Selling a unit title property or flat on an As Is Where Is basis quite often has a few more considerations involved compared to a basic standalone freehold building with one owner. But, it doesn’t have to be crazy complicated. Here are a few pointers to help in your decision making process.
Is your title freehold or cross-lease? It is actually a breach of cross-lease to be un-insured, this is where you should seek legal advice about accepting a cash offer from your insurers and selling As Is Where Is. It also depends on how well you get along with other owners involved in the cross-lease; an amicable relationship is often conducive to a smooth ‘As Is’ sale, as long as the owners are happy with the incoming purchasers’ intentions.
Cross Lease
Imagine leaving all of your neighbours and other cross-lease owners in a predicament if a new purchaser decides not to repair – this is often the case with out-of-town investors who buy As Is cheaply and don’t repair and mortgage, then rent them. This increases their returns if they bought it cash, however, this strategy is harmful to neighbourhoods and communities. Properties can quickly become ‘cash-flow eye-sores’.
Freehold
Freehold can be easier depending on the number of other freehold units that comprise the block. Different owners may share a firewall, but not share an insurer! This is when it gets a little tricky but as long there is cooperation, issues can get resolved.
If possible, sell the block in entirety rather than individually. As purchasers, we’d prefer to purchase as a block and carry out all the repairs asap to reinstate insurance. From a sale point of view, you can command a much higher sale price by all selling together, it’s a much more appealing proposition for a buyer.
However, selling the block in its entirety isn’t always possible. In the past, we have purchased 4 out of 6 units in a block of 6 individually titled units and carried out the repairs in tandem with the other 2 units. This was beneficial to us all. The 4 owners sold As Is and carried on with their lives and 2 got the repairs they wanted alongside our repair methodology – with costs split equally and we managed the repairs for the other 2 owners.
We understand it can be difficult to get all people on the same page, especially if there is a large number of people/units involved in the transaction. Here at Arete, we try to keep things as easy as possible. If some owners want to stay, we are happy to chat about their intentions and our intentions, hopefully, they align.
We have experience in an array of scenarios. We have taken over tenancies in the past, we have moved tenants out briefly whilst the repairs are taking place but we move them back in asap, usually to a freshly renovated property, so they are generally pretty happy!
The only problems we run into are ‘stick in the mud’ owners who refuse to cooperate. This can be detrimental to the sale of a block, hamstringing us as purchasers and all of the other owners looking to move on. We will always try to lend a hand to explain this and hopefully get everyone back on the same page.
As with all our dealing with As Is Where Is sales, we like to keep things nice and simple.
Do you have a unit title or block of flats you want to sell? Get in touch today
Give us a call today on 0800 568 568 or email enquiry@areteproperty.co.nz to find out if we can help you sell your unit title property or block of flats, As Is Where Is.
Dave hops over to see Claire for a BBQ sausage sandwich, he takes the bread and resists taking his own sausages – his are from Peter Timbs and Claires are from the supermarket. Dave is a sausage snob. The two neighbours finally trade their EQC stories. Both not great stories but both with a similar(ish) outcome:
Dave spoke to GCCR and got paid out an extra $90,000 for his foundation work and resulting damage after he engaged Monarch Construction to quote the job. He then got them to do the works. His insurance company were happy to continue cover once Monarch had properly repaired the dwelling (emphasis on properly). The same agent sold the house for $525,000. Dave is pretty happy but he looks back with hindsight at Claire’s experience which was tougher but panned out pretty well.
Claire got paid out $400,000 made up from $100k plus Gst from EQC, the rest from her insurer. She decided to keep those funds and couple it with the offer from Arete which was $280,000. Claire had a combined total of $680,000. A way better result than Dave.
Arete then went ahead with the repairs on Claire’s (sweet rhyme bro) and the property then sells as a fully remediated, renovated villa to a first home buyer for $525,000 – the same as Dave’s. Both houses had a paper trail of the repairs and structural engineers sign-offs…eventually.
The two houses and owners had to take a very different route to their final destination but, happily ever after, the right outcome was achieved for the next purchasers! So go forth house hunting but remember this parable told by an old old wise man…and heed the term ‘Caveat emptor’ (buyer beware). Behind every house in Christchurch is a story. Just make sure you’re reading a good one.
