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Whitianga Medical Centre

The Sale & Purchase Agreement goes to Council next week.

I have extracted some extremely interesting clauses that indicate the level of control that Hoppers will retain post purchace, and explain the $250,000 tax deduction that they have aranged for themselves.

Oh yes - a very good deal, and one where they retain ultimate control - just read the wording of the Agreement and in particular the clauses below, and note 18.3 - the vendor is not reuired to complete settllement until the completion of all construction - very unusual indeed. And indeed, can claim back the entire property if it has not been completed in five years.

  1. Purchase Price

18.1                 The purchaser warrants that at the settlement date it will be registered for Goods and Services Tax and will also be registered as a charitable trust under the Charitable Trusts Act 1957 and shall be registered as a "Donee Organisation" under the Income Tax Act 2007.

18.2                 The purchaser shall pay the purchase price to the vendor on the settlement date immediately it has received by way of gift an amount equal to the purchase price and such payments may be arranged contemporaneously.

18.3                 The vendor shall not be required to complete settlement until the purchaser has provided satisfactory evidence of the matters in clause 22.

  1. Restraint on Disposition and Use

19.1                The purchaser covenants with the vendor that the purchaser shall:

19.1.1             use the Property only for a community medical centre; and

19.1.2             not for a period of five years from the settlement date sell, lease or otherwise dispose of the Property except for zero consideration to the Council or another charitable trust approved by the vendor and complying with the requirements of clause 22 and having the same or similar charitable objects as the purchaser.

19.2                The provisions of this clause shall be recorded by deed of covenant between the purchaser, the vendor and the Council and shall include an option for the Council to acquire the Property at zero consideration, together with an option for the vendor to acquire the Property at zero consideration in the event that development of the community medical centre has not commenced within 5 years of the date of satisfaction of clause 18.1. The terms of the deed of covenant are to be secured by a first ranking encumbrance to be registered against the title to the Property. The Council shall be entitled to lodge a caveat against the title to the Property in respect of its option to purchase. The deed of covenant will include a clause providing that the Council will not withhold its consent as caveator to any document that the vendor requires to be registered on the title to the Property to satisfy any conditions in the Consents or any other requirements of the Territorial Authority.

There are a number of other clauses that give rise to real concern regarding the acumen of those who negotiated this deal on behalf of the Council, but thay can wait until later.

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