Radar | Feb 13,2021
A judge at a lower court has ordered a Chinese real estate firm to hand over title deeds to homebuyers after a months-long legal battle.
The Yeka District Federal First Instance Court has ruled in favour of homeowners of Tsehay Real Estate Plc, ordering the developer to respond to the demands of 300 members of a Homeowners Association.
However, the real estate company has mortgaged the property, taking out loans in hundreds of millions of Birr. Tsehay Real Estate has taken 240 million Br in loans from Bunna International Bank, using the apartment units as collateral.
This is the latest development among dozens of disputes between real estate companies and homebuyers lingering at federal and regional courts, where there is little in the way of laws governing the real estate market.
Three weeks ago, the Federal High Court ordered for the injunction of property under Impero Real Estate Plc as part of the lawsuit against the company filed by a group of 51 buyers, who claim to have paid 125 million Br in the last seven years but have yet to secure their housing units from the developer. Impero had pledged to deliver the units within 22 months.
Established in 2011, Tsehay Real Estate claims to have invested three billion Birr in developing the property near CMC roundabout, Yeka District. The apartment complex sits on a 30,000sqm plot and houses 634 units in 13 apartment blocs. The company, which started selling the units seven years ago, agreed with homeowners to process title deeds within a "reasonable" period following the settlement of payments.
Transfers of legal ownership have yet to occur, although homeowners began to move in as early as 2014.
More than half of the homeowners organised themselves into an association and challenged Tsehay of failing to honour the terms of the contract it signed with clients.
The litigation at the court of law coincided with Bunna Bank's move to foreclose on the properties due to default, but it backed off after striking a deal with the developer to collect the payment from the sales of unsold apartment units. Dozens homeowners have also taken loans, using their properties as collateral, with the facilitation of Tsehay Real Estate.
Lawyers representing Tsehay Real Estate petitioned the court that the preparation of title deeds had been underway but delayed on the side of the Addis Abeba City Administration and the Yeka District Land Management Office. They also challenged the Homeowners Association, formed in 2017 with 105 members, for having no legal standing.
Judges dismissed the latter and ordered the District Office to ascertain whether Tsehay had put any effort into transferring deeds.
Title deeds for 174 homeowners had been prepared, though they were still in the developer's name and had yet to be transferred, officials of the District told the court.
The judge, Dereje Yitagesu, ordered the defendant to start issuing title deeds to the homeowners. Tsehay Real Estate had begun processing about 500 title deeds for transfer, according to an executive from the firm.
"The Document Authentication Agency stopped services after we processed 70 deeds," said the executive.
None of the homeowners has yet received title deeds as the Federal Document Authorisation & Authentication Agency has temporarily suspended transfers as of July 12, 2021.
Homeowners have confirmed the process has been initiated, but some issues remain unaddressed.
"We're satisfied with the verdict," said Hana Woldegebriel, secretary of the Homeowners Association. "But, there's still a lack of communications from the developer."
Since separate deeds cannot be prepared for undeveloped property, agreements are normally made to facilitate sales of units. Developers usually take out loans collateralising the properties, that is when trouble brews, according to Liku Worku, a consultant and attorney at law, who has noticed real estate developers abusing the opportunity.
Buyers do not usually ask for their deeds as long as they reside in their homes, said Liku. He advises homebuyers to demand deeds within a few months following the completion of the houses and settlement of payments.
"It's usually stated in their agreements," he said. "They should exercise their right."
Liku sees the absence of a strong homeowners association as another issue.
The homeowners association at Tsehay Real Estate has been one of the active groups advocating the interests of its members. It filed a separate civil suit in late 2020, challenging Reliance Property Management & Security Services Plc for failing to meet the quality of services promised. Tsehay Real Estate Plc hired the company to manage and administer the apartment complex, but homeowners claim the provision of "unhygienic water" contaminating the water lines, due to a lack of oversight.
The courts ordered Reliance Property to vacate the premises in a verdict passed on March 11, 2021. Five months later, the company has yet to hand over any shared properties or vacate.
The management of Reliance declined to comment on the matter.
Established in 2011, Tsehay Real Estate claims to have invested three billion Birr in its 30,000sqm compound containing 634 apartment units in 13 blocs.
PUBLISHED ON Aug 28,2021 [ VOL 22 , NO 1113]
Radar | Feb 13,2021
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