Amde Akalework, managing director of Habtewold International Commission Agent, is one of the 152 clients Habitat-New Flower Homes Plc has entered into an agreement with to develop an entirely new suburb around Kality area, in the eastern periphery of Addis Abeba.
Amde has agreed to buy a house that is worth of 2.9 million Br from the real estate developer on the plot of land around Kality St. Gabriel church.
His agreement with the real estate developer was made on June 16, 2006, to buy Mago Court house, a name the developers have given to the model of houses which have three bedrooms, a terrace, a garage with a capacity to accommodate two cars, and a basement. The developer has agreed to complete construction of houses within 18 months.
“I have completed 90pc of the payments,” Amde told Fortune.
Amde and 27 other people, who claim to have mostly completed their payments (60pc to 90pc), now are complaining about the ambiguity surrounding the title deeds transfer that seems to have not turned out they way they expected.
“When we request the transfer of ownership, we have to deal with an individual named Estegenet Abate, who actually owns the land the houses are built on,” Amde explains. “We do not know who this woman is and we do not have a deal with her.”
The 28 people have requested an explanation from Habitat about who Estegenet is. She is said to be one of the shareholders in the company having shares worth of 50,000 Br. She has shares in the company in cash but not in kind, and is currently out of Ethiopia.
“Habitat is Estegenet’s legal representative,” Brehane Abate (Eng.), managing director of Habitat, said; the real estate developer was established by nine shareholders back in 1999 with an authorized capital of 1.2 million Br.
The real estate developer has been Estegenet’s officially authorized representative since 2005, which entitled it to build houses on the plot she owns and wants to develop real estate on. It has also been entitled to represent her in relationships with different bodies, to control and watch over the construction and to collect the money from clients and deposit it in the company’s and her shared account.
The title deeds of the plot the houses are built on belongs to Estegenet, under Title Deed No. 39963, which is found in Kebelle 11 of the current Akaki Kality District, the former Woreda 27.
The land is owned by Estegenet as freehold, which is the legal ownership of a property giving the owner unconditional rights, including the right to grant leases and take out mortgages.
But Habitat’s 28 clients wonder why the deal cannot, then, be finalised by the company itself; that is part of their complaint and something they demand explanation for from the real estate firm.
This is because, in the agreement, it is stated that the company has secured and acquired vacant land for residential construction purposes.
“In the agreement, the title deed number is indicated and once you have signed an agreement you are obliged to be ruled by it,” Manyahelishal Abate, marketing director of Habitat, and also a shareholder in the family business, told Fortune.
“Site shall mean the land acquired by the developer for residential construction purposes identified under Title Deed No. 39963 in Kebelle 11 of Woreda 27 in Zone 6 of Addis Abeba,” reads Sub-article 11 of Article One of the agreement signed by the company and each of its clients.
At this point, however, Amde does not deny that he and the other clients failed to cross check if the developer had secured the land from any authoritative body.
“We did trust the company,” he said.
Perhaps due to that, Habitat’s lawyers believe they have the legal upper hand.
“Once you give your consent you are liable,” Tesfaye Tadesse, legal advisor to Habitat said. “The two parties have agreed and signed the agreement and the agreement is binding.”
The problem would have been an issue if Estegenet had refused to sign and transfer her ownership to Habitat’s clients, according to Tesfaye.
But that did not happen, it is only because they do not want Estegenet in the deal, Manyahelishal supports the idea.
In order to bind the land owner to the agreement, the title deed number was intentionally included and to which all parties agreed upon.
“We only entered into agreement with Habitat and that is all,” Amde still maintains his views shared by his would be neighbours in the new village.
The developer and the 28 clients have been dealing with the problems they have encountered, primarily caused by the delay of the completion of houses. They have also gone to arbitrations on issues related mainly to the transfer of title deeds, utilities, Value Added Tax (VAT) and the infrastructure within the neighbourhood.
The 28 individuals, most of whom are from the Diaspora community, addressed their complaints a month ago to the Prime Minister’s Office, the Ministry of Foreign Affairs (MoFA) Directorate for Diaspora Affairs, Ministry of Justice, Ministry of Works and Urban Development, Federal Ethics and Anti Corruption Commission, the Mayor’s Office, the Police Commission, and Akaki-Kality District.
They requested these offices to investigate the legality of the company and the VAT and other taxes they have paid so far.
“This is one of the many cases that come to our office,” Mebrat Beyene, director of the Diaspora Affairs Directorate with the MoFA told Fortune.
Some of the clients have also chosen other courses they felt would help their case.
For instance, Amde went to the Kera Area First Civil Bench on March 24, 2009, requesting the court to issue a temporary injection – a judiciary order that suspends Habitat from making any move on Amde’s house with MC 117 identification number – and the court did so.
“The issue of VAT is regarding the payments that Habitat has made while the proclamation was not even there,” Amde told Fortune. “We are not sure if the receipts they issue are the legal VAT receipts.”
Habitat’s legal advisor does not agree. He mentions the agreement once again which he believes is the major substance of the debated issue.
“All costs involving the transfer of title deeds, including all government taxes, relevant administrative charges, etc. shall be to the client’s account,” reads another sub-article of the agreement.
As a result, the developer has paid taxes on behalf of its clients and they are obliged to pay back through the agreement they have consented to, according to Tesfaye.
Habitat has two construction sites; one in Kality and the other in Kotebe area, in front of CMC Housing Development – the latter site has 114 houses. These houses are built on a plot leased from the city government.
At present, there are about 40 clients who have started living in the houses on Kality site constructed by BERTA Construction Plc, a company established by the major shareholder and Managing Director of Habitat, Berhane.
There are some clients who have already transferred ownership and there are some in the process of transferring ownership over the land and property. Almost 10 clients from the total 152 which are included in the Kality project have had their agreements terminated due to being unable to make payments on time.
The new village, which includes a tennis court, swimming pool, an artificial lake, internal roads and side walks, all rests on a portion of 181,134Sqm of the total 293,582Sqm land owned by Estegenet and approved by the former Region 14 Administration in 1999/2000, looks almost deserted.
A visit to the area on Tuesday, May 5, 2009, showed that there was not much activity to indicate that construction was still going on; but there are some clients who have decided to finish the houses by themselves. Some of the houses on the left side of the entrance look old and the paint is already fading.
- By HILINA ALEMU | Addis Fortune
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