Sun | Dec 4, 2016

Moorland's hardship test - Investors pay for property but won't collect

Published:Sunday | October 5, 2014 | 12:00 AM

Tameka Gordon, Business Reporter

Moorland Development Company Limited has been left holding 50 housing lots previously sold to shareholders and others on the open market, who have failed to complete transactions dating back six years.

The purchasers have not completed the necessary paperwork to have the lots transferred in their names, said managing director, Carlton Maxwell.

The holdings are valued at around $40 million.

The development company says neglectful purchasers have left the company with property-tax obligations to government for the properties.

"The issue is simply that since 2008, we have been trying to get a number of our purchasers and shareholders of Moorlands Estate who have acquired lots to come forward and either sign the sale agreement, return the sale agreement or return the transfer and that has not happened, despite taking steps several times," said Maxwell.

He said the company has been forced to maintain the inventory on its books as a liability.

Persons who bought lots advertised on the open market "have completed all their purchase (and) owe us no money whatsoever," but have still not completed the process, the managing director said.

"All they need to do is return their signed transfer agreement to facilitate the transfer of their interest in the lot from us to them," Maxwell said.

TARDY SHAREHOLDERS

As for the tardy shareholders, who comprise former employees of Alpart, they are at various stages of the process.

"Some have not yet paid their closing costs; some have not yet signed their agreements; some have not returned the signed agreements and some who have not yet as much as singed a sale agreement," the managing director bemoaned.

Moorland, which was incorporated in 2001, was started primarily by Alpart employees who pooled their financial resources to acquire reclaimed lands from their former employer.

Moorlands Estate, comprising 555 serviced lots spread across 404 acres, was the company's first project.

The second development, Moorlands Manor, is not affected by incomplete transactions, Maxwell said, having learned from the Moorlands Estate experience.

The company is "taking steps to ensure this does not become a problem," he said.

Moorlands Manor, a 250-acre development, was developed at a cost of close to $1.2 billion.

At the set up of Moorland Development, "for most of the persons who invested in the company, part of the money they invested was considered equity and a portion of it would have gone to a deposit in a lot, making them shareholders," Maxwell explained.

Shareholders, on average, got half acre
lots, he said. The open market lots were sold for roughly
$500,000.

"But what is happening is that approximately
10 per cent of all the lots that were sold are still to be transferred,
of which most belong to shareholders," Maxwell
said.

The total amount that is tied up on our books on
account of that is probably in the region of $30 to $40 million, or
nearly 50 lots, the managing director
said.

Shareholders were further expected to pay all
associated costs of acquisition for their lots, which six years ago
amounted to about $250,000 but is now over $400,000, Maxwell said,
"because they have delayed so the valuation of the property has gone
up."

Shareholders will now have to pay the new costs,
he said.

OCTOBER DEADLINE

The
company has set a deadline of October 15 for all sales to be
completed.

Failure to do so on or before the 15th of
October will result in steps being taken to resell these lots on the
open market, the company said in a press
advertisement.

"We have taken the decision that the
matter must be concluded by the end of this financial year, which is
December 31. So whatever each person's status is, it will have to be
addressed, because we are not going to be carrying it on our books going
further," said Maxwell.

"We have to be paying to put
the notices in the newspaper and paying the lawyers. Some of them have
not paid the taxes and we have been summoned by the courts and have to
be paying it because it is in our name," he
said.

Maxwell cited mostly neglectfulness on the part
of shareholders and open-market purchases for the delay, even as he
conceded some persons have fallen on hard times.

He
said Moorlands Estate has encouraged shareholders with hardship cases to
dispose of the lots.

"You bought a lot for a million
and now you can sell it for $7 million," he said. What is preventing you
from disposing of it to make good on your
obligations?"

tameka.gordon@gleanerjm.com