Is apartment insured after winding-up?

PROPERTY CLINIC: Q I am looking for some advice about a purchase of a property I made two years ago. It is an apartment in a block of three apartments; the other two are unoccupied at the moment and are only partly finished. This is in a mixed estate of apartments and houses where some are occupied and others are unfinished.

A recent event has left me with some concerns regarding the contracts that I signed.

The management company, X Ltd, which holds the block insurance for the apartment building in which I purchased, has wound up. At present there is no management company, and after speaking to the developer (also X Ltd) it looks as though he is not going to put a new one in place.

He has informed me that my block insurance is not affected by this as he has renewed the insurance through Y Insurance for the whole complex, and my bank is named on that insurance.

My worry here is that he is named on this insurance and not me – therefore, if a fire, for example, were to destroy my building, I would be relying on him and his insurance company to restore the building.

Could you clarify what the insurance status is for my apartment, in light of all this, and, what legal standing I have if I have no insurance in place?

AProperty title to apartments usually takes the form of a lease granted by the property developer to the apartment owner for a long period (often 999 years).

Traditionally, the property developer commits to transferring his interest (the landlord’s interest) to an owners’ management company specifically created to hold the freehold title of the estate once completed.

The lease contains many obligations on the part of the apartment owner and the lessor (either the developer or owners’ management company) which will include the owners’ obligation to pay service charges and the lessors’ obligation to insure the structure against certain risks.

The insurance policy for the structure and the common areas will be taken in the name of the developer or owners’ management company, whoever owns the building at the time.

In your situation, as the developer has not transferred ownership of the estate to the owners’ management company, the insurance is in the developer’s name.

As a minimum, you should ensure that the insurer confirms the interest of you and your bank in respect of your specific apartment. In addition, you should request confirmation that the premium has been paid in full.

In the event that the premium is being financed you could request that the insurer informs you of any cancellation of the policy during its term.

Since September 30th, 2011, the freehold interest of the common areas of all multi-unit developments (MUDs) should be transferred to the owners’ management company.

There is some concern over your management company having been wound up, as normally this company would have already contracted to receive the freehold of the common areas and is named as the perpetual lessor in each of the title documents of the properties sold in your estate.

It is very important to the value of your property that your owners’ management company is compliant with the Multi Unit Developments Act 2011 and that you are aware of the status of the company and that proper financial records are being kept regarding service charges that you and your co-owners are paying.

The Multi Unit Developments Act requires owners’ management companies to have general meetings to approve service charge levies, sinking fund levies and house rules each year and also to update owners by way of an annual report as to insurance matters, fire safety matters and the financial position of the company.

It is strongly recommended that owners attend these meetings and keep themselves informed about the status of their company. Every property owner in a multi-unit development is a member and part owner of their owners’ management company.

Paul Mooney is a member of the property facilities management professional group of the Society of Chartered Surveyors Ireland

No obligation to sell at any price

Q My partner and I have been looking at houses to buy just outside Cork city for the past three or four months. On two occasions, houses that were advertised for sale, that we went to see and made offers on were subsequently withdrawn from the market without going sale agreed.

This is very frustrating, as we were interested in both houses.

When I called the estate agents to find out what had happened they told me the sellers had decided to take their property off the market.

Is this practice allowed?

Surely if someone puts their house up for sale it should be for sale until sold? Otherwise, it seems like a waste of everyone’s time.

AI can appreciate your frustration, particularly if you have spent time and effort going to view the properties for sale. Ultimately, however, the owner/vendor reserves the right to remove the property from the market and there is no obligation for them to sell, whether a satisfactory offer has been received or not.

It is worth remembering that the agent does not have any authority to legally bind their client to sell the house and the role of the agent is to advise the vendor, market the property and to negotiate the sale on their behalf.

There could be a range of reasons why the vendor has decided to remove the house from the market, including personal circumstances. It is also possible the vendor did not achieve an offer on the property that they were willing to accept, and instructed the agent to remove it from the market. While national property values have fallen significantly since the peak – by about 47 per cent, according to the latest report from the Central Statistics Office – there are early indications of a possible stabilisation in some areas and for some particular property types, and the vendor may have felt they could get a better price in time.

Unfortunately that doesn’t offer you much comfort, but as a prospective purchaser if you do find a house that you like and get to the stage of giving a deposit, it is worth ensuring that the agent you are dealing with is a regulated professional who will act accordingly if a similar situation arises in the future.

John Archer is a member of the southern region of the Society of Chartered Surveyors Ireland

Buying in from abroad

Q I would like to buy a property in Ireland, and the estate agent told me I needed a PPS number if I want to purchase a house. I am Italian and currently living in Italy, and so non-resident, and I do not intend to reside in Ireland nor work, as I am retired.

The property would be a holiday house where I would spend a maximum of three months a year. To get a PPS you need an address in Ireland and to buy a house you need a PPS. How do I get out of this impasse?

AMany agents are reporting increasing interest from overseas buyers in properties for sale. This includes both Irish people who have moved abroad and prospective purchasers new to the country, which may suggest there could be a perception of value in Irish property internationally beginning to form.

The consequential issue of what paperwork overseas buyers need is an increasingly common question, and the PPSN issue is easily resolvable. You need to contact the client identity services section of the Department of Social Protection, which will issue you with the relevant application forms and issue the PPSN when the forms have been completed and returned for this purpose. The section is in Carrick-on-Shannon, Co Leitrim, and can be contacted on lo-call 1890 927 999 or by email at cis@welfare.ie. You will need to provide photo (such as passport) ID, and address ID of your address in Italy, but I recommend you ask your solicitor to contact them on your behalf, which will smooth the process.

You should also consider the charges and taxes that will accrue to owning a holiday home in Ireland. These include stamp duty payable on the purchase of the property (1 per cent of the value up to €1 million and 2 per cent on any balance), the household charge (currently set at €100 but likely to increase when the full property tax is implemented mid-next year) and also the Non-Principal Private Residence charge, which is currently set at €200.

Other charges may apply, particularly if the property is part of a multi-unit development. Given that a range of property taxes apply in Italy, the concept should not present an issue for you.

Edward Carey is chair of the residential property professional group of the Society of Chartered Surveyors Ireland