The Kuilima Estates Owner Association has signed a letter of intent to purchase the lease to the grounds the Kuilimas Estates are located on. Below is the letter to owners from the Kuilima East Owner Association President.
Dear Kuilima East Owner:
The Kuilima Estates East Board met on Dec. 11 and approved the Letter of Intent (LOI) to purchase the fee simple interest in our property. Both the KEE Board and Turtle Bay Resort have now signed the LOI.
The next step is a purchase and sale agreement that will be prepared by our attorney and Turtle Bay Resorts. I expect that document to be completed by mid January. I also hope to have a final commitment from the bank that will finance our purchase of the fee simple interest. The price of $7,841,000 is the price that I previously sent to you.
We are hoping to close the sale and the loan by the end of March 2011. In January, you will be sent a purchase agreement which you will need to sign and return confirming that you will purchase the fee.
For those of you who plan to finance the purchase of your fee, it is critical that you talk to your bank as soon as possible about obtaining a loan. If you are an owner occupant, many of the local Hawaii banks offer loan programs at around 4.5% interest. If you are a Hawaii resident, but not an owner occupant, you should still talk to your local bank about financing but the rate may be higher. Banks are taking at least 60 days to close loans so give yourself plenty of time. If you live on the mainland, you might consider a home equity loan secured by your own property as the best way to obtain low interest rates.
The Kuilima East Home Owners Association (HOA) will have some limited funds for Agreement of Sale purchases of the fee, on a first-come, first-served basis. Under such an arrangement, the HOA would be financing your purchase, and would retain title to the fee until you pay the purchase price in full. Currently we are looking at 6% interest with 20% down and 7% interest with 10% down. Closing costs would be additional and the loans would be for 2 years using a principal and interest amortization of 25 years. You will have to prepare a financial statement to give to the board to obtain this financing. The Board will provide more information later.
We plan to give everyone a reasonable amount of time to close their purchase. As the units close, the bank loan will be paid down. However, the HOA will still accrue interest on the loan. If you don’t close by May 1 or decide not to purchase the fee by that time, the price of the fee will go up 20% plus carrying costs. It may go up again August 1.
The Board negotiated this purchase because we feel it is in our best interests to own the fee. For example, without owning the fee, we might have a difficult time refinancing our condo or selling it. If a condo is sold without the fee, the buyer might be able to purchase the fee interest but at a higher price. This higher price may affect the selling price of the condo.
As of today, 153 owners have responded to either the original survey or follow up calls. 60 have said they will pay cash, 68 feel that they will need some type of financing, 21 are unsure between cash and financing and 4 have said no to purchasing. 14 owners have not responded.
If you have questions, please contact me and I will do my best to answer them.
President, Kuilima Estate East