiderate.

There is no silver lining here. People chose to buy these houses, handed over €20k and now they are going to get nothing for their money. Telling them they're lucky they were'nt 'stuck' with a property that they wanted to buy is simply offensive.

D3PO

Deepsense wrote: »

I do feel really sorry for them lucky escape or not. I would think most of them are thinking not. Being stung for 20 big ones is an incredibly bitter pill to swallow and no ammount of lucky escape patter would sweeten it for me. Id punch the patronising git straight between the eyes if it were suggested to me aftr me losing a huge ammount of money. Id come round though I think....eventually. Just not today. Id be getting steaming drunk right now.

In this case I suggest you never buy property. If you cant remove emotion from financial acumen you shouldnt be a home owner.

nobody is saying it isnt a bitter pill to swallow they are just saying the side effects of said pill are actually quite nice.

Take another example. My house will most likely be in negative equity by the end of the year. Yes its not nice but hey. Now if somebody said to me well look at the bight side at least you didnt buy in 07 at the top of the boom it would be wrong to see that as patronising, the fact is they are trying to soften the blow for you and point out the positives of the situation.

glass is half full and all that .....

El Stuntman

Gurgle wrote: »

Not evil, just stupid and inconsiderate.

There is no silver lining here. People chose to buy these houses, handed over €20k and now they are going to get nothing for their money. Telling them they're lucky they were'nt 'stuck' with a property that they wanted to buy is simply offensive.

OK, I'll overlook the 'stupid' comment as I'm a big boy

consider this:

Jimmy Joe Junior slaps down 20k for a deposit on an apartment in 2006. Agreed sale price is 400k.

fast forward to today. Developer has gone busto. JJJ has lost his 20k and the apartment will never be built.
However....JJJ can now buy the same standard of apartment in the same area for 250k.

overall, do you not agree that JJJ is better off? If not, why??

D3PO

Gurgle wrote: »

Not evil, just stupid and inconsiderate.

There is no silver lining here. .

yes no silver lining i mean they would much rather be 70 - 80 k in negative equity than lose 20k with the potential to buy the same apartments for much cheaper than they originally agreed :rolleyes:

D3PO

El Stuntman wrote: »

OK, I'll overlook the 'stupid' comment as I'm a big boy

consider this:

Jimmy Joe Junior slaps down 20k for a deposit on an apartment in 2006. Agreed sale price is 400k.

fast forward to today. Developer has gone busto. JJJ has lost his 20k and the apartment will never be built.
However....JJJ can now buy the same standard of apartment in the same area for 250k.

overall, do you not agree that JJJ is better off? If not, why??

Economics 101. That will go over the head of most in here :rolleyes:

NewFrockTuesday

D3PO wrote: »

In this case I suggest you never buy property. If you cant remove emotion from financial acumen you shouldnt be a home owner.

nobody is saying it isnt a bitter pill to swallow they are just saying the side effects of said pill are actually quite nice.

Take another example. My house will most likely be in negative equity by the end of the year. Yes its not nice but hey. Now if somebody said to me well look at the bight side at least you didnt buy in 07 at the top of the boom it would be wrong to see that as patronising, the fact is they are trying to soften the blow for you and point out the positives of the situation.

glass is half full and all that .....

If I found out yesterday that I was taken for 20g I still be raging today. The economics make sense yes, but the gall of losing that much money would not breeze over me, regardless of the logic.

bangersandmash

I think comments about popping champagne are not exactly in the best taste. For those who had paid deposits, the final realisation that their 20k deposit has become €150 is not exactly going to be a cause for celebration.

However presumably the buyers who paid deposits, could not (or did not wish to) complete, and were being sued will feel relieved.

Laragan Developments, part of the Roscommon-based Hanly Group, has filed more than 40 High Court cases against buyers who refuse to complete on contracts.

http://www.timesonline.co.uk/tol/news/world/ireland/article5908617.ece

An as El Stuntman pointed out, some of the potential buyers will find themselves in a better financial situation in the long run. Consider that two-bed duplexes here were 415k. You could buy a proper semi-d in the same area for that price now.

El Stuntman

Deepsense wrote: »

If I found out yesterday that I was taken for 20g I still be raging today. The economics make sense yes, but the gall of losing that much money would not breeze over me, regardless of the logic.

hence the point of trying to remove as much emotion as possible from the situation

I mean, do you get very angry every time the stock market dips by 10% and think of the effect on your future pension?

mathie

Gurgle wrote: »

Not evil, just stupid and inconsiderate.

There is no silver lining here. People chose to buy these houses, handed over €20k and now they are going to get nothing for their money. Telling them they're lucky they were'nt 'stuck' with a property that they wanted to buy is simply offensive.

I don't agree.

It's like winning the 1 million jackpot in the lottery and then being told there's a 2 million euro fee for winners.

They have to look at the big picture.

There were two outcomes.

1 The house are completed. The owners are in serious negative equity.
2 The houses are not completed. They lose their deposit.

I know a couple who did buy an apartment 3 years ago and who now want to move and are in serious negative equity.
They'd love to pay 20K to walk away from their current place.

I'm not saying losing 20K is fine.
I also hate the 'it could be worse' mentality but really ... it could be worse.

The_Conductor

Guys- behave- or you will be forced to take a holiday from posting in this forum. I will not allow abusive comments from anyone in here- regardless of how emotional they feel about whatever point of view they are advocating.

If you disagree with whatsome else posts- refute the post without attacking the poster. Any more personal comments- from anyone- will result in an automatic banning- no warnings.

Cop-on, be civil, its not the school yard.

Regards,

SMcCarrick

NewFrockTuesday

I may well when Im screwed over for cash when it comes time to draw it down. Im not disagreeing with the logic of the situation - I cant see why youre not getting this. Im saying you may not give a damm about hard saviing 20g just to have it swiped from under your nose, but Im sure the losers of the cash are not feeling the love right now....even if its better for them in the long run.

JJJJNR

I'm sure we all agree that there should be an up turn in property prices at some stage.

I think the negative equity brigade on here should realise this.

D3PO

Deepsense wrote: »

If I found out yesterday that I was taken for 20g I still be raging today. The economics make sense yes, but the gall of losing that much money would not breeze over me, regardless of the logic.

im not saying they shouldnt be unhappy obviously if they got their deposits back it would be better im just saying over time once the initial shock wears off they should be able to see this has worked out ok for them.

i know if it was me and i found out i would be raging but i also know when i managed to calm down and survey the situation that it isnt as bad as your initial human reaction will tell you it is.

its not like people are on here lauging at their unfortune people are genuinely trying to point out the positives and how they can turn this around in their favour

D3PO

smccarrick wrote: »

Guys- behave- or you will be forced to take a holiday from posting in this forum. I will not allow abusive comments from anyone in here- regardless of how emotional they feel about whatever point of view they are advocating.

If you disagree with whatsome else posts- refute the post without attacking the poster. Any more personal comments- from anyone- will result in an automatic banning- no warnings.

Cop-on, be civil, its not the school yard.

Regards,

SMcCarrick

in fairness I think given the emotion involved this thread is pretty civil.

El Stuntman

JJJJNR wrote: »

I'm sure we all agree that there should be an up turn in property prices at some stage.

I think the negative equity brigade on here should realise this.

in refutation of this I refer you to.....Japan

20 years into their crash and they're still waiting for the upturn

of course, our price run-up was actually worse :rolleyes:, also our over-supply

El Stuntman

D3PO wrote: »

in fairness I think given the emotion involved this thread is pretty civil.

apart from the odd 'evil' comment. That was strange.

dearg lady

I think there are other factors to take into consideration, OK so losing 20 grand on deposit leaves them better off than being for example 100k in negative equity, but, they now have to save this up(and more) again as banks are requiring higher deposits, and also banks are much less willing to approve people for mortgages. So some of these people may now be a position of having to wait a few years before even being considered for a mortgage.
I think it will depend very much on the individual situation, some are probably happy to be out of it, some are probably pretty devastated.

ionapaul

JJJJNR wrote: »

I'm sure we all agree that there should be an up turn in property prices at some stage.

I think the negative equity brigade on here should realise this.

No doubt.

Will those (or similar) apartments EVER be priced the same as in 2006 / 2007 in real terms (not inflation adjusted)? Not a chance. Unless it is possible that we are blind enough to revisit the greatest asset price bubble of all time...

ionapaul

Also, lets remember the vast VAST majority of people are financial illiterates - they are unable to recognise that a certain situation will leave them better off than another.

A class covering household finance should be introduced at secondary level, it is very badly needed in Ireland.

D3PO

dearg lady wrote: »

I think there are other factors to take into consideration, OK so losing 20 grand on deposit leaves them better off than being for example 100k in negative equity, but, they now have to save this up(and more) again as banks are requiring higher deposits, and also banks are much less willing to approve people for mortgages. So some of these people may now be a position of having to wait a few years before even being considered for a mortgage.
I think it will depend very much on the individual situation, some are probably happy to be out of it, some are probably pretty devastated.

Not exactly true

firstly mortgage approval is only valid for 6 months so given the deposits were paid in 2006 they would have to reapply for their mortgage to draw down now anyway

some of these people might be in a worse financial position now anyway and might not get reapproved and would have lost the deposit regardless thats the first point.

secondly since it was 2006 i would assume most of these persons would have continued to save since then giving them 3 years worth of savings which would hopefully for them relate to a new deposit. yes the deposit required as a percentage might be more but given the drop in house prices it might be similar or less than was originally needed anyway.

El Stuntman

dearg lady wrote: »

but, they now have to save this up(and more) again as banks are requiring higher deposits, and also banks are much less willing to approve people for mortgages. So some of these people may now be a position of having to wait a few years before even being considered for a mortgage.
.

this is a good thing

1. 40/35/30 year mortgages were financial suicide
   
2. 100% mortgages were financial suicide
   
3. borrowing your 'deposit' from the Bank of Dad or the Credit Union was financial suicide
   
4. buying a home at 8*your annual income was financial suicide

in the long run, these people have dodged a massive bullet

JJJJNR

El Stuntman wrote: »

in refutation of this I refer you to.....Japan

20 years into their crash and they're still waiting for the upturn

of course, our price run-up was actually worse :rolleyes:, also our over-supply

Yup there was also one in Sweden but they seemed to do ok.

The_Conductor

JJJJNR wrote: »

I'm sure we all agree that there should be an up turn in property prices at some stage.

I think the negative equity brigade on here should realise this.

It all depends on how you define 'at some stage'. Certainly- once prices have fallen to reflect genuine affordability at international norms- there is no reason prices should not rise or fall according to a combined measurement of the rises and falls in average wages and the rate of inflation.

Totally aside from affordability factors- both wages and inflation are in negative territory- meaning that relative affordability of property is getting worse and worse. Totally aside from the bubble we are in- other economic factors would tend to support falls in property of in the region of 6-8% per annum- and if interest rates rise in the medium term- this rate of fall would be a lot higher (totally outside of the bubble and its current deflation).

Certainly- at some point in time prices will stabilise and return to normality. Normality though- would be 2-3% rises or falls on an annualised basis. When will this happen? I don't know- but I'd have a lot more faith in someone advocating a 12-15 year window and giving their reasons for it- than I would for someone who has blind faith in price rises recommencing (even at reasonable levels) in a 5 year window.

The Irish economy is comparatively speaking- worse off than the Icelandic economy- with massive private sector debt, and those assets which people privately hold- mostly pensions and houses, have been decimated to an extent unprecendented anywhere else in the world. I don't know if anyone has read the IMF report out today (I've only read the summary)- while its hopeful in many respects, its horrifically depressing in others. Its advocating chopping roughly another 4 billion from the budget in December- 3.2 billion from social welfare and another 800 million from the public sector.

We have a lot of misery on the horizon before the clouds start to clear.......

Ps- Irish sovereign debt rose further to 5.9% yesterday (the government sold 6 billion of 10 year redemption bonds). We are expected to borrow just under 26 billion this year. Our finances are in trouble- and the taxpayer is going to suffer as a result- which means- the liquidity of the past- is history......