Buyers attempt to prevent auction by the bank – Parts of Caravanserai sold under false pretenses

POSTED: 09/16/13 3:45 PM

St. Maarten – The Caravanserai drama entered the next stage on Friday when two companies that bought pieces of the property from Haresh Manek’s Kildare Properties in 2011 went to court in an attempt to prevent financer Scotia Bank from selling or auctioning their properties. The court will pronounce its ruling on September 27.

While the court session on Friday was mostly of a technical nature, the bottom line seems to be that International Financial Planning Services (IFPS) and NHKK bought pieces of the Caravanserai property assuming that they were mortgage-free. IFPS paid $1.5 million and NHKK paid just $132,000 for a piece of the property that has an estimated value of around $1 million.

“The notary verifies before signing the deed whether a property is mortgaged,” attorney Jeroen Veen said on behalf of his client International Financial Planning Services. The notary – Franciscus Gijsbertha – retrieved an excerpt from the Cadastre that showed that the property was indeed mortgage free. He also called before passing the deed and received the same answer. “Two years later in April it suddenly appears that the property was mortgaged after all,” Mr. Veen said. “The registry was incomplete or unclear at the time of the transfer.”

The attorney said that, if mistakes have been made, the bank ought to hold Kildare liable, or otherwise the Cadastre or the country. mr. Veen asked the court to order Scotiabank to stop the execution of its mortgage rights until the case has been decided upon in a regular court procedure. “That could be completed within 6 to 9 months.”

Attorney Veen said that the total value of Caravanserai has been estimated at $20 million and that the debt to the bank is $14 million. “There is therefore a surplus value.”

Chris van Amersfoort, the attorney for NHKK, said that the keeper of the land registry – Cadastre Director Clemens Roos – had registered the $14 million mortgage “on his own initiative.” The attorney added that he suspects Scotiabank to be the driving force behind this action. “ Van Amersfoort said that his client had bought its property mortgage-free and that the registration of a mortgage “does not have effect retroactively.” Scotiabank’s attorney Roeland Zwanikken told the court that Kildare – owner of Caravanserai – had acted “in bad faith” by telling the buyers that their properties were mortgage-free. “The bank and/or the buyers have been seriously put at a disadvantage by Kildare. That is the source of all evil.”

Zwanikken pointed out that holders of a long lease, like Kildare, are not allowed to split their property without the written permission of the owner – in the case country St. Maarten. “Domain management has never given permission for splitting the property, so IFPS and NHKKM never became the owner of these properties. The lack of permission makes the transfer void. Without permission long lease rights cannot be transferred. Therefore the demands by IFOS and NHKK cannot succeed. The bank has not been a party to the split.”

Attorney Zwanikken said that Kildare started defaulting on its mortgage in the fall of last year. Several meetings with Haresh Manek, followed by promises that were never kept, drive the bank in the end to its decision to put the property up for sale and to exercise its mortgage rights,

Zwanikken also blamed notary Gijsbertha. “He cannot prove that he did his due diligence,” he said. The attorney also pointed to a statement of Cadastre-Director Roos who said that when information is not mentioned in an excerpt, it does not mean that this information is also missing in the public register.

Zwanikken criticized an opinion from the notary, who had claimed: “In practice, permission (for splitting a property – ed.) is assumed to have been given when a certificate of admeasurement is issued.”

The attorney maintains that the notary should have done a more thorough investigation, knowing that the pieces of property were part of a multi-million dollar project. “It stands to reason to assume that there is financing involved. Besides, NHKK bought its property for $132,000 while it has a value of around $1 million. That should have set off alarm bells as well. Kildare has a debt of $16 million and it is increasing every month.”

After the bank published an ad in which it offered the Caravanserai property for sale, several parties have expressed their interest. “Their bids are between $15 and $16 million, but they want to buy the whole property,” Zwanikken said. “The contractor also has a claim of $1.7 million. A regular court procedure could last something like six years. The country and the notary are not in a hurry with such a procedure, because they will be held accountable.”



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