Fortune News | Jul 18,2021
Hundreds of homebuyers signed up for deals with Access Real Estate to buy properties under Pacific Link Ethiopia Real Estate should be paid compensation for homes undelivered, a Judge at the Federal High Court ruled.
Disgruntled homebuyers filed civil suits against the developers, claiming reimbursements of the money paid along with interests and punitive damages. Some buyers paid the full prices of the houses sold by Access Real Estate and Pacific Link, the latter 40pc owned by Access.
Judge Yihenew Kelil ordered that close to 170 of these buyers be reimbursed for the advance payments, expenses incurred during litigations, and interests. The interest is calculated according to the contracts the developers and buyers made. In most cases, interest rates involving legal matters go over 12pc, but if nothing is stated in the contract, the Judge can decide on a nine percent, according to Arba Beyene, a legal expert who worked in a land management bureau for over three years.
Judge Yihenew ordered the companies to settle 1.9 million Br in legal expenses.
The ruling was made a month ago, eight years after buyers took their case to court, accusing Ermias Amelga, the main promoter, in absentia.
Pacific Link had planned to build seven-storey luxury apartments, Ayat Eastview, on a 50,000Sqm plot, past the Ayat neighbourhood. Its managers had promised to complete and deliver homes in two years, beginning in 2011. Pacific Link had contracted Access Real Estate to build the houses; Access had collected 1.4 billion Br from buyers within a few years of its incorporation.
The plaintiffs appealed that each contract signed with Access Real Estate be nullified and refunded.
Pacific Link Real Estate was involved in the same case in 2013. Close to 137 aggrieved homebuyers brought charges against the company, claiming 73.4 million Br in punitive damages for failing to deliver homes.
First incorporated in 2007 with paid-up capital of 50,000 Br, Ermias was a significant shareholder of Access Real Estate with a 92pc stake. Four other shareholders contributed equity of 1,000 Br, before the company went public, mobilising 35 million Br in equity from 640 shareholders. It faced multiple civil suits brought against it and its subsidiaries over the decade.
Access Real Estates’ downhill slide escalated after its CEO, Ermias, was arrested for issuing a cheque without sufficient funds in the company’s account, forcing him to leave the country in 2014. This led to homebuyers rushing to the Access Real Estate offices, demanding their money back.
Amidst this trouble, homebuyers from each site organised themselves into committees to decide how to recover their costs.
Azeb Worku, an artist and TV personality, paid 1.5 million Br for an apartment planned on African Avenue (Bole Road), on a site behind Mega Building.
“The company has tricked many,” said Azeb.
Homebuyers were offered a contract on a plot that Access did not own, according to Azeb. Buyers demanded the plot be transferred to them and build the property on their own.
Dawit Tewolde is one of the 167 plaintiffs who formed an association to follow the case for the past eight years.
“Finally, we won,” he told Fortune.
Aklok Seyoum is a board member of the Access Real Estate Homebuyers Association, formed in 2012 by over 2,000 members. The Board has brought the case to former Prime Minister Hailemariam Desalegn. An intra-agency committee comprised of members from ministries of Urban Development, Housing & Construction, Foreign Affairs and Trade, as well as the Federal Police Commission, the Addis Abeba City Justice Bureau, the Mayor’s Office, and the homebuyers association had been formed to probe the case.
“Many frauds were committed,” said Aklok.
Ermias says Access Real Estate’s Board could not perform properly because there was a management problem due to the governmental structure at the time.
“This is not new,” Ermias told Fortune. “The company had such cases for a long time.”
Mayor Adanech Abebie has announced that her administration has reclaimed title deeds for 90hct land from 68 developers who had not developed the plots in over a decade since 2006. Pacific Link is among these developers.
Pacific Link’s significant shareholders, Addis Ayele and Nebyou Samuel, were unavailable for comment.
PUBLISHED ON Nov 27,2022 [ VOL 23 , NO 1179]
Fortune News | Jul 18,2021
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