Maisonette insurance problem

Gabi_11

Hello,

I am haping to get some insights from anyone who has passed through something similar, or has some fact base based information.This is on building insurance for a maisonette. 

I am a first time buyer, trying to get a ground floor 1 bed maisonette, in a building with 3 other maisonettes. It is leasehold, building was made in 1982, 999 years on lease from the start, no service charge, £25/year ground rent. The buildign and maisonette themselves are in a very good state and the valuation came out with no concerns.  

I was about to exchange last Friday, when the lawyer told me there is an issue with the insurance, and it may  cause me problems in the future and I will have problems when selling. I haven't had the best experience with this lawyer since I started the purchase. She cant really articulate what problems I may face, apart from something related to what happens if there is a fire and the whole building burns down. She still hasn't told me what happens in that case. 

There is no building insurance, and the leasehold refuses to do it. The lease doesnt make it clear who should do the building insurance. The current seller has insured the maisonette only and has a building indemnity insurance policy in place. 
If I buy it, I would also have to get the same insurance for the maisonette. I understand I could go down the route of buying and them maybe trying to convince the other people who have the 3 maisonettes, to get a joint building insurance. But if i dont manage to do that, and i stay with my insurance for the maisonette,  would I make myself liable for anything? 

The current seller was until now under the impression that the freeholder organises the insuranc, and so were probably the other people having the maisonette. So I am not sure,  if those people even have insurance for their own maisonettes or not. 

Just looking for some advice, under the assumption that if I proceed to buy, the building will stay uninsured, with only the maisonette being insured. Would that be problematic when I sell? 
Thank you 

Philomel

I bought a maisonette (one flat in a two-flat house conversion) earlier this year and our mortgage lender (HSBC) would not proceed unless we had whole-building insurance. Previously the two flats had been insured separately but luckily, the other flat's insurance was coming up for renewal and they were agreeable to purchasing a joint insurance policy, which we duly did. This was something that actually came up fairly late in the process and was the last thing we sorted before we were able to exchange.

user1977

Gabi_11 said:

The current seller has insured the maisonette only 

The current seller was until now under the impression that the freeholder organises the insurance 

Those can't both be true - do you mean the seller has only now taken out insurance over their own flat, and previously it wasn't insured at all?

canaldumidi

Who is the freeholder? Owned jointly by the 4 leaseholders? The council? A 3rd party company?

What did the other 3 occupants say when you knocked on their doors for a chat?

What exactly does the lease say (if anything)?

Gabi_11

Philomel, thank you - my lender is also HSBC, waiting for their reply.

Use1977 and canaldumidi:
The management company paid the building insurance until 2019, then it stopped. The seller is an elder lady who had no idea (she now gave power of attorney to her daughter). She had £900 outstanding payments to the management company which she hadn't paid for the last 3-4 years (she has now paid them). From what I have seen on the papers, the management company used to insure the whole building and then the leaseholder would be charged annually. I dont know the reason why they stopped in 2019, but no one would ask them. I tried to contact them, but they want talk to me, since I am not the actual leaseholder.

So the seller just realised now there is no insurance, and made one for the maisonette. 
I went to the other 3 maisonettes, to talk to the people there, and they are all rented, and I cant contact the owners. 
The estate agents and the seller's lawyers are refusing to contact the management company, on the basis that the management company will not resume the insurance. They seem to be a private company, acting on behalf of the freeholder. 

The lease mentions the insurance in two places. In one, it says the freeholder has to do it "from time to time", in another place is says it is the responsibility of the leaseholder to insure the maisonette in the joint name of the leaseholders plus the freeholder. 

Gabi_11

canaldumidi said:

Who is the freeholder? Owned jointly by the 4 leaseholders? The council? A 3rd party company?

What did the other 3 occupants say when you knocked on their doors for a chat?

What exactly does the lease say (if anything)?

Replied above, sorry, still getting used to the system.

Gabi_11

user1977 said:

Gabi_11 said:

The current seller has insured the maisonette only 

The current seller was until now under the impression that the freeholder organises the insurance 

Those can't both be true - do you mean the seller has only now taken out insurance over their own flat, and previously it wasn't insured at all?

Replied above 

Continental

I guess the tenants of the other properties don’t care about buildings insurance (they probably have contents insurance only)....but if the whole building has no insurance for the bricks and mortar, have the owners considered what will happen to their investment if the building burns down/lorry crashes into it/flooding etc? They will all suffer a loss!

I absolutely would not exchange until the matter is resolved. I can’t understand that the vendor has taken out insurance on her flat....what is this, just her contents? The whole building needs to be insured, not just her individual flat!

kirtondm

I wouldn't imagine your montage company will allow you to exchange without insurance being in place. The lease sounds as though it may be defective if it is not clear on who has to insure.

canaldumidi

canaldumidi said:

Who is the freeholder? Owned jointly by the 4 leaseholders? The council? A 3rd party company?

What exactly does the lease say (if anything)?

Hi - it's still unclear who the freeholder is (and hence who appointed the management company).

Can you quote the exact wording in the lease pleasr?

Gabi_11

canaldumidi said:

canaldumidi said:

Who is the freeholder? Owned jointly by the 4 leaseholders? The council? A 3rd party company?

What exactly does the lease say (if anything)?

Hi - it's still unclear who the freeholder is (and hence who appointed the management company).

Can you quote the exact wording in the lease pleasr?

The lessor seems to be (Removed by Forum Team), and the management company is: (Removed by Forum Team) (hope it is okay to mention them).

Below is where it is mentioned about the insurance. For me below suggests that the freeholder has to do it (it is mentioned in the first half of the page, towards the middle), but it is someone in conflict with point j (later mentioned in the lease).
(Removed by Forum Team)

Point j below comes under the leaseholder responsibilities.
(Removed by Forum Team)