COMMON QUESTIONS & ANSWERS
Relating To the Mar e Sol Timber Home Development In Ponta D’ Ouro, Mozambique
1.
Question:
What exactly is SSI selling?
Answer:
Through its principle Micawber 521 (Pty) Ltd shares are being sold in SSI. This shareholding equates to the rights to build a Timber Frame Log Home on the improvements and land owned by SSI in Ponta D’ Ouro, southern Mozambique.
2.
Question:
What rights does SSI hold and how safe is it to invest?
Answer:
SSI has obtained Definitive Title for the use and exploration of the land to develop a 40 unit Residential/Holiday Home complex. The Mozambique State has granted SSI perpetual Land Right usage. Through the largest legal firm in Mozambique KPMG Sarl, SSI has spent the last 8 years at considerable time and cost ensuring that all possible authorizations, rights and approvals pertaining to the proposed project have been obtained.
3.
Question:
Does SSI have a 99 year lease?
Answer:
No, SSI does not have a Lease on either the rights of land use or for the development of the 40 house complex. Rather than a 99 lease and more beneficially, SSI has Title on the land, as the project is registered as a Residential Complex rather than that of a commercial Tourism Lodge. The benefits in this respect are that with this title shareholders in SSI have a perpetual investment that may be sold at any stage, transferred or ceded to family or utilized indefinitely for oneself or rented out to earn a return on the investment. With the Improvements on the land the shareholders of SSI would therefore own a Perpetual Title for the use and enjoyment thereof as dictated by the construction approval granted by the Mozambique State.
4.
Question:
How can the “rights & title” be verified?
Answer:
All documentation pertaining to the rights, authorizations and approvals by the Mozambique State relating to Land Rights and Project Authorization are available for scrutiny from the offices of KPMG in Maputo. In addition to a summary in English by KPMG of the rights held by SSI, certain translated documentation pertaining to Title and Project Licenses are available from SSI in Johannesburg. Deneys Reitz Attorneys in Johannesburg one of South Africa’s largest legal firms can be contacted for confirmation on the structure and system implemented for proposed buyers in obtaining shareholding in SSI.
5.
Question:
Can the Mozambican Government confiscate the land?
Answer:
According to Mozambique law, the State cannot confiscate land that has approved Improvements thereon.
6.
Question:
Why can individuals not obtain Title on the Improvements they make on the land?
Answer:
The company SSI has obtained authorization for Land Right use and for the completion of the proposed project. The land has not been sub-divided into individual plots but rather is 6.875 hectares of open ground zoned for residential use. Therefore, once a proposed buyer purchases shares in SSI and builds a Timber home in the allocated area on the property, the house is then registered in Maputo with the authorities as an additional Immovable Improvement on the land that SSI has rights to. KPMG has confirmed that the Homeowner/Shareholders may at a later stage apply for the sub-division of the land into individual plots and once authorised, owners may then obtain title to the individual plots.
7.
Question:
What would happen if SSI is liquidated or becomes insolvent?
Answer:
SSI is not a commercial entity and it will not trade. SSI is debt free, is not encumbered in any way, is not bonded and has no financial obligations. SSI will merely sell its shares which are associated with Land Rights and building rights in Mozambique. Micawber 521 (Pty) Ltd owns 100% sharehold in SSI. Micawber will be selling off shares in SSI to prospective buyers and Micawber who as the Developer of the Mar e Sol Complex, will be “hired” by shareholders to build Timber Frame Log Homes on allocated sites on the property which SSI has Land Rights on. Micawber therefore will be the commercial entity which will trade and the shareholders of SSI will not be involved in any way with this entity.
8.
Question:
Once all shares are sold and all the units built, will SSI and the Complex be left to fend for itself?
Answer:
Absolutely not, as a sure sign of confidence in the project all 4 shareholders of Micawber will retain shares in SSI and will in fact be building their own houses on the property. Additionally, one of the shareholders will be a Director of the local Mozambican company Por Do Sol Investimentos Lda which has been hired as the Management Company for the Mar e Sol complex.
9.
Question:
Can the purchase of the shares and construction of the house be financed?
Answer:
South African Financial Institutions will not readily finance housing in foreign countries. Mozambican Financial Institutions will only finance a development once it is already built. In other words a buyer would have to fund and build the house and then it could be financed by a Mozambican Bank. The Share Certificate in SSI would then have to be re-issued to the Mozambican Bank by the original buyer until the mortgage is paid off in full (we are presently busy negotiating with Moz Banks). Alternatively additional funds could be obtained from a second mortgage from a SA Bank or by forming a consortium of investors through friends, family, colleagues etc.
10.
Question:
What sort of security is available and will the complex be managed?
Answer:
Por Do Sol Investimentos Lda has been hired to manage the complex on behalf of the Homeowners. A monthly levy will be charged which will cover operating costs such as a maid service, maintenance of complex infrastructure, electrical supply to centre, 24 hour patrolling security, refuse removal, a full time on-site manager etc.
11.
Question:
Will there be a Rental Pool for houses to be let out?
Answer:
Yes, Por Do Sol and its subsidiary in South Africa, African Safaris cc will be managing the rental of the houses on behalf of the Homeowners if they so desire. African Safaris has 15 years experience in renting out holiday accommodation in South Africa and Mozambique in particular. Rentals have been pre-determined and schedules drafted according to peak, high and low season occupancy in the area. Funds received from rentals will not be paid into a rental pool but directly into the Homeowners account. Houses will be cleaned and prepared on site by the Management Company.
12.
Question:
Would I be able to re-sell my unit at a later stage?
Answer:
As the Homeowners houses are linked to a sharehold in SSI, the shares held would initially have to be sold, a new share certificate issued and as part of the share transfer, the Improvement on the property (owners house) would be transferred as well. With its massive data base and links to numerous agents, African Safaris through Por Do Sol Investimentos, will offer owners a home re-sale service.
13.
Question:
What am I allowed to build and can I add on at a later stage?
Answer:
All the units within the Mar e Sol Residential/Holiday Home Complex have been standardized to include a 145m², 4 bedroom Timber Frame Log Home. After construction and inspection by the authorities, Homeowners have the opportunity of adding on additional decks or rooms under the house, outside shower, swimming pool and a host of extras. Micawber, the developer will assist owners with the drawing up of upgrade plans, application to the Authorities for approval, transport to site and construction.
14.
Question:
How are the shares purchased and my house built?
Answer:
Prospective Buyers will enter into a Promissory Agreement with Micawber 521 (Pty) Ltd. Thereafter a Share Sale Contract, Use & Services Agreement, Articles of Association, Article Rules, Construction Agreement & Rental Pool Rule Agreements will be sent to the prospective buyer. A deposit of 50% will be placed in trust with the buyers attorney. Upon signature of the Promissory Agreement the deposit is released to Micawber and construction begins. Drawdowns are made according to a Progress Payment schedule and monitored via a milestone development chart and site photographs sent to the buyer by the Project Manager.
15.
Question:
Is there VAT payable on the sale?
Answer:
According to a written opinion from Advocate PA Solomon SC, the top Legal Tax counsel in SA who was consulted by Deneys Reitz Attorneys on behalf of the Developers, “the sale of shares in the company will not give rise to a liability for VAT”.
16.
Question:
Will my unit have a view of the ocean?
Answer:
Whilst we cannot guarantee the same view for each unit, there certainly will be sea views from each house. The ground has been surveyed and the houses will be sited according to the contour elevation depicted on the site plan. From the site plan you will note that all houses are placed at varying angles in order to ensure that the views are obstructed as little as possible.
17.
Question:
What is excluded in the purchase price?
Answer:
Excluded in the purchase price are force majeure insurance, furniture and personal fittings, annual state property tax, monthly service levies, house electrical consumption and legal fees.
18.
Question:
Will there be a Homeowners Body Corporate?
Answer:
Yes, a Body Corporate will be formed by the Homeowners once the Development is complete. Por Do Sol Investimentos Lda, the Management Company will report directly to the Body Corporate.
19.
Question:
Will there be any restrictions with regard to visitors and will the complex have rules?
Answer:
The general rules pertaining to the operation of the complex, its Homeowners, visitors, tenants and the like are reflected in the “Use & Services” Agreement. In order to ensure that the complex is operated efficiently and that Homeowners privacy and security is respected, it is essential to ensure that the rules are enforced.
