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Aston Lawyer
Aston Lawyer, Solicitor
Category: Law
Satisfied Customers: 10412
Experience:  Solicitor LLB (Hons) 23 years of experience in Conveyancing and Property Law
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We live in effectively a terraced house, albeit created by

Resolved Question:

We live in effectively a terraced house, albeit created by conversion of a huge 19th century barn into 14, attached, freehold properties. We have a management company consisting of all 14 owners. The properties have a number of covenants, one of which is ’To insure all the properties built on the estate save unit 14 in full reinstatement value in an office it shall decide upon.’ Does this mean we must have a communal buildings insurance or that all members must have their own buildings insurance policy?
Submitted: 8 months ago.
Category: Law
Expert:  Aston Lawyer replied 8 months ago.

Hi,

Could you please clarify if each owner owns a Leasehold interest in each of the 13/14 units, and that the Management Company own the Freehold? Is the Insurance covenant mentioned in each of yours Leases (if your property is Leasehold) or the Transfer document (if your property is Freehold)?

Kind Regards

Al

Customer: replied 8 months ago.
Hi
Each owner holds the freehold for their property, the Management Company does not hold the freehold. The covenant is in the Transfer Document for each property issued by the Land Registry.
Expert:  Aston Lawyer replied 8 months ago.

Thanks for your reply- almost there.

Although the covenant is in each of yours Transfers, each Transfer will contain covenants which each owner is responsible for and there will also probably be a section setting out the covenants which the Management Company are responsible for. Do you know which section this covenant is contained within?

Thanks

Al

Customer: replied 8 months ago.
The relevant covenant is in the 'Covenants of the Management Company'. For your information, all the owners constitute the Management Company, i.e. 14 members.
Expert:  Aston Lawyer replied 8 months ago.

Hi,

Thanks for the clarification.

Well, it is the responsibility of the Management Company to insure each property under a Block policy. (It would be normal for there to be a covenant on the part of each owner to contribute towards any costs incurred by the Management Company, whether it be for Insurance/maintenance of any communal parts).

I am not sure if such a block policy is in place, but legally, that is what should be happening.

I hope this assists and sets out the legal position.

Kind Regards

Al

Customer: replied 8 months ago.
Two points. Firstly, why can't the Management Company insist that everyone insures individually but has to prove this? Secondly, is the other option to get the covenant changed/removed?
Customer: replied 8 months ago.
Is this relevant - the First Schedule, which details covenants on the purchasers states 'To pay an equal part of the costs incurred by the Management Company jointly with the owners of properties forming part of the estate save the insurance provided for by paragraph 3 of the Third Schedule. Doesn't this imply they don't have to pay the communal insurance?
Expert:  Aston Lawyer replied 8 months ago.

Hi,

Generally, it makes a lot more sense and gives greater protection, for a Block of houses/flats to be insured under just one Policy- especially if, for example, the Management Company is responsible for maintaining the main roof/ or anything else which is classed as communal. The covenant could get changed, but it would mean all 13/14 Deeds would need to be changed and registered at the Land Registry. Alternatively, provided all of you are happy that individual Buildings Insurance policies give adequate protection, you can agree informally to insure your own individual properties.

As regards ***** ***** you quote, this does confirm that each owner has to contribute to any costs incurred by the Management Company but NOT for the insurance mentioned at para 3 of the Third Schedule. What does para 3 say please?

Al

Customer: replied 8 months ago.
Hi
Para 3 says 'To insure all the properties built on the estate save unit 14 in full reinstatement value in an office it shall decide upon.'
Unit 14 is a separate private house on adjacent land.
Expert:  Aston Lawyer replied 8 months ago.

This is getting confusing. Any chance you could forward to me a copy of your Transfer, so I can read it in its entirety?

Thanks

Al

Customer: replied 8 months ago.
Hi
I can scan our document and send this. It will take me a few minutes as there are several pages. Do you require all of it, or are the Schedules sufficient as I have these typed from an AGM. Please supply an email address.
Expert:  Aston Lawyer replied 8 months ago.

Hi, ideally I need to see it all, but if you want to send the Schedules to me first and then I will let you know if I need anything further. Not sure why you had the Schedules typed from an AGM? Have you not got the original Transfer which would have been registered at the Land Registry, when your property was bought for the first time?

My email-***@******.***

Al

Customer: replied 8 months ago.
Hi
Some owners claimed they couldn't find their documents and so it was easier to type ours and print them for everyone. I've scanned the document and about to send the email.
Expert:  Aston Lawyer replied 8 months ago.

Ok, thanks

Expert:  Aston Lawyer replied 8 months ago.

Hi,

I have now read the Transfer, thanks.

It is clear to me that firstly, the Management Company are responsible for insuring all the properties on the Estate (clauses 3 and 5 of the Third Schedule). Clause 12 of the First Schedule also confirms that the individual owner should NOT insure the individual property.

What is not clear is who is responsible for paying for the block Insurance. The Transfer confirms that each owner shall contribute towards all communal costs, other than the Insurance. Accordingly, my view is that the Management Company alone are responsible for insuring and paying for the insurance. However, in practice this does not really cause an issue because if each of the owners are a member of the Management Company, and the Management Company are responsible for paying for the Insurance, this makes each owner jointly responsible for paying for the Insurance!

This is therefore the legal position.

As mentioned previously, if all of you agree to insure separately, that would be OK, PROVIDED you were all happy that the Estate has been adequately insured. I must say that it would be better if just one Block Insurance Policy was taken out and the cost of it can then be divided between the owners.

I hope this assists and answers your question.

Kind Regards

Al

Customer: replied 8 months ago.
HiThat's very helpful. I can now go back to the owners with the option of continuing with the block policy, or we go individually provided we can be certain the estate is adequately covered.Many thanks for your time and advice.RegardsCarl
Expert:  Aston Lawyer replied 8 months ago.

Hi Carl,

Thanks. If I have helped, please would you be kind enough to rate my answer, so I can get credited for my time.

All the best

Al

Aston Lawyer, Solicitor
Category: Law
Satisfied Customers: 10412
Experience: Solicitor LLB (Hons) 23 years of experience in Conveyancing and Property Law
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Customer: replied 8 months ago.
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