Apartment in block with no management company and vacant lots

micromurph

I want to put an offer on an apartment which seems to suit my needs, however there are some issues.

It is in a block of 8 apartments, only 4 of which are occupied. The other four (on one side of the building) are owned by NAMA and have been vacant for a number of years. There is no management committee (although residents of the occupied apartments have organised bin collection between them). So this means any maintenance work would, for now, have to be carried out individually by myself.

The apartment itself is of a higher standard than anything I've seen so far for the price, and it's in a good area of the city suburbs. But I have misgivings regarding the vacant units and the lack of management committee. Can anyone give any advice, or think of questions I should be asking? They currently want a bit more money than I was hoping to spend, and I'm wondering if it's worth it.

Graham

In the absence of an OMC (assuming there is none), who is going to pay for any major maintenance works that will be required over the coming years?

Think along the lines of roof maintenance, painting the entire block, fire safety equipment etc...

An OMC would typically have a sinking fund built-up from a proportion of the owners annual fees to cover these items.

Liamo57

Is there Block Insurance or Public Liability Insur.? The maintenance of these properties into the future is the problem. Owners will not have surplus cash to keep the properties up to scratch and the NAMA properties will be given to those on the housing list. I would stay clear of this apartment.

JustMe,K

Do you mean there is no management committee or no management company? I would not buy an apartment without a management company in place.

micromurph

JustMe,K wrote: »

Do you mean there is no management committee or no management company?

I meant company. Thanks

How did NAMA not manage to sell those 4 off to a Housing Charity by now and if not done now they are the obvious Customer for those 4 apartments so you will get neighbours who may not be to your liking given those 4 apartments

Doop

Liamo57 wrote: »

Is there Block Insurance or Public Liability Insur.? The maintenance of these properties into the future is the problem. NAMA properties will be given to those on the housing list. I would stay clear of this apartment.

Insurance is a big question here.

But I beg to differ on the NAMA properties being given to the housing list. Is NAMAs remit not to get the highest return for the tax payer... ie sell to the highest bidder?

daheff

run a mile.

your solicitor should be telling you this.


is this a purchase from Nama or a resident?

L1011

First thing is that this is unmortgagable - have you the funds to purchase already?

micromurph

daheff wrote: »

is this a purchase from Nama or a resident?

From a resident. The apartment was being rented out before now, but the owner has made a permanent move to the other side of the country (supposedly).

micromurph

L1011 wrote: »

First thing is that this is unmortgagable - have you the funds to purchase already?

How do you mean unmortgageable? I have mortgage approval, is this something the bank would go back on?

Doop

Doop wrote: »

Insurance is a big question here.

But I beg to differ on the NAMA properties being given to the housing list. Is NAMAs remit not to get the highest return for the tax payer... ie sell to the highest bidder?

I expressed interest in a house in a ghost estate with NAMA and doggedly pursued it. I would have been paying more than NAMA eventually got from teh Housing Charity(according to property price register). The estate is now ruined and a ghetto.
I sometimes wonder whether those staff I corresponded with in NAMA were negligent in their duties or doing me a favour without being able to tell me that they were doing me a favour in not allowing me to purchase there.

Graham

Mod Note

haphaphap, while there's an outside possibility the empty units could be acquired by a housing charity. There's no suggestion it's happening here so please don't derail the thread further now you've already mentioned it.

Graham

micromurph wrote: »

How do you mean unmortgageable? I have mortgage approval, is this something the bank would go back on?

The bank may refuse to provide a mortgage for the specific apartment you're talking about primarily because of the lack of an OMC.

daheff

micromurph wrote: »

From a resident. The apartment was being rented out before now, but the owner has made a permanent move to the other side of the country (supposedly).

and question to think about....is the price too good to be true?


I doubt your bank will accept a mortgage on the property. the resident is probably selling below market price for the area (but not too much) to make it seem a reasonable sale.

Graham

Graham wrote: »

Mod Note

haphaphap, while there's an outside possibility the empty units could be acquired by a housing charity. There's no suggestion it's happening here so please don't derail the thread further now you've already mentioned it.

This is not de-railing the topic at all. They are candidate No.1 for purchase of multiple units in an existing development especially one where the Management Company is not live as they will take the steps to rectify this particular issue. 4 units is too small for a REIT, too much for a private investor.

Do you not agree that my contributions are 100% on topic.

micromurph

daheff wrote: »

and question to think about....is the price too good to be true?


I doubt your bank will accept a mortgage on the property. the resident is probably selling below market price for the area (but not too much) to make it seem a reasonable sale.

The advert was initially posted for a specific price, then taken down and posted for 10 grand more. They allegedly received an offer for the initial asking price, which was then withdrawn. I've offered 5 less than this, so 15 less than the current price on the advert, and they are now looking for the initial asking price (ie. what was already offered by someone else and then withdrawn).

L1011

micromurph wrote: »

How do you mean unmortgageable? I have mortgage approval, is this something the bank would go back on?

It is exceptionally unlikely a bank would allow draw-down on this property, AIP or no AIP.

The title is going to be a major issue as ownership of the freehold will be highly questionable. The building is almost certainly uninsured and indeed uninsurable by you.

The risk to the bank is far too high.

micromurph

L1011 wrote: »

It is exceptionally unlikely a bank would allow draw-down on this property, AIP or no AIP.

The title is going to be a major issue as ownership of the freehold will be highly questionable. The building is almost certainly uninsured and indeed uninsurable by you.

The risk to the bank is far too high.

Thanks, this is really helpful. I'll speak to the bank about my concerns.

The_Conductor

In addition- if there is no Management Company- and no returns filed with the CRO (so its struck off)- the apartments can legally have their title changed to the Minister for Finance (including the ones that are owner occupied) allowing the Minister to dispose of the entire development as he sees fit.

The Management Company can be reinstated- but its convoluted and expensive- but probably necessary at the same time.

Avoid- at any price.

spaceHopper

micromurph wrote: »

How do you mean unmortgageable? I have mortgage approval, is this something the bank would go back on?

You are approved to borrow x amount of money on a apartment or house with good title.... having no management company means you will be responsible for thing outside your control like cost of a new roof... the bank probably won't lend on it. Check with your solicitor but it sounds like a cash only purchase or at least channanging.

the_syco

micromurph wrote: »

It is in a block of 8 apartments, only 4 of which are occupied. The other four (on one side of the building) are owned by NAMA and have been vacant for a number of years. There is no management committee (although residents of the occupied apartments have organised bin collection between them). So this means any maintenance work would, for now, have to be carried out individually by myself.

How many of the top most apartments are occupied? I'd say there's no insurance, and thus if a section of roof came off, the owners may not have the cash to fix it.

chicorytip

micromurph wrote: »

How do you mean unmortgageable? I have mortgage approval, is this something the bank would go back on?

Is your bank aware that there is no management company in place? It may not be a deal breaker in any event. Neither is block insurance or the lack of it. Many small complexes require little or no maintenance. It is more important to get your own private insurance cover to cover the contents and interior of your dwelling. Block insurance will not cover you in the event of, say, a faulty kitchen appliance causing a major fire.

L1011

chicorytip wrote: »

Is your bank aware that there is no management company in place? It may not be a deal breaker in any event. Neither is block insurance or the lack of it. Many small complexes require little or no maintenance. It is more important to get your own private insurance cover to cover the contents and interior of your dwelling. Block insurance will not cover you in the event of, say, a faulty kitchen appliance causing a major fire.

No insurance on the secured asset (the physical apartment) is going to be a deal breaker.

sheepondrugs

what is your solicitor saying?

JJJackal

This property sounds unpurchasable at almost any price. Only way to buy is to buy all 8 at once!

chicorytip

L1011 wrote: »

No insurance on the secured asset (the physical apartment) is going to be a deal breaker.

What if the purchaser were to arrange their own insurance cover for the apartment and it's contents only? I know this is possible to arrange even where no management company or block insurance exists. Would a lender look favourably at a loan application under those circumstances?

Del2005

chicorytip wrote: »

What if the purchaser were to arrange their own insurance cover for the apartment and it's contents only? I know this is possible to arrange even where no management company or block insurance exists. Would a lender look favourably at a loan application under those circumstances?

The bank don't give a F what's inside the apartment, the owner of an apartment only owns the air inside the walls.

The OMC owns and insures the building, each apartment owner has a share in the OMC, and there's no way an individual owner will be able to get a policy for the block and you can't insure an individual unit in a complex.

If there's no OMC then along with no block insurance there's no public liability cover and that means that each owner would be liable for any injuries on site.

L1011

chicorytip wrote: »

What if the purchaser were to arrange their own insurance cover for the apartment and it's contents only? I know this is possible to arrange even where no management company or block insurance exists. Would a lender look favourably at a loan application under those circumstances?

That doesn't insure the actual asset and is hence irrelevant to the lender.

The purchaser cannot insure the block on their own (even if they could afford it) as they won't have an insurable interest in most of it

chicorytip

Del2005 wrote: »

The bank don't give a F what's inside the apartment, the owner of an apartment only owns the air inside the walls.

The OMC owns and insures the building, each apartment owner has a share in the OMC, and there's no way an individual owner will be able to get a policy for the block and you can't insure an individual unit in a complex.

If there's no OMC then along with no block insurance there's no public liability cover and that means that each owner would be liable for any injuries on site.

You can get insurance for an individual unit in a complex where no management company is active. I know this because I have done so myself, without difficulty, living - as I have been for the past three years - in such a development.

Hollybeg

OP...

Don't walk away... run. Buying an apartment is stressful enough but one without a management co? Don't waste any more time on this.

Del2005

chicorytip wrote: »

You can get insurance for an individual unit in a complex where no management company is active. I know this because I have done so myself, without difficulty, living - as I have been for the past three years - in such a development.

What have you insured when you don't own any part of the building? You only have a share in a company which doesn't exist. It's easy to pay for insurance it's difficult to get them to pay out.


What good is that insurance if the roof goes or your neighbours unit is destroyed by fire?

chicorytip

Del2005 wrote: »

What have you insured when you don't own any part of the building? You only have a share in a company which doesn't exist. It's easy to pay for insurance it's difficult to get them to pay out.


What good is that insurance if the roof goes or your neighbours unit is destroyed by fire?

I live in a Duplex, one of three in a small development also containing townhouses and apartments. What is covered - according to the policy - is my "premises and it's contents". If, let's say, my roof leaks as a result of storm damage or a fire in my neighbours attic spreads next door to me or a burst pipe in my kitchen causes flooding I am covered. What I am not insured against are things like subsidence or structural damage caused by crumbling foundations. My insurer was made aware there was no management company in place here when I was getting quoted.
If the OP here decided to go ahead and buy this apartment she is interested in it maybe assuring for her that this type of insurance could possibly be obtained. Different criteria may apply for an apartment block rather than the mixed type of development I live in. It would be worth making enquiries about.

Del2005

chicorytip wrote: »

I live in a Duplex, one of three in a small development also containing townhouses and apartments. What is covered - according to the policy - is my "premises and it's contents". If, let's say, my roof leaks as a result of storm damage or a fire in my neighbours attic spreads next door to me or a burst pipe in my kitchen causes flooding I am covered. What I am not insured against are things like subsidence or structural damage caused by crumbling foundations. My insurer was made aware there was no management company in place here when I was getting quoted.
If the OP here decided to go ahead and buy this apartment she is interested in it maybe assuring for her that this type of insurance could possibly be obtained. Different criteria may apply for an apartment block rather than the mixed type of development I live in. It would be worth making enquiries about.

It's not your premises though. You don't own the roof and even if you can get a builder to repair it how will they access the roof when you don't own the ground to put up scaffolding. If your neighbours apartment burns down how will you make your apartment weather proof as you can't authorise anyone to go into the other apartment.


Don't forget that insurance companies took money off learner drivers but as soon as they tried to make a claim then they told them that they were driving outside the terms of their permit so only 3rd parties are covered and they then go after the learner in court to recoup the payout to the 3rd party.

chicorytip

Del2005 wrote: »

It's not your premises though. You don't own the roof and even if you can get a builder to repair it how will they access the roof when you don't own the ground to put up scaffolding. If your neighbours apartment burns down how will you make your apartment weather proof as you can't authorise anyone to go into the other apartment.


Don't forget that insurance companies took money off learner drivers but as soon as they tried to make a claim then they told them that they were driving outside the terms of their permit so only 3rd parties are covered and they then go after the learner in court to recoup the payout to the 3rd party.

Yes, that's speaking strictly from a legal and technical point of view but such issues could be dealt with by simply talking to your neighbours and coming to a mutually acceptable arrangement with them.

L1011

chicorytip wrote: »

Yes, that's speaking strictly from a legal and technical point of view but such issues could be dealt with by simply talking to your neighbours and coming to a mutually acceptable arrangement with them.

...but a bank is not going to give you a mortgage on such a basis.

They will need buildings insurance. Which you can't get.

pwurple

It's a solicitor you need to talk to