Freeholder with no insurance

Tangerine88

Hello all,

I am in the last stages (supposedly) of exchanging on my maisonette flat. 

Our freeholder has no insurance so it is down to each leaseholder to cover themselves. My buyer has taken out a contingent buildings indemnity but her lender will not accept this by itself.

My upstairs neighbour has provided their policy summary but the lender wants the full policy schedule and the former is now not playing ball. To be fair he is under no obligations here. The alternative is to take out block insurance but that would also involve the neighbour so seems an unlikely fix.

My adjoining neighbour (same freeholder) sold 6 months prior to me with no problems and no requests for the neighbours' insurance so it doesn't seem this is 'acoss the board' as the EA has tried to persuade me.

The buyer is self-employed and I am more inclined to think a sticky lender and a solicitor who should have identified this at the start rather than now. 

Does anyone have experience of this? Should a contingent buildings indemnity not suffice?

Many thanks!!!

eddddy

I think it may be the terms of the contingent buildings indemnity policy that is the causing this issue.

Based on contingent buildings indemnity policies I've come across, I believe that...

• The neighbour must have buildings insurance in place on the date that the contingent buildings indemnity policy starts

• The contingent buildings indemnity policy will only cover the risks that are currently covered in the neighbours buildings insurance policy

So for example, if the neighbour's buildings insurance policy covers, Fire, Explosion, Flood etc... but not Subsidence, then the contingent buildings indemnity policy won't cover Subsidence either.

So I guess the solicitor wants to see the neighbour's policy to make sure all the 'usual' risks are covered.



Do you have any idea why the neighbour is being difficult about providing a copy of their buildings insurance policy? Do you think they may have something to hide?



Edit to add...

Tangerine88 said:

Our freeholder has no insurance so it is down to each leaseholder to cover themselves. 

Just to add - you make it sound a bit like you think the freeholder has done something wrong. 

But maisonette leases often say that each leaseholder must insure their own part of the building. If that's the case with your lease, your freeholder isn't doing anything wrong.

Tangerine88

@eddddy Thanks! No, I don't think the freeholder has done anything wrong, I gather it's not uncommon for leaseholders to be responsible for their own buildings cover. 

The neighbour is a non-resident landlord who I think is just sick of being badgered about it and as this hasn't arisen when any of the other flats have sold rather baffled to boot. 

Thank you. That explains why the contingent buildings policy doesn't suffice alone. If I manage to get his full policy and they ask him to amend it we are game over tho, I will have to find a buyer with a lender who is less of a stickler. 

ThisIsWeird

Has your conveyancer had sight of the Lease yet - surely yes? That should explain the buildings (and probably contents) insurance obligations - it should be made clear in there, afaIk.

And Freeholders are usually obligated to sort this, to which all Leaseholders then contribute. The reason is obvious - if an uninsured part of the building burns down, everyone else is stuffed.

What does the lease say?

Tangerine88

@ThisIsWeird yes, both solicitors have had the lease since August. That is quite another matter - why this has only been raised last minute. The freeholder has no responsibilities. We leaseholders are required to file a copy of our leases with their agent. Don't get me started on the buyer's solicitor 😂😂😂

eddddy

ThisIsWeird said:

The reason is obvious - if an uninsured part of the building burns down, everyone else is stuffed.

Which is why you need contingent buildings indemnity insurance.

So that you are not 'stuffed' if an uninsured part of the building burns down.

(And the buyer's solicitor needs info from the other leaseholder, in order to set up a contingent buildings indemnity insurance policy. Which is the problem.)

theartfullodger

What does lease say about insurance?  Can't read it from here

Tangerine88

@theartfullodger hi, as I said above, as per the lease, the freeholder has no insurance and each leaseholder is required to cover themselves for both buildings and contents, then to file a copy of said insurance with the freeholder's agent.My question was was why the neighbour's full policy was required in addition to a contingent buildings indemnity. The latter has already been drawn up without sight of the neighbours' policy as I have seen the former myself.

Also, another neighbour in the same block sold 6 months previously and the issue wasn't raised at all so it does seem to be a lender specific concern.

ThisIsWeird

So the Freeholder only has the responsibility to check that all the flats have insurance?

eddddy said:

Which is why you need contingent buildings indemnity insurance.
So that you are not 'stuffed' if an uninsured part of the building burns down.

This Contingent Buildings Insurance indemnity is designed to do what? Provide additional cover in case one of the other flats isn't covered?

Is this something that Tanger would need in place at all times they live there, or just to cover this conveyancing time?

DullGreyGuy

These types of policies are typically 25 years in duration. 

Tangerine88

@ThisIsWeird Correct re. the freeholder. And the CN policy is designed to do just that, provide cover in the event that one of the other flats' insurance is inadequate, were there a fire, for instance.

Which is why I find it odd insisting on the neighbours ' policy as surely the purpose of an indemnity is to compensate for any lack of provision thereof....

Also, we are actually a block of four all with the same freeholder (it's semi-detached) but the buyer's side is only concerned about the flat upstairs from mine. Maybe it's particular to maisonettes.