I’m afraid of being ‘cleaned out’ by a claim for fire damages
Can I insure my apartment without a management company in place?
I have an apartment in Limerick but there is no management company in place
I have an apartment in Limerick. It is part of a block of 4 apartments but there is no management company in place. The apartment is rented out but every insurance company I ring to try to get insurance for fire, flooding and public liability said there should be a management company in place and thus they will not insure individual apartments for these risks. I can get insurance for the contents of the apartment but I’m not interested in that as the headache for me is either fire or public liability. The tenants don’t know that I don’t have this type of insurance.
As a result of being unable to get insurance for fire etc, the value of the apartment is approx €50,000 max (as per valuation of local auctioneers) when it should be at least €75,000 to €80,000 as it is in a very convenient location. No bank or building society will give a mortgage on it to a potential purchaser as it is not possible to insure it against fire etc.
Is there any way I can get insurance for fire or public liability?
- Is there any way I can force the owners of the other three apartments in my block to form a management company just for our four apartments so we can both increase the value of the apartments and get the relevant insurance?
- Do you know of insurance companies or brokers who will insure individual apartments where a management company is not in place?
- Is there somewhere I can check which insurance companies are insuring the other apartments so that I can approach them?
I dropped a note into the other apartments that are rented out (there are four blocks of four apartments) and addressed the envelope to the landlord in each case. Not one replied, so it looks unlikely they will join with me in forming a management company for just the four blocks.
It seems I could form a company and transfer the ownership of my individual apartment to a company owned by me and another individual and this would have the benefit of limiting my liability in the event of fire, but the tax consequences of this action when I would eventually sell the apartment would not be good.
The apartment has been rented out for the last six years. I’m afraid of being ‘cleaned out’ by a claim for fire damage or public liability.
You say the development was built approximately 25 years ago and that there was supposed to be an owners’ management company (OMC) but this was never set up. It would be helpful for you to check your title deeds to see if there was an OMC which may now be dissolved. If this is the case it might be possible to restore the company to the register.
It is possible that there was no management scheme ever put in place but this would be extremely unusual and it would have been difficult for the developer to sell the units had this not been done. There does not always have to be an OMC and, for smaller developments, the common areas are sometimes owned jointly by the unit owners.
Any legal obligations on the part of your neighbours will be contained in the original title deeds for the development. The starting point is for you to inspect your own title deeds to see what scheme, if any, was put in place at the time the units were first built. If there is a scheme in place it may be possible to get it working again so as to allow you to get insurance.
If there is no scheme then you are dependent on the co-operation of your neighbours to put something in place. If this is not forthcoming, a further option is an application to the Circuit Court under Section 24 of the Multi Unit Development Act 2011 to amend the scheme documentation to provide a proper management structure.
In relation to the insurance queries, it is unlikely you will be able to get building insurance for your own individual apartment. In the absence of an OMC, you could either seek insurance cover for the block of four apartments in the name of each of the owners or, if they will not co-operate, you may be able, subject to the proposal being accepted by the insurance company, get cover for the entire building on your own as you have an insurable interest.
You would need to discuss the details of insurance options and available cover further with an insurance broker. Finally, there is no database where you can check if other units are insured.
Enda McDonnell is a Chartered Property Manager and member of the Society of Chartered Surveyors Ireland, scsi.ie/ Suzanne Bainton is a Solicitor with Liston & Company