Insurance

W

WebBoard

Guest
From: Mark Totney


I'm new to this so please forgive any mistakes

I am the owner of unit with there being two on the block .The owner of the other unit has just sold,but too complete the sale she is telling me that she must have Body corporate\strata title insurance on the properties .Can anyone tell me if this is true.


thanks Mark
 
Last edited by a moderator:
Reply: 1
From: Michael G


Hi,

I understand your problem.

I'd hazard a guess, that you live in a duplex or some other form of semi detached dwelling.

I'd say that both units are strata titled, meaning you each own the airspace inside your buildings but share the costs of maintaining the building and surrounding lands.

With strata title, it is necessary to have a body corporate to manage this "common property".

With blocks of units or townhouses, a strata manager is normally appointed at a minimal cost of around $800 per year.

With such small configurations like yourselves, you may have opted to self managed the property bypassing the cost of a strata manager.

Regardless, a strata titled complex needs to have books showing the sinking fund, and its compliance to the strata title law.

This issue seems to only arise when a property is sold.

When I was selling my half of a duplex, I paid a strata manager a small fee (about $250) to update the books and create a strata certificate (this is what the solicitor wants to transfer the property - to see the strata title is up to date).

So what your other half needs to do is work out which one of you knows where the common seal and books are, else create them, and find a strata manager willing to update the books for them.

In regards to your insurance issue, the purchaser's solicitor (the one acting for the buyer of the unit), wants to see that the building insurance AND workers compenstation insurance is up to date.

As I mentioned before the common property is handled by the body corporate (in this case you and the other unit owner). What you should have in place already is a insurance policy that covers the replacement value of the building (the contents and fixtures are the individual owner's responsibility). You also require a policy to cover liabity that may arise if someone is working on the property (gardener, painter, plumber, etc).

Both these policies should be in the registered under the strata title's number.

If neither of you have such insurance, you're gunna need it now anyway.

This cost will be shared 50/50. You see, you need to pay your half in case the place burns down or an electrician zaps themselves.

I'd suggest you call around and get a good price then ask the other owner to write a cheque to the company where your getting the insurance from. Ensure your both not running around.

Its also a good exercise for you, since if you're there for a while you'll have to do it all again next year :)

Michael G
 
Last edited by a moderator:
Reply: 2
From: Kristine .


Hi, Mark

With only two units on the block, there may not be any common property as in grounds, driveways etc, but you may share a common roofline and foundations.

Check the plan of subdivision for details. The P/S number is also the Body Corporate Strata Plan number, and the BC is registered at the titles office immediately the P/S is approved. However, the BC does not have to be 'active' while all lots are owned by one owner. Once sold, the B/C should be actioned, with the first General Meeting within 15 months and annually thereafter.

In most small developments the BC is not 'active', ie, there are no levies, people tend to take out individual insurance policies (which is NOT a good idea - eg someone may not pay this year, the property is damaged and they cannot afford to reinstate it, the whole development is devalued as a result), and they make their own gardening arrangements.

When a Form 4 is requested it's primary purpose is to determine if there are any outstanding levies due against the property. An insurance Certificate of Currency can be had from each owner's insurance company, sometimes for a fee, sometimes not.

If you find that there is common property, then you should immediately effect one insurance policy to cover the entire building and grounds, including not only building and improvements but also $10,000,000 in public liability. There are now only two major BC insurers in Victoria, CHU being the main insurer. They specialise in comprehensive policies of this nature.

Be aware that 50/50 may not be appropriate. The P/S (you should have a copy in the Section 32 from when you bought) will show the table of units of entitlement and liability. Thus, your shares may be eg 86 units to you and 78 units to the other property, a total value of 164. The surveyor allocates value according to amenity eg middle units often have least amenity.

In the absence of a professional BC manager, the other owner's solicitor should be able to draft a letter conforming to Form 4 requirements regarding levies and contributions, any orders against the property, the existence or otherwise of a sinking fund (very few BC have these unless there is major capital infrastructure such as swimming pools, lifts etc). The BC Rules are registered with the title and are usually Schedule 2 unless there was need at some time to include Special Rules.

When I managed 80+ BC, most of the books were very simple to organise. Managers were rarely appointed if there were three or fewer units in a development, and our primary role was discretely collecting the levies, making sure the insurance was adequate and current, and paying the little bills like the gardener or organising new fences, and convening the annual general meeting.

You can get a copy of the Subdivisions Act and Regulations from the Govt bookshop for only a few dollars and this clearly sets out your mutual rights and responsibilities as owners.

So although it is a good idea (and more economic) to have one comprehensive insurance policy, it really depends on the physical configuration of your own particular development as to whether it is compulsory. You will find it cheaper than two policies, and interestingly enough it does cover some interior circumstances as well.

Good luck

Kristine
 
Last edited by a moderator:
W

WebBoard

Guest
Reply: 1.1
From: Mark Totney


Thanks Michael for your reply

The unit is currently leased and has its own insurance to cover it, should this policy be canceled.

regards Mark
 
Last edited by a moderator:
Reply: 1.1.1
From: Kristine .


Mark

Body Corporate insurance stops at the door.

A landlord should also have insurance for inside the property ie public liability, landlords chattels and any fixtures & fittings not covered by the main insurance, and insurance against loss of rent (which means if the building becomes uninhabitable)and also landlords insurance covering default by the tenant.

Cheers

Kristine
 
Last edited by a moderator:
Reply: 2.1
From: Donna L


The latest one is "Strata insurance". This
is required by some banks for loans and
means they want you to have insurance in
case the body corporate has
underinsured the building!!

Donna L
 
Last edited by a moderator:
Top