CLT Victorian lease additional term media release

[Derek Mortimer]

Hello all

here is our media release on the lease "additional term" as promised.

Derek Mortimer

[Derek Mortimer]

Dear all

I have had some private feedback about the lease additional term that might be best to generically disclose to all.

The question arose about the CLT charity being required by the additional term to "compensate"' the outgoing tenants. In normal circumstances the CLT charity would expect to find the sum required to compensate the outgoing tenant by using funds contributed to the charity by an incoming tenant. 

An Australian bank's lawyers also suggested generally that a CLT should have a cash reserve, just in case an incoming tenant could not be immediately found - this was in the Bank's interest to protect any loan it had made to the tenant to acquire the tenant's equity . In the present case example, the tenants did not need to borrow, however the charity does have some cash reserves.

I recall, but do not have details, that CLT's in very rare cases have had to sell the land to pay out the tenant in the absence of an incoming tenant. Even the subprime mortgage crisis in the USA did not affect CLT tenants as badly as it did with other borrowers.

The researchers amongst you might have precise details about those matters. 

Derek Mortimer

[Kerry Pearse]

Thanks Derek and hi all

Thanks very much for the information about the lease Derek.

 I have attached a copy of the research you mentioned incase others are interested. It looks at the frequency of foreclosures on mortgages provided to CLT residents in the USA during the subprime mortgage crisis.

 

Cheers, Kerry

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