New Build Insurance (CRL)

Dough123

I appreciate there are other threads on this but I find my situation sort of specific.

This is in Scotland (incase the law is different.

I live and own a flat, in a building of 8. They were constructed 8 years ago.
6 of them are owned by the man who built them. There is no factor, there is no residents association or 'building manager'. There is my flat, another private owner and 6 flats rented out by the man who built them.
There was no Buildings Insurance in place when I bought one of the flats from him 2 years ago, he had to go out and purchase retrospective cover from CRL in order for Halifax to give me a mortgage.

I have never been named on the policy or seen or received a certificate from CRL however I do know the policy exists and covers the whole building including my flat.

The structural insurance runs from 2016 to 2021 so has 3 years remaining.

However now it appears Alpha, who underwrite the insurance for CRL, have went bankrupt.

I will need to remortgage in December (current policy with Halifax) since my 2 year fixed term will be up and I am unsure if this causes big problems for me. I am also unsure on the rules with regards to new builds needing structural insurance for the first 10 years they stand. If I wanted to sell the place in 2 years when they are 10+ year old, would I be able to do this without a structural insurance policy? Bearing in mind that I only own 1/8th of the building.

There can be various issues with the flats, like a fence at the back falling down etc, and getting a hold of the builder/building owner to fix can be hard. Anything I read online about this sort of thing (common parts policy etc) seems to say that majority rules when getting things fixed. IS this the case? Is there anything I can do?

To sum up:

- Do I need to have new structural/buildings insurance in place for December to remortgage at the end of my fixed term?
- Do I need to have structural/buildings insurance in place if I want to sell once the new build is over 10 years old?
- If the answer to either of the 2 is yes, what can I do if I can't get in contact with the owner of most of the flats who is also the builder?
- What can I do about general repairs and even things like a leak in the roof, if I can't get in touch with the owner of most of the building?

Looking forward to hearing your replies as my head is spinning from all this.

davidmcn

Newbuild warranties only cover significant defects and even then aren't all that valuable - by the time you get to 8 years old most problems will have made themselves known, and after 10 years everyone is on their own anyway, so I wouldn't worry too much about it. Generally lenders only care if it's less than 6 years old.

As for common repairs, if you can't get hold of the majority owner (what methods are you trying?) then you're probably best to organise any necessary works yourself and recover the cost from him. You can register the costs against his properties so you should get it back eventually.


(and yes, the law in Scotland is different, so please ignore any replies here talking about freeholders, leases, etc)

Dough123

Thanks for your reply.

Just to confirm though, will there still need to be active buildings/structural insurance for the building (encompassing my flat) for me to renew a fixed term mortgage, or sell the property in future? (whether the building is under or over 10 years built)?

I phone and text him pretty much every day and only very rarely get a hold of him. At which point he tells me he will fix the issues, then nothing happens and I am back to chasing him. How can I register the costs against him? The issue with that is some of the repairs will be at a price I can't afford to pay out and then chase him for.

Warrantyexperts

Thanks for your message :-)

Firstly I apologise for not being totally familiar with the legal situation in Scotland regarding the common parts of buildings so I'll try to answer the points you raise individually but you may need to seek some legal advice on any common parts situation.

The demise of Alpha Insurance means that the policy previously purchased via CRL will no longer be in force. In fact you are highlighting the real issue at the moment which is that many homeowners probably don't realise yet that the warranty they still rely on is no longer in force if it was backed by Alpha. Again I'm not sure of the legal position but potentially they could be in breach of their mortgage conditions without knowing it! However, thats a different issue so lets stick to your points.

- Do I need to have new structural/buildings insurance in place for December to remortgage at the end of my fixed term? - Yes. Whatever the rights and wrongs of the situation the lenders will normally insist on a warranty being in place up to 10 years after completion of the build. Somebody above mentioned they don't bother after 6 years but my experience is very different and the 6 year period usually refers to where a lender has accepted a professional certificate rather than a warranty. The majority of lenders insist on a warranty and therefore 10 years is the date to have in mind. You could try to have a discussion with the lender explaining the position and throwing yourself on their mercy ut I would be surprised if they didn't insist on one.

- Do I need to have structural/buildings insurance in place if I want to sell once the new build is over 10 years old? - No. If the property is over 10 years old it would be very strange if the lender requested a warranty.

- If the answer to either of the 2 is yes, what can I do if I can't get in contact with the owner of most of the flats who is also the builder? - Assuming the lender does continue to insist on a warranty then I'm afraid an alternative warranty will need to be purchased. My first option would be to try and contact CRL to see what they have done about it. Normal practice in such situations is for the managing agent (CRL) to "block transfer" their book of business from Alpha to a new insurer thus enabling cover to be issued for the remaining period. Whether they have done that or not I have no idea. However, I understand they can be very difficult to get answers from at the moment so, if you can't get an answer from them then you could look to buy your own warranty. There is a cost implication for you and the problem will come in relation to common parts but if you check with your lender that a warranty on just your flat is sufficient then you may solve the issue. It may depend on where your flat is in the block because if you are at the top then the common part of the roof is fairly critical. However if you are in the middle then it becomes less critical.

- What can I do about general repairs and even things like a leak in the roof, if I can't get in touch with the owner of most of the building? - The warranty with Alpha has a claims procedure that can be followed. 2 years after completion of the build the warranty protects major damage to the structure. If it falls within the terms of the warranty then CRL were saying that you can approach the Financial Services Compensation Scheme who will pay the claim. Unfortunately Alpha were Danish and therefore it may fall back to the Danish scheme which operates independently of the UK version so you would need to see what they say. The details will be in your original warranty document.

Sorry for the lengthy response but the solutions to your problem are not as straightforward as you would want. I wish you all the best in resolving matters and if you need any further help then message me and I'll be happy to discuss further.

Dough123

Thanks for the post, very informative and appreciated.

I think the main difference with Scotland is like the poster said above, leasehold/freehold stuff doesn't really exist here.

I had a look through the title deeds not so long ago and it mentions the roof, gardens, communcal areas etc as common parts and says that each properiator must shoulder a one eigth share of the costs incurred and majority rules on decisions of works, maintenence etc. This is complicated for me as I will always be in the miniority with the builder still owning most of the property.

I have not had any contact at all from CRL but I wouldn't expect to as I never took the policy out with them. That was the builder (and the owner of 6 out of 8 of the flats). I will try and contact him and make him aware that the policy is now basically worthless. I will tell him he should try and contact CRL like you say. My worry is as I've mentioned it can hard to get him to do things at the best of times, so chasing up a reportedly hard to contact company will be difficult. The flats are also 2 years away from being 10 years built so if he isn't planning on selling anymore in the next 2 years he may be thinking why would he bother shelling out more money for another building warranty (especially after paying near £5000 for a 5 year retrospective on only 2 years ago).

That would leave me having to source buildings insurance for my flat only before December when my 2 year fixed mortgage is up? I am guessing this would be very costly (probably thousands, more than I can afford right now), since I am one flat contained in a building and right underneath the roof. I wonder if I am best laying this all out to a mortgage adviser and see what he says....

Thanks again for the replies.

Warrantyexperts

Ok...there are a couple of points to make which may help clarify things but probably won't make pleasant reading for you.


The first is that the policy initially issued will be fully transferable to future owners and successors in title. Therefore you will have an insurable interest in the policy and able to benefit from the cover. Therefore, in my opinion, a managing agent should at least be writing to the occupier/homeowner to inform them that the insurance is no longer in place. I would have expected the regulatory authorities to have insisted on this but perhaps they haven't?! The builder won't be interested now as his obligations will have finished long ago so, along with you, I doubt they will help.


Bearing in mind the position of your flat I would strongly recommend a new warranty is purchased to satisfy lenders if you are re-mortgaging with another provider. Easy for me to say as I don't have to find the money!


I think you're right to talk to your advisor but I would also be contacting CRL to find out what they are doing? After all CRL are the company that chose Alpha Insurance in the first place and surely have a duty to help you find an alternative. You may of course question whether you want to deal with CRL given the situation but in the circumstances it may be your only option.


Good Luck!

Dough123

"Therefore, in my opinion, a managing agent should at least be writing to the occupier/homeowner to inform them that the insurance is no longer in place. I would have expected the regulatory authorities to have insisted on this but perhaps they haven't?! The builder won't be interested now as his obligations will have finished long ago so, along with you, I doubt they will help."

This is where my situation is a little different as;

the builder = owner of 6 out of 8 of the flats currently = basically the managing agent

It's all the one guy, and he was the one who arranged the CRL cover. As I say, I've never had one bit of contact from CRL, unless initiated by me. I only found out about Alpha from looking online by pure chance.

I think I really need to get in touch with him to let him know the structural insurance is gone, as I really don't think he knows this. My worry is that this affects me a lot more than him, as he may see the oppurtunity to wait 2 years when the building will no longer need it whereas I need it in place before the end of the year to take a new fixed mortgage, and maybe if I want to sell in the next 2 years.

Hopefully he will willingly chase it up with CRL (as he has paid close to £5000 for cover that is now gone 2 years into it's 5 year length) and hopefully he does want some cover in place for the next 2 years at least (perhaps he plans to sell one of the flats in that timeframe).

I don't really have an issue with going with CRL, more that Halifax or someone else will/won't accept that cover.

Thanks for your help again :beer:

Doozergirl

Do you know that the particular policy was underwritten by Alpha? I was of the impression that not all policies were and so some warranties are still valid.

Dough123

This policy 100% is underwritten by Alpha.

I am just off the phone with the builder/building manager. He has no idea about CRL and has actually just built another development and took out CRL 10-year warranty. I said it seems that our policy isn't standing anymore since the underwriters are bust but he didn't seem to believe that.

I am going to try and contact CRL in some way to see if this can be resolved, or at the very least prove to the building manager that what I'm saying is true. From the reports online though, it seems like it will be very tricky to get a hold of them. Also, all I have is a grainy photocopy of a document from the policy.
(basically everything warrantyexpert already said)

Do we think CRL are under an obligation to transfer the policy to another underwriter? Will they offer that or just try and charge me(us) for a new policy with them?

Wish me luck

Dough123

Sent an email to 'Alpha Requotes <Alpha@c-r-l.com>'

Warrantyexperts

Dough123 wrote: »

This policy 100% is underwritten by Alpha.

I am just off the phone with the builder/building manager. He has no idea about CRL and has actually just built another development and took out CRL 10-year warranty. I said it seems that our policy isn't standing anymore since the underwriters are bust but he didn't seem to believe that.

I am going to try and contact CRL in some way to see if this can be resolved, or at the very least prove to the building manager that what I'm saying is true. From the reports online though, it seems like it will be very tricky to get a hold of them. Also, all I have is a grainy photocopy of a document from the policy.
(basically everything warrantyexpert already said)

Do we think CRL are under an obligation to transfer the policy to another underwriter? Will they offer that or just try and charge me(us) for a new policy with them?

Wish me luck

Your final point is an interesting one in that there is a moral obligation but no more than that. Any insurer that they have engaged to "replace" Alpha will not take the liability for nothing so there is a question of the cost being passed on. Whether CRL choose to charge customers for it is a question for them but I think I know the answer!


Good to know that you have spoken with the builder/building manager and not surprised that he knew nothing about the situation. Unfortunately once a warranty is issued and the properties transferred to new owners most people lose interest and it is only those, like yourself, that require refinance or to sell that realise the issue. Personally I cannot understand why the FCA are sitting on their hands doing nothing. There are thousands of people across the country that are completely unaware that their insurance is no longer in force. It is a situation that the FCA were brought in to stop and yet it just continues without any proactive action being taken.


Hope you get the answers you need from CRL......