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Buying apartments the right way: Tips to Purchase Apartments in Sri Lanka

personCourtesy - Lanka Property Web | 11 Jan, 2021

Living in an apartment sometimes may seem like a bad thing at first, particularly in the main city of Colombo. This is because most of these aren’t exactly spacious, and even if they are, Colombo apartments aren’t all affordable! However, if you knew exactly what you should be looking for, finding an affordable and spacious apartment or any sort of property for sale, isn’t so hard!

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.

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.

But with choosing to purchase an apartment to live in, you need to be well aware of the procedures and risks to avoid.

  • Check if the property has been registered in the Condominium Management Authority (CMA) or has a Certificate of Conformity (COC) (if completed). If it’s an ongoing project refer to the provisional/semi certification issued by the Condominium Management Authority.
  • Check the building structure for any defects and whether the apartment is under the developer’s warranty.
  • If you are buying from the secondary market, check if all dues/arrears are cleared by previous tenants.
  • Check on the service and maintenance charges and how the property is managed by the management authority.
  • Consider the location, price, places of convenience in close vicinity, etc.

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.

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.

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