Pasifika businesswoman Laura Keil-Hall fears she must renege on a contract she signed to buy a Du Val property but says she will forfeit her $85,000 deposit if she doesn’t settle next Friday and wants laws changed so people like her are protected from themselves.
Two years ago, she and her husband agreed to pay $850,000 for a Te Awa Terraces unit in Māngere East, developed by Du Val.
But they were disappointed with what was built and finished two months ago.
A valuer has assessed the place as being worth only $600,000, so she no longer wants to buy it.
During the pre-settlement inspection, the materials, finishes and appliances appeared to differ from what was advertised, she said.
“They promised Boshe appliances, a high-end development but this was not the case. The valuation on the property we agreed to buy off-the-plans for $850,000 has plunged and now we can barely sell it for $600,000,” she said.
The appliances were instead Midea, she said.
Keil-Hall, originally from Samoa, is chief executive and founder of the Pacific Business Hub and said she trusted the Pacific Islanders who pre-sold the unit to her two years ago.
“This was based on market confidence and trust built through young Pasifika sales people. I was targeted and called repetitively by young Pasifika people who got my trust as a first-time investor and made promises that did not come to fruition,” Keil-Hall said today.
She said she was reassured and encouraged to sign with Du Val, “without being advised to get an independent valuation or seek specialised legal input”.
She has now pleaded with Du Val receivers at PwC to let her escape settlement and paying the balance of the $850,000. She said she has been granted some time extensions but the contract remains live.
But she says no deal has been reached.
PwC is in charge of Du Val which it has estimated has $300 million+ debts.
A PwC spokeswoman said the Statutory Managers cannot comment on individual contracts in respect of Du Val properties.
“Market conditions for residential property in the Auckland market have certainly deteriorated since the time when some purchasers entered into agreements to purchase properties from the Du Val Group.
“While we acknowledge that these market factors have resulted in purchasers being in a difficult contractual position, there are a large number of parties that have been impacted by the statutory management of the Du Val group of entities. These include purchasers, contractors, consultants, employees, suppliers, investors and secured lenders.
“Requests in respect of purchase contracts are dealt with on an individual basis. We have sought to work constructively with these parties where possible within the constraints under which we must operate.
“The statutory managers seek to act fairly and consistently across many competing interests but are required to consider all stakeholders and the associated contractual and commercial positions,” the spokeswoman said.
Keil-Hall does acknowledge that PwC has told her it must act in the broader interest: “PwC declined cancellation, citing their obligation to “act fairly across all buyers”.
The market had changed dramatically between when she signed the contract to buy in February 2023 and now, she said.
“We entered into this contract in good faith, based on the economic conditions and market expectations at the time. No one could have predicted the downturn in property values, tightening financial restrictions, and rising economic pressures. Yet, there is no legal flexibility to allow buyers in genuine hardship to exit or renegotiate fairly,” she said.
She had worked hard, built a business and invested in what she hoped would be a secure asset.
“But when I needed flexibility due to circumstances beyond my control, there was none. I was met with silence.”
Last October, she sought to cancel the contract due to financial hardship and the market change.
She wants a law change and hardship exit clauses in property presale agreements.
Du Val advertised Te Awa Terraces as a 79-unit development at 26-30 Earlsworth Rd. Places were pre-sold from $829,000.
Joanna Pidgeon, a director of Pidgeon Judd Law, said buying off the plans came with a level of risk.
“Buyers should seek advice from lawyers who specialise in advising purchasers in these types of purchases. They can enable purchasers to continue to save and add to their KiwiSavers, increasing their equity, particularly if house values increase.
“However there is risk relating to delay, prices dropping, bank lending policies changing, possible developer failure, and life changes occurring – divorce, job loss, having children in the meantime while the property is being completed,” she said.
If a person’s situation is such that they have no back-up or contingency plan if any bad events happen, off the plan might not be the best option.
It might be better to buy an existing property where there is more certainty about value, and lending policy at the time of purchase, she said.
Lenders to developers needed to have certainty of sales contracts without purchasers being able to walk away, with the exception being if the sunset date expires, or the ability to terminate under s225 arises.
If they do not have that certainty, they will be less likely to lend or require greater equity from developers, seeing less housing built.
Liquidators and or statutory managers have obligations to all creditors and have an obligation to enforce contracts if they are legally still in place.
Developers may have more personal discretion as to whether they enforce contracts or not, Pidgeon said.
The emphasis needed to be on having better legal advice up front on off the plan contracts, so that people understand the risks, and can decide to walk away then before the 14 days are up if they feel the risks are too great.
“In years gone by in a rising property market many owners did very well financially purchasing off the plan.
“In a falling or a soft market this can have quite a negative impact on purchasers’ ability to obtain finance and settle, particularly if the property has lost value from when the contract was signed, or if banking policies change.
“These possibilities need to be taken into account in the initial stages post contract execution. Seek out experience, independence and expertise from your legal adviser,” Pidgeon said.
John Fisk, one of the PwC receivers, gave an affidavit on March 7 telling of progress on Du Val. That told how the accountants had facilitated settlement of pre-sales of completed Du Val units and worked with staff to continue efforts to sell unsold units.
In other cases, PwC had made arrangements to enable the construction of homes to continue so projects could be completed.
“On a practical level, we took immediate steps to ensure continuation of multiple ongoing Du Val operations including property developments, Du Val’s property management business and the built to rent properties,” Fisk said.
Last week, the Herald reported how jewellery, artwork and firearms in the possession of Du Val’s Charlotte and Kenyon Clarke were paid for has been a focus of PwC accountants untangling the Du Val Group situation.
PwC’s latest report showed Du Val debts blew out from $238m to $306m.
The report was on 70 companies and entities, PwC saying further extensive forensic investigation was needed.
Keil-Hall said she and her husband had hoped back in 2023 to be able to borrow the money to settle but now cannot. Code compliance certificates have been issued on the Te Awa Terraces places, triggering settlement clauses.
The couple now have their own Māngere home on the market to try to get the money to pay for the Du Val place.
Indications are they could get $700,000 to $800,000 for their home but they have a mortgage of around $500,000 so they may only net $200,000 - well short of the contract on the apartment.
“We’re not going to be able to settle with PwC,” she said.
Anne Gibson has been the Herald’s property editor for 25 years, written books and covered property extensively here and overseas.
A journalist says there was 'nothing deceitful' about his approach to Polkinghorne.