Buying in a Multi-Unit Development
When you buy a unit in a multi-unit development, you purchase both your individual property and a share of the ownership of the common areas. You therefore enjoy two legal interests:
- As the owner of your individual unit and
- As a part owner of the common areas
When considering buying a new unit, ask your solicitor if the planning permission requires that a management company be set up. If the unit is in an established development, ask the estate agent if a management company is in place.
Read a detailed checklist on what information to look for when viewing a property.
Understanding contracts
Any contract that you are asked to sign contains legally binding obligations. That means you cannot opt out of any of its terms and conditions. For example, if it states that you will pay service charges and become a member of the management company, you can't opt out of these obligations later.
So always ask your solicitor to examine and explain your contract's particular terms and conditions, so that you fully understand them. If in doubt, always ask for an explanation.
Leasehold and freehold ownership
In legal terms, the ownership rights associated with buying an apartment are generally not the same as buying a house:
- In Ireland, most houses are owned freehold. Essentially you own both the property and the land on which it is built
- Multi-unit development properties such as apartments are generally owned as leaseholds. You own the property, but not the land on which it is built
In this legal sense you do not own your apartment outright, or “freehold”, in the same way as you might own a house.
The freehold of the land will generally be owned in the first instance by the developer, who usually then transfers it to the management company. The terms of the leasehold will be set out in your contract to purchase.
Leases in multi-unit developments tend to be very long (as much as 999 years), and can be sold on to a new owner or passed on in a will. Again, ask your solicitor to explain any terms of the lease you do not understand.
Common areas
Your contract to purchase should set out who owns the common areas and who is responsible for maintaining them.
For example, the developer may still own the common areas. In that case the developer is still responsible for management of the development and for deciding:
- The services that will be provided
- Who will provide them (the developer may appoint a managing agent to act on their behalf)
- What the service charges will be
In this case the documentation should set out the conditions under which ownership of the common areas and the responsibility for these areas will be transferred to the unit owners through a management company.
Building agreement contract
Where the purchase involves the construction of a new home, the contract for sale may also include a building agreement contract. In such instances, the contract is referred to as a “contract for sale and building agreement”.
The building agreement contract essentially refers to the bricks and mortar of the property and outlines the obligations and responsibilities of the buyer (referred to as "the employer") and seller ("the contractor"). It also specifies the financial terms and payment milestones.
Besides relating to your individual unit, it will also set out your part ownership of the common areas, and the rights and responsibilities that this confers upon you.
Where the developer owns the land and builds the units for sale, the contract for sale and building agreement will provide for the fact that the developer will transfer ownership of the property to you upon completion of the unit by granting a lease.
Lease contract
A lease contract is signed by each buyer in a multi-unit development. It sets out the legal responsibilities and obligations of owners, the developer and the management company.
The lease will generally outline what owners must do to maintain their unit, such as keeping it in good repair, and paying the annual service charge to the management company.
It should set out what the service charge fee is, and how it has been apportioned to you. For example, your charge may depend on the type or size of your property. In a mix of townhouses and apartment units, there may be a higher charge for houses than apartments, or for a three-bedroom apartment compared with a one-bedroom one, for example.
The lease may also include clauses about:
- Interest rates payable for late payment of service charges
- How owners should obey any house rules and regulations set down by the management company
When you complete the purchase, ask your solicitor for a copy of the lease document for future reference.
Membership of the management company
When you buy your unit and receive your membership certificate, you legally become a member of the management company.
Read more about membership of management companies , including your rights as a member.
How well are you doing?
Answer this simple question to see how well you understand buying a home
Question: When you buy a property in a multi-unit development in Ireland, such as an apartment, what is the form of legal ownership likely to be?
Answer A: Freehold (i.e. you own both the property and the land on which it is built)
Answer B: Leasehold (you own the property, but not the land on which it is built)