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Common Areas

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  • 04-03-2020 9:07pm
    #1
    xxrichixx
    Registered Users Posts: 12 ✭


    Looking to buy an apartment that was built in the early 2000s. One item that has arisen is that the developer didn't transfer the common areas to the OMC. From doing a little research, this appears to be quite common in pre-2011 constructions. However, I worry that this could negatively affect the value of the property or have some other unforeseen impact. Would this normally be considered a red flag is apartment sales?


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    #2
    Dolbhad
    Registered Users Posts: 782 ✭✭✭Dolbhad


    xxrichixx wrote: »
    Looking to buy an apartment that was built in the early 2000s. One item that has arisen is that the developer didn't transfer the common areas to the OMC. From doing a little research, this appears to be quite common in pre-2011 constructions. However, I worry that this could negatively affect the value of the property or have some other unforeseen impact. Would this normally be considered a red flag is apartment sales?

    The developer is the owner of the common areas. If he’s gone bust or no longer around, he’s not maintaining the common areas or insuring them.

    It’s a big red flag to be honest.

    And if the builder isn’t around anymore it’s hard for the common areas to be transferred to the management company.


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    #3
    xxrichixx
    Registered Users Posts: 12 ✭xxrichixx


    Dolbhad wrote: »
    The developer is the owner of the common areas. If he’s gone bust or no longer around, he’s not maintaining the common areas or insuring them.

    It’s a big red flag to be honest.

    And if the builder isn’t around anymore it’s hard for the common areas to be transferred to the management company.

    Thanks for your input.The OMC is taking care of insurance etc. (at least recently). However, very little maintenance to the exterior has taken place. Is there any reason for the developer to hold only the common areas bar the cost of transferring them?


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    #4
    Dolbhad
    Registered Users Posts: 782 ✭✭✭Dolbhad


    xxrichixx wrote: »
    Thanks for your input.The OMC is taking care of insurance etc. (at least recently). However, very little maintenance to the exterior has taken place. Is there any reason for the developer to hold only the common areas bar the cost of transferring them?

    It may be the builder is no longer around to transfer the common areas. I think also to transfer common areas, if a bank is involved, the builder would need bank consent. Also as far as I am aware, the implications on the builder for failure to transfer the common areas are weak.

    At least the apartments have been sold pre 2011. And insurance is in place. I’d be concerned if the exterior doesn't look like their being maintained now (because more than likely it will stay the same). Maybe enquire whether the management company would take care of the exterior but that may involve increase in the management fees.

    How does the rest of the management company look? Is there a sinking fund in place? Do the accounts look okay?


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    #5
    Ray Palmer
    Registered Users Posts: 8,394 ✭✭✭Ray Palmer


    xxrichixx wrote: »
    Thanks for your input.The OMC is taking care of insurance etc. (at least recently). However, very little maintenance to the exterior has taken place. Is there any reason for the developer to hold only the common areas bar the cost of transferring them?

    Weird thing about the insurance is you have to be an interested party. That tends to mean owner so I would be curious how they got insurance and if it is valid


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    #6
    xxrichixx
    Registered Users Posts: 12 ✭xxrichixx


    Dolbhad wrote: »
    It may be the builder is no longer around to transfer the common areas. I think also to transfer common areas, if a bank is involved, the builder would need bank consent. Also as far as I am aware, the implications on the builder for failure to transfer the common areas are weak.

    At least the apartments have been sold pre 2011. And insurance is in place. I’d be concerned if the exterior doesn't look like their being maintained now (because more than likely it will stay the same). Maybe enquire whether the management company would take care of the exterior but that may involve increase in the management fees.

    How does the rest of the management company look? Is there a sinking fund in place? Do the accounts look okay?

    They balance the books but a couple of apartments aren't contributing which means the sinking fund is practically non-existant. Feels a bit too messy.


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    #7
    Lantus
    Registered Users Posts: 3,027 ✭✭✭Lantus


    Ray Palmer wrote: »
    Weird thing about the insurance is you have to be an interested party. That tends to mean owner so I would be curious how they got insurance and if it is valid

    Omc is in the primary lease and has an absolute legal right and interest to manage the development.

    Still a headache though.


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    #8
    Dolbhad
    Registered Users Posts: 782 ✭✭✭Dolbhad


    xxrichixx wrote: »
    They balance the books but a couple of apartments aren't contributing which means the sinking fund is practically non-existant. Feels a bit too messy.


    That would worry me. It can be hard for a management company to turn its accounts around. If something big had to be fixed eg lift, they don’t have the funds spare to cover it which usually means hike in the management fee.


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    #9
    the_syco
    Registered Users Posts: 37,299 ✭✭✭✭the_syco


    xxrichixx wrote: »
    They balance the books but a couple of apartments aren't contributing which means the sinking fund is practically non-existant. Feels a bit too messy.
    No sinking funds means no roof becomes no roof and lots of leaks if the roof goes.
    xxrichixx wrote: »
    Looking to buy an apartment that was built in the early 2000s.
    2008; https://www.irishexaminer.com/breakingnews/ireland/roof-blown-off-south-dublin-apartment-block-383447.html


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