Trouble at a 92-unit Takapuna apartment project where Harcourts Cooper & Co is claiming around $400,000 commission has surprised one lawyer who said the project appeared successful.
Nick Kearney of Schnauer & Co Lawyers at Milford said he had not expected financial issues with Anzac St's Sargeson Apartments because around 85 per cent of the scheme had been sold.
Yesterday, the Herald revealed the company which developed the units on The Block site has gone into voluntary administration, leaving the agency claiming $400,000, most likely as an unsecured creditor.
Companies Office records show Auburn Development is in the hands of Bryan Williams of BWA Insolvency after a decision by the board of directors. David Oliphant is the sole director and shareholder.
Kearney said some of his clients had bought units so he had direct involvement in the Sargeson where residents are now living.
One of his clients was refunded a 10 per cent deposit when an 8 per cent price increase was sought late last year. That client had been unhappy to be asked for more and had withdrawn, Kearney said.
Harcourt's Martin Cooper said yesterday all but 16 of the 92 units had been sold. His firm had sold about 30 of the units and was owed the substantial sum, leaving him concerned for the Harcourts agents who were unpaid.
That left Kearney questioning the situation because he said that on the settlement, agencies were usually paid commissions in full.
But the Sargeson scheme was obviously not conventional in that sense, he said.
"It surprises me to see that such a large amount is owed. I don't understand why the full commissions were not paid. It all depends on what arrangements the developer made with the agents and what terms and conditions were on the sale. For example, it may be that the developer repaid the mortgagee before paying the agents."
Oliphant has not responded to an inquiry about the company's change in status.
But Simon Jones of Foley Hughes said he acted for Auburn Development, had talked with the administrator but could not discuss the situation any further.
Cooper said yesterday: "It's a sad story. The mortgagee has taken over. We are owed money for the sales, close to $400,000. We sold 30 of them and were paid some money. We settled properties and people moved in but the lawyers have instructed not to pay commissions.
"The sad thing is individual salespeople who put their heart and soul into the sales. They put in time and effort and have families to feed. I'm taking legal advice on our position and getting an assessment on what's the best way to protect that. We're investigating putting a caveat on the titles to protect our position," he said referring to the 16 unsold units.
Last November, Auburn Development wrote to buyers seeking more money to settle purchases.
Due to building costs rising and development finance becoming "virtually unavailable", buyers must pay more, letters said.
Pre-purchasers were then asked to pay a further 8 per cent.
One buyer said at the time that a place which was costing $465,000 originally would now cost him $535,000 and he was unhappy.