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
Type of Title
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.
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 neighborhoods and communities. Properties can quickly become ‘cash-flow eye-sores’.
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.
Should I sell my As Is Where Is unit singularly or as part of the block?
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.
Is it easy to sell ‘As Is Where Is’ if some units are tenanted and some owner occupied?
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 detremental to the sale of a block, hamstringing us as purcahsers 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.