Buying Apartments the Right Way: 3 Things to be Mindful of When Purchasing an Apartment
From vertical living to multi-storied houses and ancestral homes in the countryside, housing has evolved throughout the years in different ways in different countries. The industrialized nations are branching out their vertical living styles to higher stories, while in the developing world housing is growing larger in width.
In Sri Lanka, high-rise buildings or condominiums are increasing with constructions taking place throughout the Colombo city and its suburbs. While it isn’t necessarily as Times Square in NYC or Tokyo in Japan, Colombo has its very own unique local versions.
The areas of Colombo 1 to 6 are especially famous for the sight of many condominiums in the city. The development taking place throughout the country, the increasing facilities and infrastructure have been identified as contributing factors to this skyscraping nature.
The public revelation of Colombo Port City and openly calling for investors is also expected to further improve this. Thus resulting in the Colombo skyline being decorated with more long-standing concrete structures.
But with choosing to purchase an apartment to live in, you need to be well aware of the procedures and risks to avoid.
- Check if the property has been registered in the Condominium Management Authority (CMA) or has a Certificate of Conformity (COC) (if completed). If it’s an ongoing project refer to the provisional/semi certification issued by the Condominium Management Authority.
- Check the building structure for any defects and whether the apartment is under the developer’s warranty.
- If you are buying from the secondary market, check if all dues/arrears are cleared by previous tenants.
- Check on the service and maintenance charges and how the property is managed by the management authority.
- Consider the location, price, places of convenience in close vicinity, etc.
What is a Condominium Property?
The Apartment Ownership Law No. 11 of 1973 defines a condominium as any building erected on an alienated land, held as one land parcel and capable of being divided into sub parcels. This property and its elements may be owned individually and collectively.
Individual ownership of a condominium refers to a unit owned by a person in a building with more than one story. This unit may be subdivided further into rooms with accessory units and a direct exit to a road or common area.
Joint ownership refers to all areas in a condominium that aren’t a part of any individual unit. These are also known as Common Elements and include places like the lobby, garages, technical rooms, walkways and corridors.
Condominium Registration and Title to the Condominium Unit
Upon registering the Deed of Declaration signed by the owner and attested by a Notary along with the condominium plan, the ownership of a condominium comes into being. The vertical ownership of this registered condominium and its land is then transferred horizontally to individual property owners.
But if the building has not been registered at the CMA and there is no COC, transferring the individual ownership of its units is difficult . As a result, despite paying the full amount for the unit you live in, you wouldn’t receive the title deed. So if you ever want to sell or mortgage the property, you can’t do so unless on a cash basis. In fact, legally you are considered just an occupier and not the actual owner of the property.
Developers also sell condominium units before they are constructed and encourage customers to make payments based on the Sales and Purchase Agreement (SPA). However, this is not a Title Deed, and a title deed will only be given to you after the COC is drawn. So at some point there would be questions arising on the ownership of the property. There is also a chance that the building might not be registered as a provisional condominium for pre-selling of units or a semi or fully completed condominium.
This is because a building is only registered as a provincial condominium if the apartment obtains preliminary approval from the Urban Development Authority and local authorities before obtaining the COC. The developer can also obtain a semi certificate from the CMA before obtaining the COC only for the completed units.
So always check whether the building has been registered or has a COC.
Possible Risks and Insurance Cover
Living in a high rise building comes with a cost. Given the high elevation from the ground, there is a greater potential for risks and accidents. The risk of fire, damages caused by neighbouring unit owners, poor workmanship and injuries caused to visitors and users of common facilities (i.e. stairs, elevators and floors) are a few of them.
During a resale of a condominium, make sure to request for a certificate from the Management Corporation showing any accumulated dues that previous occupiers were supposed to pay (if there is any). As a resale is a complete transfer of property, the costs and damages may have to be borne by the new owner if he or she is unaware of them early on.
In Sri Lanka, an apartment developer need not have a license to construct a high rise building, unlike in Singapore. In fact, as long as the construction regulations and standards set by the local authorities are met, permits shall be granted. This might lead to poor construction of high-rise buildings. Therefore, before purchasing an apartment, consider the reputation of the developer and the contractor. Reputed firms constructing skyscrapers constantly partner or collaborate with only the best in the industry. So if you choose to live in such complexes, you are definitely in good hands!
Besides the above factors, it is essential to look into building insurance and insurance on moveable assets, to minimize further costs as a result of potential damages and accidents.
Administration, Management and Maintenance of the Condominium
The basic expectation tenants or occupiers have from the developer of a high rise building is administrating, managing and maintaining the complex. According to the law, developers of condominiums are expected to meet certain standards. As such, thorough checks and balances are done prior to the construction.
But the loophole of practicality that affects afterwards—especially once a building is completed and has been sold off—ends up negatively affecting the residents in different forms. The developer is responsible for defect fixing for the first 11 months after the handover. After that, it becomes the responsibility of the management committee. But with some developers exploiting opportunities and the tenants lacking knowledge, the frequency for damages and issues to take place is higher.
For example, in some condominiums the common area and the entrance of the apartment have been leased out to a third party by the developer without the consent of the occupiers. However, this is illegal since the common areas are jointly owned by the tenants and can’t be leased off without their consent.
Another example is where an apartment listed as a residential condominium is being used by the developer as a hotel with high occupant turnover. This is done so by renting or leasing out a number of units the developer holds onto during presale. This causes inconvenience and disturbance to the residents of the apartments given the excess use of common facilities.
To take precautions from such situations, be well informed of your rights and obligations before entering into sales agreements with condominium property developers.
It is also essential to remain rational and avoid being deceived by the fancy content developers use in their promotional brochures. Consider the service charges or maintenance fees you would have to pay and how the management process works. This will ensure that once you have settled in, your life in the condominium would be as comfortable as promised.
In case of a resale condominium, consider the history of the property including details like a sinking fund for major renovations, how the building is managed etc. Check your rights on how you can become a member / councillor of the management corporation and after purchasing subscribe to their letters, emails, WhatsApp groups etc. to stay updated.
Choosing to live in a condominium has some of the best advantages. But it all starts from choosing the right condominium.
Posted Date: 18th January 2021