Buying apartments the right way: 3 things to be mindful of
By Lanka Proprty Web
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.
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.