Selling a flat or townhouse is different to selling a freehold home because it is part of a larger property (the complex or apartment block) and so a potential buyer must view and consider the whole complex as well as the individual unit on sale.
Common ownership considerations
In legal terms, flats and townhouses are usually owned as “sections” (units) within a sectional title scheme. The sectional title scheme is the complex itself, and the body corporate is an association comprised of all the owners.
Each section (unit) within a complex is privately owned and the owner also shares in the common property such as the lawns, swimming pool, walls etc. In some complexes a section may have its own “exclusive use” areas such as a parking garage, storeroom or private garden, whereas in another complex those areas may be allocated from the common property to a section by the body corporate.
The bottom line is that anyone who lives in the complex will have to abide by the rules and regulations set by the body corporate. For example, there may be a ban on pets.
The more restrictive the rules, the harder it will be for a seller of a unit in the complex to find a buyer, although in reality it is usually only rules such as a complete ban on all pets that could limit interest from buyers.
The physical appearance of the buildings and facilities of the complex, especially neighbouring units, will impact the attractiveness of your own unit to potential buyers. So, as a seller, it is in your best interests for the complex to be well maintained.
Since security costs can be shared amongst the multiple owners, complexes and apartment blocks usually have good security and this is one of the key advantages of selling a flat or townhouse over a freehold home in a suburb.
Financial implications of common ownership
Since a purchaser of a flat or townhouse will be buying an undivided share in the common property, the purchaser will want to know details about the body corporate and its financial position.
Seriously interested buyers will therefore often request:
- a copy of the latest annual financial statements
- the minutes of the Annual General Meetings and trustees’ meetings
- the rules and regulations of the body corporate.
As a seller, it is recommended that you have this info available for prospective buyers so any unnecessary delays can be avoided.
The body corporate is the extra factor
Selling a flat or townhouse is the same as selling a freehold property except that the complex or block itself, and its body corporate, is an additional factor that a potential buyer has to consider. The appearance, rules and financial position of the complex are all relevant when selling a unit in a sectional title scheme.