Buying an apartment is different from buying a house, so it is very wise to engage the services of a solicitor. Unlike a house, an apartment usually involves leases, a management company, service charges and other aspects that are not involved in a house purchase where you buy the house outright and own the freehold.
Different Title to Apartment
Freehold: Here, the building is fully owned. There can still be management charges for the upkeep of the grounds and common areas.
Leasehold: Under a lease, the purchaser owns the apartment for a defined number of years usually 999 years actually and is tied into a number of conditions or covenants as to the use of the property and payment of service charge etc.
Title Registration
Your solicitor will advise on this as to whether the apartment property is registered in the Land Registry or the Registry of Deeds.
Covenants – What are These?
The lease terms need careful reading from the outset and before one gets too attached to a particular apartment. A covenant is a clause that provides obligations on both the lessor and the tenant. If the landlord sells the property on, the obligations remain, and likewise for the tenant. Note, in some cases, there might be a clause forbidding the keeping of pets and other similar restrictions.
Service Charges
The management company will seek annual or periodical service charges for maintaining the common areas, insurance, lighting, and lifts if there are any. There should also be a ‘Sinking Fund’ which is a provision for long-term repairs like roof damage or wear & tear.
The Conveyancing Process
This is the procedure your solicitor will conduct to ensure the apartment is legally yours, that all the planning and statutory requirements have been met, and that you are aware of the obligations that come with the lease purchase.
Your solicitor will conduct a number of searches to fully confirm the title to the apartment, which include:
- Title search – this is to ensure that the seller has a clean title with no mortgages or charges on it on date of closing.
- Compliance with building and planning regulations
- Compliance with local authority zoning
- A search to ensure there are no rights of way, easements, or any kind of restrictions on the property
Draft Contract and Pre Contract Enquiries
Before a draft contract is prepared, your solicitor will enquire about common areas, any outstanding lawsuits concerning the property, fire safety certification, and any matter that might create issues in the future.
A contract is then prepared by the seller’s solicitor, which your solicitor will review, and any clauses that need clarification will be discussed before concluding a sale.
Contract & Exchange
When your find an apartment you wish to purchase, you can make an offer to the sales agent or negotiate a price. Once accepted, you will pay a booking deposit, which will take the property off the market. This deposit will, in most cases, be refundable until the contracts are fully signed off.
After your solicitor has reviewed the contract and advises you that the contract is correct and ready to be signed, you then either pull out or proceed to purchase. Once the contract is signed, by both parties, you are committed to the sale. If a deposit is required and you later withdraw following signed contracts, you will more than likely forfeit the deposit.
Completion
On the completion date, the balance of the purchase price is paid, and the legal ownership passes fully to the purchaser.
Stamp Duty & Registration
As stamp duty is nearly always applicable, this must be paid by the purchaser within 30 days after completion. The rate is 1% for most homes and apartments.
The apartment must then be registered (in the Land Registry or Registry of Deeds) which your solicitor will look after and lodge the deeds with your bank.