New build flats (only 4 years old), owners charged with £425,000 repairs, no insurance

mertywerty

user1977 said:

mertywerty said:

From the above is it safe to assume that there is no separate building insurance in place at all for this property?

No, it isn't. I expect they probably do have buildings insurance in place. But as explained above, any normal buildings policy is going to be irrelevant, because the risks it insures (i.e. the ones you listed in the clause) aren't anything to do with the problems you're having.

I expect the insurers they're talking about are the ones underwriting the warranty. You'd need to look at the terms of the warranty to see what it covers - you should have got a copy when you bought. Didn't your solicitors mention anything about it? They certainly would have checked that it was in place.

Thank you (sorry I misread the posts above so initially misunderstood). 

The warranty I do have a copy of when the flat completed, and it's very limited in scope and consistent with the details I originally posted. Also there is an specific exclusion stated in the warranty saying "All claims relating to or resulting from the flat roofs are excluded from policy cover". 

These block of flats were all sold off plan a good few years before they were built. At the time of buying off plan, the solicitors produced a report on title saying: 

"The Property is to be sold with the benefit of a Premier Guarantee for New Homes whereby the indemnifier   (Lloyd’s Syndicate 4472 (Liberty Syndicates) agrees (subject to conditions) to insure against:

Defects in the Property resulting from a failure by the Vendor to comply with Premier Guarantee’s Technical Manual (which sets out fundamental requirements the developer and/or the builder has to comply with when constructing a property) notified to your Vendor within 2 years of the commencement of the insurance cover (“the Defects Insurance Period”) and within 6 months of the expiry of the Defects Insurance Period

The cost of complete a partial rebuilding a rectifying work to the Property which has been affected by “Major Damage” notified to the indemnifier within 8 years of the date of the commencement of the insurance cover. “Major Damage” means destruction of a physical damage to any portion of the Property or a condition requiring immediate remedial action to prevent actual destruction of a physical damage to any portion of the Property. The insurance does not cover:

a) External landscaping or garden features;
b) Adjustments of doors following the fitting of carpets or flooring;
c) Drawing of chimneys;
d) Contractual disputes between the Developer and the Policyholder or issues regarding specification of items;
e) Dampness, condensation or shrinkage not caused by a Defect;
f)  Chips or scratches to fittings i.e. in the kitchen, bathroom or bedroom ;
g) Minor blemishes that are subjective in degree i.e. brush marks, decoration etc;
h) Items that have been subsequently changed or altered on behalf of the Policyholder at their request such as fitting of wardrobes , fittings etc;
i) Deterioration caused by neglect or failure to carry out normal maintenance"

However when it the development was then built and I completed on the property, in hindsight there was no mention of this Guarantee mentioned by the same solicitors, they didn't flag anything up, and I was then given the CRL structural warranty which was in place of this Premier Guarantee. I'm not sure if they are equivalent warranties. 

mertywerty

AdrianC said:

mertywerty said:

No they haven't not served a section 20, they basically just said the costs will be added onto the next Service Charge bill which will be due on 1st January next year.

They can't do that.

If the work is going to be more than £250/property, it HAS to be s20.

That s20 process includes getting quotes from several suppliers, including the option for leaseholders to nominate suppliers.

I've confused building insurance and the 10 year structural warranty as the one and same thing, because that is the only details we have been given when we purchased the flat.

You wouldn't confuse your car insurance with the warranty the manufacturer gave on it, would you? Same difference.

The warranty covers against major damage. There hasn't been any major damage... yet. That doesn't mean they can leave it until such damage DOES occur.

Thanks, I don't recollect any formal notice received for this (I assuming a section 20 require a formal letter etc?) 

What they have done so far was send for specialist report on investigating the roofs leaks, then following the reports from that  requested for quotes for remedial works to 3 contractors, and then wrote a report and recommended one of quotes to us with this £425k cost and stating they would take it from our next service charge.

AdrianC

mertywerty said:

AdrianC said:

mertywerty said:

No they haven't not served a section 20, they basically just said the costs will be added onto the next Service Charge bill which will be due on 1st January next year.

They can't do that.

If the work is going to be more than £250/property, it HAS to be s20.

That s20 process includes getting quotes from several suppliers, including the option for leaseholders to nominate suppliers.

I've confused building insurance and the 10 year structural warranty as the one and same thing, because that is the only details we have been given when we purchased the flat.

You wouldn't confuse your car insurance with the warranty the manufacturer gave on it, would you? Same difference.

The warranty covers against major damage. There hasn't been any major damage... yet. That doesn't mean they can leave it until such damage DOES occur.

Thanks, I don't recollect any formal notice received for this (I assuming a section 20 require a formal letter etc?)

Yup.

What they have done so far was send for specialist report on investigating the roofs leaks, then following the reports from that  requested for quotes for remedial works to 3 contractors, and then wrote a report and recommended one of quotes to us with this £425k cost

No issue so far...

and stating they would take it from our next service charge.

Problem.

mertywerty

AdrianC said:

Problem

Apologies, after consulting with other owners, we were served a section 20, a lot of us including me, missed it in the mix of the other communications sent out by the management company, and the consultation period has long passed. 

AdrianC

Aha... Then you'd better get shaking that piggybank.

Have to admit, I'd have been surprised if they really had dropped that big a furry one.

mertywerty

Unfortunately a lot of us flat owners just don't have that much money to pay in one go in the next 3 months (~£8,000 each). And as a new build block of flats that is not yet 5 years old, it should be reasonable to expect none of us to have to pay this cost.

A large reason why many of us bought new build was for reassurance that that we wouldn't ever have to worry about large unexpected repairs to areas like the roof.  

Hence the reason for this post to see if there is any other avenue we can pursue, as we feel like we've fallen into a gap that shouldn't have ever been there in the first place. 

AdrianC

mertywerty said:

Unfortunately a lot of us flat owners just don't have that much money to pay in one go in the next 3 months (~£8,000 each).

Is there any way that the management company can arrange some kind of staged payments?

And as a new build block of flats that is not yet 5 years old, it should be reasonable to expect none of us to have to pay this cost.

A large reason why many of us bought new build was for reassurance that that we wouldn't ever have to worry about large unexpected repairs to areas like the roof.  

Unfortunately, that doesn't affect the fact that the work is clearly needed, and nobody else is going to pay for it on your behalf.

eddddy

mertywerty said:

What they have done so far was send for specialist report on investigating the roofs leaks, then following the reports from that  requested for quotes for remedial works to 3 contractors, and then wrote a report and recommended one of quotes to us with this £425k cost and stating they would take it from our next service charge.

What you're describing sounds very much like it could have been a section 20 consultation - which has now been completed.

A section 20 consultation has 3 stages:

• the pre-tender stage – notice of intention
• the tender stage – notification of landlord’s proposals (estimates)
• notice of reasons for awarding the contract.

You should have been invited to make 'observations' (i.e. comments, feedback, objections) at each stage.

(Info on section 20 consultations: https://www.lease-advice.org/advice-guide/section-20-consultation-private-landlords-resident-management-companies-agents/)


TBH, it usually weakens your case if you let the management company / freeholder go through the entire process without you saying anything - then at the very end, you raise some fundamental objections, and expect the management company / freeholder to go through the whole process again.



But I guess you're (probably) not objecting to the repairs - e.g. You're not claiming that the repairs aren't necessary and/or that £425k is excessively expensive. 

Your argument is over who should pay for them - you want CRL/CGICE or maybe the developer (or maybe even the freeholder) to pay for them.

So I guess you can pay for the repairs, and then persue any/all of those afterwards.

mertywerty

Thanks, all of us (including me) missed the communications around the section 20 process. 

Yes, ultimately we feel we shouldn't be the ones liable to having to pay for these repairs taking into account the whole situation.

We also do feel £425k is excessively expensive, as the original report stated that they did not expect the entire repairs to be more than the excess on the warranty (£104k), and therefore there was no point claiming on the warranty.

I'm not sure how a professional person who did the survey could get the estimated costs out by a factor of 4 times!

Thanks for all the advice here, we will look to take some initial legal advice first as it seems there is no real obvious way to mitigate against the costs. 

eddddy

mertywerty said:

 At the time of buying off plan, the solicitors produced a report on title saying: 

"The Property is to be sold with the benefit of a Premier Guarantee for New Homes whereby the indemnifier   (Lloyd’s Syndicate 4472 (Liberty Syndicates) agrees (subject to conditions) to insure against:

Defects in the Property resulting from a failure by the Vendor to comply with Premier Guarantee’s Technical Manual (which sets out fundamental requirements the developer and/or the builder has to comply with when constructing a property) notified to your Vendor within 2 years of the commencement of the insurance cover (“the Defects Insurance Period”) and within 6 months of the expiry of the Defects Insurance Period

The cost of complete a partial rebuilding a rectifying work to the Property which has been affected by “Major Damage” notified to the indemnifier within 8 years of the date of the commencement of the insurance cover. “Major Damage” means destruction of a physical damage to any portion of the Property or a condition requiring immediate remedial action to prevent actual destruction of a physical damage to any portion of the Property. 

Something else to investigate...

• The quote above says you're getting a 10 year guarantee from 'Premier Guarantee'. That particular guarantee has greater cover during the first 2 years - and limited cover for the remaining 8 years.

• So the roof and drainage might have been covered during the first 2 years. And you said that the problems materialised during those 2 years, and somebody may have reported them to the management company.

• However, it seems that you ended up with a CRL/CGICE guarantee. I'm not sure, but I don't think that has enhanced cover during the first 2 years - instead it might only have limited cover for the full 10 years. (You need to check your paperwork) So you couldn't claim on the guarantee.

Depending on what exactly happened, I guess there might be a breach of contract if you didn't get the guarantee that you were promised (or maybe negligence by your solicitor, if they described the wrong guarantee in their report).

But that sounds like a recipe for very expensive litigation.