Mascot Towers: Buyer found for faulty building as owners face bankruptcy

A potential buyer for the defective Mascot Towers has been found. But the near bankrupt owners face losing up to 80% on their initial investment.

UPDATE

A potential buyer has been found for the faulty Mascot Towers complex with unit owners now tasked with the difficult decision of whether to go ahead with a collective sale.

Unit owners will meet within the next three weeks to put a collective sale to a vote, which would see the entire complex sold off to a buyer at a reduced price and essentially cut the losses of the existing owners.

The owners met on Thursday night at Maroubra Juniors to discuss the option and listen to advice.

Mascot Towers was evacuated in mid-2019 after cracking was discovered in the Bourke St building and it was deemed unsafe to occupy.

Almost two years on, the 132 apartments remain empty and unlivable.

It has been a nightmare situation for the unit owners who took out a commercial loan, on top of their mortgages, to try and fix the building.

However, the cost to repair the building has blown out from an initial $20 million estimate and now sits at an estimated $38.5 million.

FRNSW taped off an area out the front of Mascot Towers after the structural damage was discovered.

Many owners are facing bankruptcy and the Mascot Towers Owners Corporation decided to stop the repair works and seek expressions of interest for a buyer last year, as a way of bringing an end to the ordeal.

Mascot Towers Owners Corporation chairman Gary Deigan said a buyer has been found who has made an offer.

He said it would see a loss on initial investment of about 70 to 80 per cent for most unit owners but would stop any further maintenance and repair costs landing on the shoulders of the owners.

“There is only one course of action that is good for the owners, which is all vote for the collective sale and people can move on with their lives,” Mr Deigan said.

He said it was a tough and tragic situation for many owners who were facing bankruptcy, including young families, and they had exhausted other options including talking to the State Government about purchasing the faulty complex.

Residents were forced to leave the complex after the defects wee discovered.

“We have exhausted that avenue. We were in pretty detailed talks with them for a number of months,” he said.

“(But) we have to stand and fight for ourselves, no-one is going to help us.”

It is understood there are two ways the collective sale can go ahead.

Option one would see 100 per cent of owners voting for the collective sale, in which case the sale could be finalised.

Option two would see at least 75 per cent of owners voting for a collective sale then the matter going to the Land and Environment Court for the sale to be negotiated and pushed through.

If lower than 75 per cent of owners vote for the collective sale it is unlikely to happen.

EARLIER

MASCOT TOWER OWNERS FACE ‘FINANCIAL RUIN’

April 15, 2021

Unit owners of the defective Mascot Towers complex will meet on Thursday night to discuss the possibility of a collective sale of the damaged building.

A sale of the 132-unit complex on Bourke St, Mascot would see unit owners take a heavy loss on what they initially paid for their apartments.

However, it would bring an end to their nightmare situation which has dragged on for almost two years since the building was evacuated in mid-2019 and which has left many owners on the brink of bankruptcy.

“We have always pursued rectification, but with such high engineering and construction costs many owners are facing financial ruin and are unable to meet repayment obligations,” Gary Deigan, the Mascot Towers Owners Corporation chairman, said.

“We can’t have a situation where some owners can’t pay and others are supposed to foot the bill. We need to look at a sale, even if we only get a fraction of the value back on our property. If we don’t the liability could only get worse.”

The 132-unit Mascot Towers complex near Mascot train station. Picture: Matthew Vasilescu

He said without unanimous approval from every owner a sale was unlikely.

It comes after earlier this week the Southern Courier reported many families were on the brink of bankruptcy after repair bills almost doubled.

The complex’s 132 apartments were evacuated in mid-2019 after cracking was found in the defective Bourke St building.

Almost two years on, the apartments remain empty and unsafe to occupy.

The complex was roughly 12 years old when it was deemed unlivable which meant it fell outside the six-year warranty period for an apartment building in NSW.

Unit owners made the tough call to take out a commercial loan, on top of their existing mortgages, to pay for the repair costs with the hope of returning to their homes.

However, their plight has since worsened rather than improved.

The cost of repair has blown out from an initial estimate of $20 million to a current estimate of $38.5 million.

“Remediation works were suspended in November 2020,” a Mascot Towers Owners Corporation spokesman said.

“Due to the dramatically escalating and insurmountable costs, owners resolved to suspend repair works to explore all options including collective sale.”

A resident leaving the building after it was evacuated. Picture: Jane Dempster

He said the owners were in a dire situation and many were struggling emotionally and financially.

He added there was currently no good option on the table.

“The only real benefits of a collective sale is that it will expedite an end to this emotional and painful nightmare.

“The reality is whatever option the owners corporation takes it will end in the bankruptcies of multiple families.”

He said the number one thing they wanted was a “solution which allows owners to walk away without entering bankruptcy, and for them to be able to buy another home”.

An owners corporation meeting in 2019 to decide on how to address the repair costs. Picture: Christian Gilles

“Currently, most owners will never be able to own a home again or one that is equal to Mascot Towers and those who cannot find employment in rural areas do not know what to do.

“They are resigned to renting for the rest of their lives as property prices reach historical all-time highs.”

He said the strata committee had even offered counselling and professional support to owners struggling to cope. He also slammed regulations in the construction industry which had let owners down.

“It has always been manifestly unjust that the costs of a poorly-regulated construction industry fall on the shoulders of innocent families,” he said.

“There are some members of the owners corporation who are new Australians and cannot believe this could happen over here in a country like this.”

Some shops on the ground level of the building have been able to continue to operate.

The company which developed Mascot Towers, J & B Elias, is no longer registered.