𝗜𝗻𝘁𝗿𝗼𝗱𝘂𝗰𝘁𝗶𝗼𝗻
CeylonProperty.lk recently released a podcast conversation with Mr. Sameera Silva, discussing important legal and financial considerations when buying an apartment in Sri Lanka.
The discussion highlights the differences between buying a newly completed apartment, purchasing a resale unit, and investing in an apartment that is still under construction. Understanding these differences can help buyers evaluate the risks and make more informed decisions before committing to an apartment purchase.

𝗧𝗵𝗲 𝗟𝗲𝗴𝗮𝗹 𝗗𝗶𝗳𝗳𝗲𝗿𝗲𝗻𝗰𝗲 𝗕𝗲𝘁𝘄𝗲𝗲𝗻 𝗔𝗽𝗮𝗿𝘁𝗺𝗲𝗻𝘁 𝗣𝘂𝗿𝗰𝗵𝗮𝘀𝗲𝘀
Not every apartment purchase carries the same legal considerations. Whether the apartment has already been completed, is being purchased from a reseller, or is still being constructed can make a significant difference to the buyer.

𝟭. 𝗕𝘂𝘆𝗶𝗻𝗴 𝗮 𝗖𝗼𝗺𝗽𝗹𝗲𝘁𝗲𝗱 𝗔𝗽𝗮𝗿𝘁𝗺𝗲𝗻𝘁
When an apartment is already completed, a buyer has the opportunity to examine the completed property and verify important documentation before proceeding.
For a completed apartment, the Certificate of Conformity (COC), condominium plan, and registered Deed of Declaration are among the documents that may be relevant to the legal process. These documents form part of the checks a buyer should consider before purchasing the apartment.
Having the completed property and relevant documentation available can reduce some of the uncertainty involved in the purchase.

𝟮. 𝗕𝘂𝘆𝗶𝗻𝗴 𝗮𝗻 𝗔𝗽𝗮𝗿𝘁𝗺𝗲𝗻𝘁 𝗧𝗵𝗮𝘁 𝗜𝘀 𝗦𝘁𝗶𝗹𝗹 𝗨𝗻𝗱𝗲𝗿 𝗖𝗼𝗻𝘀𝘁𝗿𝘂𝗰𝘁𝗶𝗼𝗻
Buying an apartment that is still being built comes with a different set of considerations. Unlike a completed apartment, the buyer cannot fully inspect the finished property or rely on a COC that has already been issued.
There may also be no completed condominium documentation or registered Deed of Declaration available at the time of purchase. This creates an additional risk factor because some of the documents and features of the completed development are yet to be established.
For buyers considering an under-construction apartment, understanding these risks before signing the agreement is particularly important.

𝟯. 𝗖𝗵𝗼𝗼𝘀𝗶𝗻𝗴 𝗮 𝗥𝗲𝗽𝘂𝘁𝗲𝗱 𝗗𝗲𝘃𝗲𝗹𝗼𝗽𝗲𝗿
When purchasing an apartment that is in the process of being built, the developer becomes an important factor to consider.
Choosing a reputed developer can help minimise some of the risks associated with an under-construction property. Buyers should consider the developer's track record and carefully review the agreement before committing to the purchase.
The legal and practical position of the apartment can change as construction progresses, making it important for buyers to understand what they are agreeing to at the time of purchase.

𝟰. 𝗖𝗼𝗻𝘀𝗶𝗱𝗲𝗿 𝗧𝗵𝗲 𝗧𝗮𝘅 𝗜𝗺𝗽𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀
Another factor buyers need to consider is the potential tax component associated with the transaction.
Stamp duty and other applicable taxes can affect the overall cost of buying an apartment. When purchasing an apartment that is still under construction, the transaction may also take place before the property is completed, creating uncertainty around what taxes may apply when the apartment is eventually completed.
Government tax policies can change over time. Buyers should therefore pay attention to the agreement and understand how any new tax introduced during the relevant period may affect the transaction.

𝟱. 𝗨𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱 𝗪𝗵𝗼 𝗕𝗲𝗮𝗿𝘀 𝗔𝗻𝘆 𝗡𝗲𝘄 𝗧𝗮𝘅
The agreement between the buyer and developer should clearly address the treatment of taxes that may become applicable during the transaction.
For example, if an apartment is purchased while it is still being constructed and a new tax is introduced before the apartment is completed, the buyer needs to understand whether that additional cost could fall on them.
Even a tax of 1% or 2% can represent a significant amount when the value of the apartment is Rs. 30 million, Rs. 40 million, or Rs. 50 million. Understanding this potential financial exposure before signing the agreement can help buyers avoid unexpected costs later.

𝗖𝗼𝗻𝗰𝗹𝘂𝘀𝗶𝗼𝗻
Buying an apartment in Sri Lanka involves more than comparing prices, locations, and facilities. Buyers should also consider whether the apartment is completed, being purchased from a reseller, or still in the process of being built.

As Mr. Silva explains in the podcast, an under-construction apartment can involve additional legal and financial considerations because certain documents and approvals may only become available as the development progresses. The developer, the agreement, potential tax changes, and the timing of completion are therefore important factors for buyers to consider.
The key is to understand the risks before committing to the purchase. Taking the time to evaluate the legal documentation, developer, agreement, and potential financial obligations can help buyers make more informed apartment investment decisions.
Listen to the full conversation with Mr. Sameera Silva on the CeylonProperty.lk podcast for a detailed discussion on the legal and financial factors buyers should consider when purchasing an apartment in Sri Lanka.