Apartment owners are require to form a maintenance reserve. The reserves of the community of owners ensure that repairs that are necessary at short notice can actually be carried out. If you sell the condominium, you are not entitled to a payment of your share of the reserves. Instead, this is transferred to the buyer. You should keep this in mind when setting the price. And after selling the apartment and you want to buy new luxury apartments in Islamabad
Important information for buyers!
So when you sell a condo, the maintenance reserve is part of the deal. The reserve is, so to speak, an inseparable part of the apartment and also changes hands when it is sold. You should inform potential buyers of the amount of the reserve because it is included in the sale price in addition to the value of the apartment. You can ask the administrator about the amount of the reserve at any time.
Does the reserve also belong in the purchase contract?
As a seller, it can usually be relatively irrelevant to you, but the buyer will value it. For this part of the purchase price there is no Islamabad real estate transfer tax at the moment, should there be a change in the law, the real estate tax can also be levied in this case. If you sell an apartment within the speculation period of ten years, it is also important for you to explicitly state the reserves in the purchase contract. In this case, the allocation included in the purchase price reduces the capital gain.
Do the other apartment owners have a say?
To avoid misunderstandings: This refers to the owners of the other apartments in the house. If the apartments for sale belongs to several owners – for example a community of heirs – they must of course agree. A look at the land register will tell you whether the owners of the other apartments have a right of veto. It is quite possible to stipulate sales restrictions there. This primarily serves the purpose that the community of owners can defend itself against a new owner who will cause problems in the foreseeable future.
Do all owners have to agree in this case?
The specific design of the sales restriction is subject to the decision of the owners’ meeting. It can be specified that the majority must agree, that all must agree or that the administrator must agree. But no matter how the regulation is specifically designed: A refusal of consent is only permissible for important reasons. If another owner arbitrarily vetoes, you can sue them for consent. Your chances are not bad. Restrictions on sales represent an encroachment on the constitutionally protected right to property. Therefore, serious reasons are required for a veto in order to survive in the judicial weighing of the legal interests.
If the apartment is rented
Existing leases are generally a problem for the seller that should not be underestimated. Because the rental agreement continues to exist in the event of a change of ownership, the new owner enters into the contract with all rights and obligations. Especially if the buyer wants to buy luxury apartments in Islamabad himself, an existing rental agreement causes considerable delays. Not only the notice period must be awaited before moving in, but also the duration of an eviction action. It can easily take more than a year before the new owner can move into his apartment. Incidentally, in these cases you cannot terminate the rental agreement in advance in order to shorten this period. The personal needs of the new owner is a reason for termination, but not the planned sale!
Terminations for personal use are normally possible without any problems
If a notice of termination is given for personal use (and the personal need actually exists!), the terminations almost always stand up in court. The public perception is different because the rare exceptional cases find broad media resonance.
When do tenants have a right of first refusal?
In principle, tenants always have a right of first refusal when a rental luxury apartments in Islamabad is converted into a condominium. There are only a few exceptions to this rule, such as selling to relatives or selling an entire house. But it must actually be a complete house! If several apartments are sold in a pact, each tenant concerned still has a right of first refusal.
At what price must the tenant be offered the apartment?
At the exact same price you negotiated with the outside buyer. You have to disclose the purchase contract to the tenant, who can also enter into the notarized contract at the last minute on the terms agreed there. The tenant does not forfeit his right of first refusal if he previously rejects another purchase offer.
Tricks can get expensive
There have been countless attempts to undermine the right of first refusal. Most of the time it was about some form of tie-in transaction where the apartments “coincidentally” were very expensive, for which there was a right of first refusal. Such contractual constructions are ineffective and can justify significant claims for damages by the tenant. The same applies if the tenant has not been informed of his right of first refusal.
A termination agreement is often advisable
Because of all these restrictions, you must expect price reductions when selling rented properties. These can be up to 30 percent. It can therefore be worthwhile making a termination agreement financially palatable for the tenant if you are planning to sell.
In a nutshell: What do you need to look out for when selling an apartment?
You should ask yourself the following questions if you want to sell your apartment:
- Is there a right of first refusal for tenants?
- Are negotiations about a termination agreement worthwhile?
- Can the appearance be significantly improved by inexpensive renovations?
- How high is the maintenance reserve?
- Do you need an appraisal or do you know the value?
- Will the sale take place within the speculation period?
- Do you have all the necessary documents?
On the last point, you should remember that selling an apartment requires some additional documentation compared to selling a house. This includes the declaration of division and the minutes of the owners’ meeting.
What are the costs of selling a property?
The really mandatory costs for the seller are manageable:
- advertising costs
- Costs for the energy performance certificate and other documents
- Costs for deleting the land register entry
These are all quite small items that are almost negligible in the overall balance. Depending on the individual case, remarkably higher costs can be incurred due to special circumstances:
- renovation costs
- Cost of a market value appraisal
- speculation tax
- The prepayment penalty for financing
The buyer bears the notary costs. If you hire a broker, these costs can also be passed on to the buyer in whole or in part. From a legal point of view, this does not pose a problem because the so-called “orderer principle” only applies to rentals, but not to sales. However, depending on the location of the property, buyers may not be willing to pay a broker’s commission. You won’t have any problems with that in Nuremberg or Munich, but in regions with a high vacancy rate, “for sale commission-free” can prove to be a decisive sales argument.
Conclusion: Talk to tenants and the household in good time!
Unlike when selling a house, selling an luxury apartments in Islamabad, the community of owners of the house is also affected. If the apartment is rented, the tenants are another party involved. Possible rights of objection of the community of owners are limited to a few exceptional cases in which the potential buyer wants to misuse the apartment or foreseeably cannot meet his financial obligations. Tenants, on the other hand, do not have a say in their decision to sell, but the continued existence of the lease and the right of first refusal make the sale significantly more complicated.
