Very many Jersey residents are therefore buying into a communal property-holding arrangement, whether a ‘flying freehold’ or a ‘share transfer’ structure. Whilst there are important legal differences between these two bases of dividing up a property for multiple ownership, there are some key questions to be considered which apply in either case:

Is the constitution clear and equitable?

In the case of a flying freehold property, each apartment owner has the absolute ownership of their apartment together with an interest in common with the other owners in the common parts. The constitutional document is known as a declaration of co-ownership. In the case of a share transfer property, the whole property is owned by a company, in which the apartment owners hold specific shares conferring the right of exclusive use and enjoyment of their respective apartments. In the former case, the owners together form a legal entity known as an association; in the latter case, the owners will be shareholders of the company and some or all of them may also be directors of the company.

Whatever the nature of the constitution being considered, it should be clear and free from ambiguity and its terms should be equitable as between the parties bound by it. Particular points to consider include the following:

Whether the description of the individual apartments and other relevant parts of the property is clear. There should not be any ambiguity as to whether particular elements form part of an apartment or of the common parts.

Whether there is clarity as to responsibility for carrying out particular works and paying particular costs.

How communal expenses are allocated between owners.

The basis upon which decisions affecting the property and/or the communal entity are to be taken.

The nature of any restrictions on the use of apartments and/or the common areas set out in the constitution and any power to make ‘house rules’ conferred upon a delegated body.

Whether there is any impediment to the free disposal by an owner of their apartment.

How are expenses dealt with?

It is important to know not just what the constitution says about expenses but how they are dealt with in practice. An incoming owner will wish to be satisfied that all necessary expenditure on the property will be able to be met. With this in mind, relevant questions include the following:

Are contributions from owners made in accordance with comprehensive budgets?

Are funds paid into a sinking fund to cover significant costs that will or may arise from time to time?

Is there any history of default by owners in paying what they owe and, if so, how has this been addressed?

Who is managing the property and administering the communal entity?

A share transfer company, like any other Jersey company, requires a company secretary. Similarly, a flying freehold association requires an association representative. Whilst it is possible for either these roles to be held by an individual owner, they are roles that require both a certain level of expertise together with time and diligence. In all but the smallest developments, it is advisable for appropriate professionals to be appointed to hold these positions and to manage the property. It is all too often a false economy to dispense with the services of experienced professionals.

Buying an apartment involves joining a club. As with any club, prospective new members need to be satisfied that the club’s rules are clear and fair, that the club’s finances are sound and that the club’s affairs are properly and efficiently managed.

Locations

Jersey

Services

Property

Type

Insight

Share
Twitter LinkedIn Email Save as PDF
More Publications
17 Jun 2024

Leading ARC

This month sees the official launch of Appleby Regulatory Consulting, or ARC for short. Find out mor...

22 May 2024

Listing and Delisting Eurobonds on The International Stock Exchange

Find out more about the advantages of listing debt securities on TISE, including the wide internatio...

7 May 2024

The International Stock Exchange: Structures and Suitability

A summary of Appleby listing agent services in the Channel Islands, including the structures and sui...

1 May 2024

BEWARE: GREEKS RECEIVING GIFTS! REPRESENTATION OF EQUIOM TRUST (CI) LIMITED, IN RE MATTAS [2024] JRC 068

A recent Judgment on the principles applicable to charitable trusts, wills and their construction em...

30 Apr 2024

Secondary Pensions in Guernsey: Are you ready for it?

After several years of planning (and delays), The Secondary Pensions (Guernsey and Alderney) Law (La...

11 Apr 2024

Jersey: corporate re-domiciliation and tax residency changes

An analysis of how Jersey law offers flexible solutions for corporate re-domiciliation and tax resid...

9 Apr 2024

The Global – your offshore corporate law questions answered: April 2024

The Global is a quarterly collection of corporate expert insights and analysis across Appleby's glob...

26 Mar 2024

Listing high yield bonds on The International Stock Exchange (TISE)

Find out why TISE is the stock exchange of choice for High Yield Bonds

19 Mar 2024

Guernsey retains its EU adequacy – as expected

The post-Brexit regulatory landscape continues to throw up challenges and jurisdictional arbitrage, ...

18 Mar 2024

Parental Bereavement Leave: Jersey to implement further family leave rights

The UK introduced “Jack’s law” in 2020. Jersey is now following the UK’s example, and as of ...