Building's Insurance - Share of Freehold properties

BatterseaUK

Hi. I am a first-time buyer in the process of buying a ground floor flat in a purpose-built, three apartment, Victorian building. The apartment comes with a “share of freehold” – so, as I understand it, the ownership structure means that I will be buying the apartment leasehold as well as a third share of the freehold management company.

The question I have centers around buildings insurance for these types of property. Upon further investigation by my solicitors, I've discovered that each of the three apartment owners has their own building insurance policy. This seems quite unusual to me as I would expect one building insurance policy to be taken out by the freehold management company covering the entire building.

The reason this is causing additional concern is that there is a crack in the external wall next to a bay window. The vendor has told us this was historic movement and that he has seen no further movement in the 10 years he has lived in the property. Being a sceptic I don’t believe this and if on-going movement / subsidence was to be occur, whose insurance policy would cover the required repairs. As the apartment we are buying is on the ground floor, would we be expected to cover these costs?

Has anyone else has experience with properties of this sort? Can you give me any advice about what to expect when it come to insurance on share of freehold purchases / what the best setup would be?

Any help / thoughts you have would be much appreciated. Generally feeling a little lost without much previous experience to refer back on.

Thanks!

Fire_Fox

Try this website which needs to be read alongside the long lease as this will detail provision for what is paid communally and what is an individual responsibility:
http://www.lease-advice.org/publications/

G_M

It's not the usual arrangement and perhaps indicates that the 3 owners who comprise the mgmt company are not cooperating well.

Where 3 insurance companies are involved, each may try to argue that the claim should be taken on by the other(s). Result? Long delays, legal haggling etc etc.

A single policy is much better.

Given that there's a potential structural problem already in evidence, I'd be very wary.
1) Get the crack looked at by a structural engineer, not surveyor.
2) ask the seller to liaise with the other owners to set up a single block policy before you Exchange.

otherwise walk away.

Richard_Webster

OP's solicitors will need to check what the lease says about insurance but it is very likely that it will say that it is the freeholder's responsibility.

One of the problems with these small shared freehold set ups is that people tend to go off and do their own thing without much regard for what is in the lease.

If OP is not happy his way forward is to tell seller that he will only buy if there is one policy for the whole building. How that will go down with the other shared freeholders is anyone's guess! So he may have to walk away.

This is one difficulty with shared freeholds, particularly where there are only 2-4 flats involved, that the personalities and attitudes of the individuals are often more important in practice than the legal rights and obligations which can be quite costly to enforce and result in a lot of bad feeling with the other flat owners who often don't really understand the legal position.

In all cases where there are only a few flat owners I advise talking to them all to find out their attitudes. This is even more important with a shared freehold.

For instance, eventually lease will need extending, but some shared freeholders refuse to get involved and sign the documents because "we haven't got leases, we've a shred freehold...."

Leasehold_Solutions

Usually, blocks of flats are insured as a whole, but sometime individual flats within it get their own buildings insurance. It all depends what it says in the lease. If you are using a solicitor that knows what they are doing, they will be able to advise you. If you do not get a satisfactory answer, go and look for another flat. If you want some guidance then why not consider asking one or two vetted expert solicitors or surveyors - you can find them listed on the Association of Leasehold Enfranchisement Practitioners.