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Buying an apartment without any management company in place.

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  • 08-11-2015 1:44pm
    #1
    RickyG
    Registered Users Posts: 43 ✭


    Hi . I'm just wondering if anyone has any experience of buying an apartment without any management company in place?I found a nice 2 bed downstairs mid terrce apartment with no common entrance etc to the upstairs apartment.nice big garden etc and perfect for my financial situation.however after submitting all my paperwork for the mortgage the bank decided to refuse application because of no management company in place . I'm gutted.has anyone come across this situation before or is there any way around it?cheers ...


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    #2
    Del2005
    Registered Users Posts: 18,891 ✭✭✭✭Del2005


    If there's no management company who do you buy the lease off? Start looking elsewhere as with no management company there will be no work done on common areas, no sinking fund and more importantly no insurance.


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    #3
    FishOnABike
    Registered Users Posts: 4,376 ✭✭✭FishOnABike


    Unless you were a cash buyer, buying at a substantial discount, had done your homework and had assessed and was willing to accept the attendant risks I'd look for something else where everything was in order.

    As you have already experienced no financial institution is likely to back you taking on such a property which does not have a functioning management company.


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    #4
    RickyG
    Registered Users Posts: 43 ✭RickyG


    Del2005 wrote: »
    If there's no management company who do you buy the lease off? Start looking elsewhere as with no management company there will be no work done on common areas, no sinking fund and more importantly no insurance.

    As far as I can see every house in the estate independently owned.only common area is the green in the middle of the terrace and residents look after that themselves.i wonder how the other house owners got their mortgages tho when I can't..confused..


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    #5
    RickyG
    Registered Users Posts: 43 ✭RickyG


    FishOnABike wrote: »
    Unless you were a cash buyer, buying at a substantial discount, had done your homework and had assessed and was willing to accept the attendant risks I'd look for something else where everything was in order.

    As you have already experienced no financial institution is likely to back you taking on such a property which does not have a functioning management company.

    Yep I'm thinking the same but I'm confused as to how the other home owners in the estate got their mortgages drawn down in the same circumstances.terrace only 10 yrs old..


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    #6
    Paulw
    Moderators, Society & Culture Moderators Posts: 13,381 Mod ✭✭✭✭Paulw


    RickyG wrote: »
    As far as I can see every house in the estate independently owned.only common area is the green in the middle of the terrace and residents look after that themselves.i wonder how the other house owners got their mortgages tho when I can't..confused..

    Buying a house is very different from buying an apartment. A house tends to sit on the ground. An apartment sits on top or below another property.

    A house can be bought freehold, but an apartment (almost always) is leasehold. You buy a lease, usually for 999 years. A house, you can insure the structure. With an apartment, since you only have a lease, the management company insure the structure.

    Your initial post said buying an apartment, but now you are talking about a house. Which is it??


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    #7
    RickyG
    Registered Users Posts: 43 ✭RickyG


    Paulw wrote: »
    Buying a house is very different from buying an apartment. A house tends to sit on the ground. An apartment sits on top or below another property.

    A house can be bought freehold, but an apartment (almost always) is leasehold. You buy a lease, usually for 999 years. A house, you can insure the structure. With an apartment, since you only have a lease, the management company insure the structure.

    Your initial post said buying an apartment, but now you are talking about a house. Which is it??

    Sorry for misunderstanding..The terrace has about 25 houses with the duplex/apartment I'm interested in right slap bang in the middle of it.its flanked on both sides by houses.going by the comments here I'm best walking away I reckon..pity tho because it's a bargain..oh well..


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    #8
    the_syco
    Registered Users Posts: 37,295 ✭✭✭✭the_syco


    RickyG wrote: »
    pity tho because it's a bargain..oh well..
    I'm guessing that although it's a bargain now, it'll end up costing you a lot in the long term.


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    #9
    RickyG
    Registered Users Posts: 43 ✭RickyG


    the_syco wrote: »
    I'm guessing that although it's a bargain now, it'll end up costing you a lot in the long term.

    Yes quite possibly..mortgage payments would have been less than what I'm paying for rent right now so twas very tempting.


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    #10
    volchitsa
    Registered Users Posts: 7,019 ✭✭✭volchitsa


    If it's a terraced house, why would it need a management company? Does it have a shared roof (maisonnette-type place) or other shared built areas? If it doesn't, and the shared space is only outside, garden-type space, surely that can't be a major issue?

    Edit: okay I see it has an upstairs apartment so with a shared roof then. I don't know how that works, but I'd have thought as the downstairs place you'd be less at risk of having problems getting insurance than the upstairs one. Have you asked th neighbors how they managed to buy/insure?


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    #11
    RickyG
    Registered Users Posts: 43 ✭RickyG


    volchitsa wrote: »
    If it's a terraced house, why would it need a management company? Does it have a shared roof (maisonnette-type place) or other shared built areas? If it doesn't, and the shared space is only outside, garden-type space, surely that can't be a major issue?

    It is an actual house divided into 2 apartments with 2 separate owners..there is actually no shared space whatsoever..downstairs has big back garden and upstairs a balcony.both have independent front door entrances.seems simple but bank not interested in the joint insurance policy between the two owners...


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    #12
    CIARAN_BOYLE
    Moderators, Sports Moderators Posts: 14,599 Mod ✭✭✭✭CIARAN_BOYLE


    RickyG wrote: »
    It is an actual house divided into 2 apartments with 2 separate owners..there is actually no shared space whatsoever..downstairs has big back garden and upstairs a balcony.both have independent front door entrances.seems simple but bank not interested in the joint insurance policy between the two owners...

    who owns the land though, and how long would your lease be if you "buy" the apartment?


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    #13
    RickyG
    Registered Users Posts: 43 ✭RickyG


    CIARAN_BOYLE wrote: »
    who owns the land though, and how long would your lease be if you "buy" the apartment?

    I'm assuming it would be 999 yrs going by other comments.who owns what land tho?do you mean what the house is standing on or the back garden?


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    #14
    RickyG
    Registered Users Posts: 43 ✭RickyG


    volchitsa wrote: »
    If it's a terraced house, why would it need a management company? Does it have a shared roof (maisonnette-type place) or other shared built areas? If it doesn't, and the shared space is only outside, garden-type space, surely that can't be a major issue?

    Edit: okay I see it has an upstairs apartment so with a shared roof then. I don't know how that works, but I'd have thought as the downstairs place you'd be less at risk of having problems getting insurance than the upstairs one. Have you asked th neighbors how they managed to buy/insure?

    No and I'm intending to call to the guy that lives next door tomorrow to ask him how they managed to get mortgage /house insurance etc.the two owners of these apartments drew up a joint policy for entire building.a block policy of sorts but bank still wouldn't accept it..


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    #15
    volchitsa
    Registered Users Posts: 7,019 ✭✭✭volchitsa


    Have you thought about trying another bank?


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    #16
    CIARAN_BOYLE
    Moderators, Sports Moderators Posts: 14,599 Mod ✭✭✭✭CIARAN_BOYLE


    RickyG wrote: »
    I'm assuming it would be 999 yrs going by other comments.who owns what land tho?do you mean what the house is standing on or the back garden?

    Exactly. Both the house and the back garden. Usually a management company owns the land and you lease the land for 999 years (from the date the apartment was built) from the management company.

    If there is no management company then who owns the land? Who is the lease with? How long is the lease?

    Thats what you need to know. If you can settle those issues you might be able to get finance and proceed with the purchase. If not stay away.


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    #17
    RickyG
    Registered Users Posts: 43 ✭RickyG


    volchitsa wrote: »
    Have you thought about trying another bank?

    I only got refused on Friday so I'll do a bit of ringing around this wk.have feeling lack of management company will be an issue with all of them tho..


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    #18
    RickyG
    Registered Users Posts: 43 ✭RickyG


    CIARAN_BOYLE wrote: »
    Exactly. Both the house and the back garden. Usually a management company owns the land and you lease the land for 999 years (from the date the apartment was built) from the management company.

    If there is no management company then who owns the land? Who is the lease with? How long is the lease?

    Thats what you need to know. If you can settle those issues you might be able to get finance and proceed with the purchase. If not stay away.

    Well the back garden is definitely part of the downstairs apartment..I'm thinking with lack of management company that everyone in the terrace bought their houses outright tho I know apartment scenario entirely different.both apartment owners independently own their own properties far as I can detect so I assume they bought directly from builder/developer.the issue with the bank is the joint insurance policy being unsuitable..


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    #19
    jd
    Registered Users Posts: 5,682 ✭✭✭jd


    It's more likely there was an OMC in place when the scheme was first sold, but developer is gone and the owners didn't take it over and keep it running. It needs to be resurrected. The people who tried to get insurance were refused because they don't own the building.

    Anyway none of this should be your concern - run a mile.


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    #20
    RickyG
    Registered Users Posts: 43 ✭RickyG


    jd wrote: »
    It's more likely there was an OMC in place when the scheme was first sold, but developer is gone and the owners didn't take it over and keep it running. It needs to be resurrected. The people who tried to get insurance were refused because they don't own the building.

    Anyway none of this should be your concern - run a mile.

    Yep it's looking like that alright tho the ppl selling did get the joint insurance in place but bank's legal team saw there was no management company and pulled the plug.might be just as well..


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    #21
    April 73
    Registered Users Posts: 846 ✭✭✭April 73


    How many apartments are there? By your description it sounds like it's all houses with one house divided into an upstairs & downstairs unit?
    If that's the case I doubt there would be a management company as such.

    Maybe the bank don't understand the set-up. Or maybe I misunderstand the description.

    In the UK it seems common to see buildings divided into apartments. I never see a mention of a management company.


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    #22
    RickyG
    Registered Users Posts: 43 ✭RickyG


    April 73 wrote: »
    How many apartments are there? By your description it sounds like it's all houses with one house divided into an upstairs & downstairs unit?
    If that's the case I doubt there would be a management company as such.

    Maybe the bank don't understand the set-up. Or maybe I misunderstand the description.

    In the UK it seems common to see buildings divided into apartments. I never see a mention of a management company.

    Yep you have the set up described perfectly there.i think originally unit was designed as a retail unit but developer scrapped that and converted the house into 2 independent apartments.surely be ridiculous to have management company but I've described the set up in detail to mortgage advisor etc and the bank still baulked..


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    #23
    April 73
    Registered Users Posts: 846 ✭✭✭April 73


    I guess that scenario raises a few questions. Who is responsible for maintaining the building, especially the roof & gutters? Who owns the garden? What exactly would you be buying?
    The management company seems like it would overly complicate things but the bank has used this as a get-out clause.

    It might be worth approaching the other owner. They must have had similar issues. Or it may be safer to run a mile!


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    #24
    RickyG
    Registered Users Posts: 43 ✭RickyG


    April 73 wrote: »
    I guess that scenario raises a few questions. Who is responsible for maintaining the building, especially the roof & gutters? Who owns the garden? What exactly would you be buying?
    The management company seems like it would overly complicate things but the bank has used this as a get-out clause.

    It might be worth approaching the other owner. They must have had similar issues. Or it may be safer to run a mile!

    The other owners rent out top floor apartment tho its vacant now.the garden is definitely part of the downstairs unit same as the balcony is belong to the top unit.would imagine both owners responsible for the upkeep of entire building and insurance of it etc.place is only 10 yrs old so very little maintenance required thus far.the 2 owners both had separate insurance up until I decided to buy.they then bought a joint policy for entire building but bank still refuse..


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    #25
    riclad
    Registered Users Posts: 8,184 ✭✭✭riclad


    What will happen is someone will buy that for cash,
    bank might refuse to give a loan on it . cos its not clear who is responsible for repairs ,
    if there,s a leak in one or both of the apartments for example .
    Who pays for repairs ,if its not covered by the building insurance.
    IN the case of the non existance of the managent company.
    Maybe the other 2 apartments were bought from the builder who might be gone out of business .
    So that may be the reason its going cheap .


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    #26
    RickyG
    Registered Users Posts: 43 ✭RickyG


    riclad wrote: »
    What will happen is someone will buy that for cash,
    bank might refuse to give a loan on it . cos its not clear who is responsible for repairs ,
    if there,s a leak in one or both of the apartments for example .
    Who pays for repairs ,if its not covered by the building insurance.
    IN the case of the non existance of the managent company.
    Maybe the other 2 apartments were bought from the builder who might be gone out of business .
    So that may be the reason its going cheap .

    Imagine it can only be sold to a cash buyer really when banks won't give out finance.there is joint insurance in place but have no idea how it would work if we'll say top apartment had the leak and flooded the apartment below . it'll be a gamble for whoever buys it I guess..


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    #27
    Mrs OBumble
    Registered Users Posts: 25,705 ✭✭✭✭Mrs OBumble


    Can the two owners just form a management company for their two unit? I wonder how much the legal work would cost?


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    #28
    the_syco
    Registered Users Posts: 37,295 ✭✭✭✭the_syco


    Check if you can access to the above apartment, and do a Riverdance. See how much you can hear it below. Also play some music. There may be a reason why the downstairs apartment is for sale, and the above apartment is empty.


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    #29
    RickyG
    Registered Users Posts: 43 ✭RickyG


    Mrs OBumble wrote: »
    Can the two owners just form a management company for their two unit? I wonder how much the legal work would cost?

    I guess they could do that but would imagine it would take hell of a long time and cost a small fortune.there also seems to be an issue with the bottom apartment being originally planned as a retail outlet and then converted to residential afterwards..its a mess really..


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    #30
    RickyG
    Registered Users Posts: 43 ✭RickyG


    the_syco wrote: »
    Check if you can access to the above apartment, and do a Riverdance. See how much you can hear it below. Also play some music. There may be a reason why the downstairs apartment is for sale, and the above apartment is empty.

    As far as I know there is a thick concrete slab between the 2 apartments so noise not an issue..


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    #31
    pwurple
    Closed Accounts Posts: 12,449 ✭✭✭✭pwurple


    There needs to be a management company in place for insurance and other regulations. An apartment owner owns the inner shell.

    I own an apartment in a block where the management company dissolved. We (the owners) had to set up our own management company to replace it. it can be done quite quickly and it's not particularly expensive to do, talk to your solicitor. You already have a solicitor for the conveyancy, discuss with them.

    It could be complicated to do while you are not an owner? Legal advice really is required for this situation. What happens if you create a management company, become a director of it, and then never buy the apt?

    Completely bizaar the vendor is not addressing this though, as the place cannot be sold until it is resolved.


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