What to watch out for when renovating/buying old apartments

Today, I will go thru some items to consider when purchasing old apartments for  renovation  purposes. Due to the rising cost of new homes and the popularity of renovations, more and more people are renovating and living in used apartments. Renovation seems to offer a lot of freedom in terms of space and design changes, but in fact, depending on the apartment, you may not be able to renovate it the way you want. There may also be cases where you have to narrow down the content and scope of the work to be carried out depending on your budget.

What risks are there to be concerned about when purchasing a used apartment? Even if you renovate it nicely, a used apartment is still a used apartment. If you are planning to renovate it, I think it is often the case that you will purchase a property that is over 30~40 years old. First of all, you should be aware of the risks unique to used apartments that are not available in new or recently built apartments. In many cases, it is a private sale, so be careful of the period of liability for non-compliance with the contract.

The seller of a new home is often a real estate company, but the seller of a used apartment is often an individual. If the seller is an individual, the first risk is that the period of "liability for non-compliance with the contract" is shortened to three months.

Liability for non-compliance with the contract is the responsibility of the seller for "defects or deficiencies that do not conform to the contract" after the contract is signed. However, since liability for non-compliance with the contract is optional, the period for which the seller is responsible may be limited or the seller may be exempt from liability.

An old used house, it is expected that the building and piping will deteriorate to a certain extent. Although deterioration can occur in any apartment building, the state of maintenance, management, and upkeep varies greatly from apartment building to apartment building.

An apartment is a building that is managed jointly by multiple people. If you purchase an apartment building, you will become a member of the management association. Residents will bear the management fees and repair costs and decide the direction of what and how to maintain it, but many apartment buildings are in a state of excessive debt.

According to the comprehensive survey of condominiums, only 33.8% of the respondents answered that "the current balance of the repair reserve fund is in excess of the plan" (Image source: Ministry of Land, Infrastructure, Transport and Tourism "Current situation surrounding condominiums")
However, it does not necessarily mean that it is not OK to have a shortage of repair reserve funds or to borrow money. Just as whether a company or an individual has borrowed money, it does not mean that their business or economic condition is bad. There are also preferential interest rates for borrowing money for large-scale repairs. If appropriate repairs are carried out at the appropriate time and a repayment plan is solid, it is not a big problem.
The important thing is to understand the situation. The job of a real estate company representative is not just to support the purchase and sale contract. Please be sure to ask whether the management situation of the condominium is objectively good or if there are any concerns. If your agent  cannot answer these questions, you should consider changing the brokerage company or the person in charge. Recently, there are specialized institutions that inspect not only buildings but also the management status of condominiums, so if you are concerned, you may want to consider using such services.

Private areas (compartmental ownership areas) are not within the scope of the management association's maintenance and management, so the only thing you can do is ask the seller about the repair history and any problems that have occurred in the past. However, depending on the area where deterioration or damage has occurred, the management association may be able to cover the repair costs, or it may be covered by fire insurance. If there are signs of leaks, it is possible that deterioration or damage may be found not only in the private areas but also in the common areas, so it is important to thoroughly check the deterioration or damage and repair history of the private areas.

In the next article, I will focus more on  the "Renovation" aspect, and share the risks to be aware of,  and ways to tackle them.