water leak in block of flats - management company's responsibilities

eddddy

subjecttocontract said:

Now you made a comment about insurance excess......I know it probably doesn't apply to you in this situation but for the future here is how it usually works on leasehold flats :
The lease requires the freeholders to effect building insurance. In order to keep premiums lower they often take insurance that specifies ......for example .....water leak claims carry a £500 excess. But the lease doesn't require them to take buildings insurance with an excess, it requires them to cover all leaseholders with 100% insurance. So, if someone needs to make a claim they are reimbursed for the cost of the claim by the insurers, less the £500 excess. The leaseholder is then entitled to have the £500 reimbursed by the Man' Co' from the service charge account because the lease says they are to be covered 100%. This means ultimately there is no excess to pay on any buildings insurance claims.

Do you have a link which confirms that explanation?

Insurance and excesses in blocks of flats can be a contentious issue - but most of the 'more reliable' sources I've seen say that the leaseholder of the damaged flat would usually be responsible for paying the excess.

Or if more than one flat had been damaged, the excess would usually be split between the affected leaseholders.

The key reason being that a leaseholder is responsible for repairs to their own flat, and the freeholder isn't.


Unless
- the lease explicitly says that insurance excesses are paid from service charge funds, or
- the leaseholder can prove that somebody's negligence caused the damage. Then the leaseholder can claim back the excess from the negligent person.

subjecttocontract

No I don't have a link but I have been letting leasehold flats for 20+ years and been a director of a property management company for 10 years.

The lease doesn't have to explicitly say 'that insurance excesses are paid from service charge funds'. What the lease will say is something along the lines of this......that the freeholders or its managing agents are obligated to ensure that at all times buildings insurance is in place that fully indemnifies leaseholders.

Buildings insurance that only covers 50% or 70% or any other amount less than 100% of a claim does not fully insure the leaseholder. Almost all Man' Co' do it in order to keep premiums lower and consequently that should reduce the service charges paid. A Man' Co' is taking a chance that the savings on the premiums will be larger than the total of any excesses reimbursed to leaseholders. In my experience it's fairly normal practice. Of course not all leaseholders are aware and no doubt some do pay the excess & don't claim it back.

eddddy

subjecttocontract said:

No I don't have a link but I have been letting leasehold flats for 20+ years and been a director of a property management company for 10 years.

<snip>

I've just had a look at a few tribunal cases - and tbh, I couldn't find any that support your theory.

Is your theory based on legal advice, and/or was it ever tested at tribunal? 

Perhaps it was true of your lease(s), because of their specific wording. But it doesn't seem to be universally true of all leases.




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I found two cases (a and b below) where the tribunal simply said leaseholders were responsible for the excess to repairs to their own flats.

I found another case (c below) where the tribunal said the excess should be paid from service charge funds - but not for the reasons you suggest. The reason was...

The reasons for this is that the level of the premium is directly related to the level at which the excess is set. The higher the excess the lower the premium and vice versa. 

i.e.

• The leaseholders should either expect to pay a high premium through the service charge - for a policy with no excess 

• Or the leaseholders have a lower service charge if the policy has a high excess - but then they should expect to contribute to that high excess

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Case a  (see paras 204(iv) and 208) - https://decisions.lease-advice.org//app/uploads/decisions/act85/13001-14000/13578.pdf

Case b  (see para 99) - https://decisions.lease-advice.org//app/uploads/decisions/act85/10001-11000/10974.pdf

Case c (see paras 20 and 21) - https://decisions.lease-advice.org//app/uploads/decisions/act85/10001-11000/10193.pdf