Seniors Housing & Healthcare Trends

LOS ANGELES: Tiny home companies continue to struggle to build market share in the low cost affordable and Boomer markets.

Amazing Spaces NZ, a tiny house company based in Morrinsville, has now gone into liquidation, leaving around 14 clients waiting for houses secured with deposits between $100,000 and $130,000. Liquidators say the total debt owing is expected to be in excess of $1 million.

The company was founded by director Michael Christopher Goodall in 2019. Goodall is a director of the controlling company LKN Group, which is also in liquidation.

Four days before Amazing Spaces NZ went into liquidation on May 29, 2023, Goodall resigned as a director of Modular Spaces, a separate company specialising in small prefabricated homes and studios. That company was established in August 2021.

A spokesperson for a company that has regular dealings with Amazing Spaces NZ (no connection to the TV series of the same name) told Stuff clients pay large deposits to cover the cost of manufacture (in China) and shipping to New Zealand. The balance, paid on arrival in New Zealand, goes towards the cost of fitting out the steel-framed tiny homes, which are priced from $205,000, including GST.

“I know of four people who have paid large deposits, and two of those have been waiting 14 months for their houses,” the spokesperson said. “At this stage they don’t want to talk publicly. Michael is an extremely good salesperson, and he always manages to assure his clients everything is under control.”

Goodall says he takes the blame for the business collapse, and appointed the liquidators himself: “At the end of the day, I’ve got to own the problem. I’ve caused the problem. However it washes up, I am going to be paying this off for the rest of my life.”

Goodall says the company first had problems after Covid hit, when freight costs for the tiny homes jumped from $15,000 per unit to between $45,000 and $50,000. “We honoured our customers [contracts] and didn’t pass those costs on.

The director also says he contracted throat cancer as things were starting to get going after the Covid lockdowns. “The company was in a bit of hiatus because of my medical condition. But by wanting to help everybody and honouring everything I probably dug myself a bigger hole.

“It’s a very difficult market right now. It seems one [tiny home builder] a week is going under. But I am not a person to blame things – it is what it is. And it has been a big learning curve for me. I have had sleepless nights when you think of the hurt you’ve put on people that wasn’t meant to be. I am sitting here right now with less than $200 in my bank account. My family has lost their investments, and my partner, who also put her inheritance money into the business has lost that.”

Steven Khov of Khov Jones liquidators says it is too early to determine at this stage whether customers will get their money back, as they are still in the initial stages of the liquidation.

“We have contacted all the customers and asked them to complete a claim form to lodge their claim in the liquidation. Part of our duties as liquidators is to investigate the affairs of the company and the director’s conduct. This includes whether the director has breached their directors duties and may include a recovery from the director for the benefit of creditors.”

Khov says there are a number of homes in the company’s yard. “We have engaged with those customers and are working through the process with them to determine their rights, and getting access to their homes to those customers if appropriate.

“We are also aware of some customers that have paid deposits for homes that have not arrived into the country or have not yet been built. These customers will be creditors of the liquidation.”

The media spoke to a tiny house towing company that will shortly be removing one partially completed tiny home and two cabins from the company’s yard and taking them to a client in Gisborne. “The houses are unfinished and not watertight.”

The move to reclaim specific buildings under construction follows a recent High Court decision following the liquidation of NZ Tiny Homes in New Plymouth, last November.

The collapse left a number of NZ Tiny Homes customers out of pocket and without a home. Six of these creditors went to the High Court to try and get their partially and nearly completed homes released from the premises. The court found in their favour, and Tiny Homes NZ was forced to hand over the homes in what has been described as a “ground-breaking” court decision.

NZ Modular Homes

NZ Modular Homes and Kiwi Modular Homes also went into liquidation last month. On May 1, 2023 Fair Go talked to several customers who had been left out of pocket by owner Warren Sinclair following the NZ Modular Homes liquidation. Most customers had paid the majority of the cost of their builds.

“No product was going out, but money was coming in, and Warren was busy signing up new customers,” reporter Gill Higgins said.

Another of Sinclair’s companies, Ready Homes, was placed into liquidation last year.

Another tiny house company that had been struggling has been sold this week with a contract in two parts. As only one part has been signed off and the full contract won’t be completed till July, Stuff has agreed not to name the company nor the new owner.

The former owner did say he could personally guarantee “not one single customer will lose a unit or a cabin, or anything. We are protecting customers and investors.”

Tiny home organisation’s Builder Report

Sharla May, founder of Tiny House Hub and director of Collab Developments says the organisation has taken proactive steps to protect future tiny home buyers.

“The increasing popularity of the tiny living lifestyle has attracted both genuine professionals and opportunistic individuals.”

The hub has consequently developed the Tiny House Builder Report, which May says is a comprehensive tool designed to help individuals find trustworthy builders in the industry.

“By providing information on a building company’s credit score, history of multiple company openings and liquidations, as well as any Disputes Tribunal involvement, the report lets potential buyers make an informed decision.”

Legal advice when buying a tiny house new

Lawyer Andrew Skinner, a partner in Urlich Milne Lawyers, also says it’s important to do your due diligence on these businesses to protect yourself.

“If you are dealing with a new tiny house builder you should consider the position regarding ownership of the tiny house while the tiny house is under construction,” he says. “We would normally expect you will make staged payments to the tiny house builder for materials and when particular milestones are reached.

“Your contract should confirm that you own the tiny house as it is being constructed. In addition, we also recommend that you carry out checks on the Personal Properties Securities Register (PPSR) in the tiny house builder’s name to see what security interests have been registered over the assets of the tiny house builder.

“If there are security interests registered that could potentially cover the tiny house under construction, you then need to obtain comfort from those secured parties that their security will not cover your tiny house once you have made the staged payments. We recommend that you ask your lawyer to confirm this point and review the build contract.”