NAMA developers' wives give up rights to the home
WIVES of Ireland's top developers are giving away the rights to their family homes in order to keep their husbands' businesses afloat, under a deal being offered by NAMA.
Spouses are legally entitled to a 50pc stake in the family home, but NAMA is asking them to waive this right, so that the husband does not face either receivership or liquidation at the hands of the loans agency.
In exchange for giving up this right, NAMA is allowing property-developer couples to keep up to €500,000 from any sale of the home at a later date.
This means that if NAMA moves against the couple at some point in the future, they would still be allowed hold on to some funds to buy a new home and start again.
A document seen by the Irish Independent shows that developers and their wives must give up all their major assets to NAMA as security for their loans -- including the family home. If the developer breaks this agreement, all these assets are then up for grabs.
However, NAMA will still leave a sum of up to €500,000 untouched in relation to the family home, known as the 'principal domestic home'.
The agency last night declined to comment.
It is understood, however, that the amount remaining untouched varies between developers and is often tied to the value of their so-called 'trophy home' where they live at present.
The number of wives accepting the deal is not known, but a source said that each case was taking a long time and the agency was into "long drawn-out and hard negotiations" with developers and their spouses.
The document shows that developers have little choice but to go along with NAMA if they want to stay afloat as functioning businesses.
"Consensual workout deals require borrowers to put up all unencumbered assets in return for NAMA tolerance in not enforcing," it states.
NAMA has found itself frustrated by the transfer of homes into wives' names in the last two years, although it does have the right to overturn some of these transfers if they were done to evade creditors.
Sources in the property and legal industries denied that the arrangements amounted to a "sweetener" for developers.
One source pointed out that NAMA did not have an automatic right to a developer's home. In fact, the agency is applying for such security for the first time under this deal.
Judges have huge discretion when it comes to the position of the family homes and usually try to protect them. Sales can be forced, but a judge may not let a bank or NAMA take possession of a home immediately.
However, in reality, NAMA does not need to force a sale to get co-operation from its debtors. There is a range of ways in which the agency can force developers to work with it.
For example, it can deny a developer any new funds to finish off projects and can enforce personal guarantees that a developer may have taken out with their bank. Another way that it can get co-operation is through its control of the salary that a developer is paid.
NAMA has often appointed outside individuals to sit on the boards of companies, which is resented by some developers.
A receivership or liquidation of assets also makes life difficult for developers if they try to move abroad. Most are hoping to pay down debt over several years and eventually move out of NAMA's control.
One final option open to developers is to refinance their loans. This means they would borrow from another bank, most likely in an overseas market, and use this to pay off NAMA and go independent.