Buildings insurance.

Woodstock1953

A few months back, a soil pipe cracked and caused damage to two of the Leasehold flats. There are 8 flats in all.
The repair work was undertaken, and Zurich Insurance agreed to pay out. 
The freeholder paid the  plumbers' bills, and has now billed us for his expenditure.  He says the Service Charge bills will be amended towards the end of the year, once he receives the money from Zurich. 
This is a straightforward insurance claim but he wants money from us now. Our view is that the insurance contract is between him and Zurich, so he should be sorting this, and not making us pay. 
Help!

eddddy

This situation sounds very strange - you probably need to provide more info...

Assuming you have typical leases...

What caused the soil pipe to crack? 
If it was general wear and tear, or due to it's age - typically a plumber's bill to repair the pipe wouldn't be covered by insurance. (But the damage to the building caused by the leaking pipe probably would be.)

According to the leases, who is responsible for the the section of soil pipe that cracked - an individual leaseholder or the freeholder?  
If an individual leaseholder is responsible - that leaseholder should have arranged and paid for the repairs.
If the freeholder is responsible - the freeholder should arrange repairs - then the cost should (probably) be split across all 8 flats as a service charge


Or is the bill for repairs to 2 damaged flats - e.g. re-plastering, repainting, etc? (So not a plumber's bill, but a plaster's bill, a decorator's bill, etc)
If so, why is the freeholder dealing with that? The leaseholder (owner) of each flat should be dealing with the repairs to their own flat.

The flat owners could either wait until the insurance company pays out, and then use the money to pay for repairs. Or the flat owners could pay for the repairs now, and hope that the insurance company will pay out in due course.

Woodstock1953

The Lease actually says very little! The plumbers eventually fixed everything that needed doing, but it took several months for the properties to dry out. There was quite a bit of water damage to one flat and it was uninhabitable for some time. Both flat holders have redecorated their own places. So no charge for other workman. 
The freeholder arranged for the plumbers  to do the extensive repair work. There were several visits by the freeholder and loss adjusters. 
The insurers were 'okay' with paying out and we all assumed that was an end to it. The money would be paid to the freeholder - as he had arranged cover with Zurich. 
So, as he had paid the plumbers, and Zurich are paying up (covering the plumbers' bills) we had no reason to think that he would demand money from us. Yet suddenly he decided that he wanted us to pay - it runs into thousands - until he is reimbursed from the insurers...and he will be, he won't lose out a penny.
I don't know the true extent of the damage - or what caused the issues. But we were informed that everything was covered by the buildings insurance, and the freeholder was dealing with it. We don't know exactly how much the freeholder has claimed for as we have to fight to see every invoice. 
But the freeholder chose to pay the plumbers - we didn't even know that he had - and wants us to reimburse him until the insurers cough up (they may even have done do already,  we have no way of finding out - they won't deal with us, only the freeholder).

eddddy

Woodstock1953 said:

The Lease actually says very little! 

That seems very unlikely.

If your lease didn't explain who was responsible for maintenance and repairs, your solicitor would have warned you and probably advised you not to buy the flat (and advised a mortgage lender not to offer a mortgage on the flat).


But most leases typicaly say...

• You are responsible for repairs to your flat (and paying for them).

• So it seems like you made "a private arrangement" with the person who happens to be your freeholder, to arrange repairs to your flat

• So payment terms will be whatever you agreed with that person (the freeholder) - when you agreed to let him/her arrange repairs

This shouldn't go through the service charge accounts - as it's a private arrangement between you and that person (the freeholder).

And hopefully, you will get some/all your money back (less the excess) if/when the insurance company pay out.


(I imagine that the other 6 flat owners would go ballistic if any of the cost of repairing your flat was added into their service charge.)


Assuming the above is the case, I guess you could simply refuse to pay the freeholder until the insurance money comes through.  The arrangement sounds so vague and loose that I doubt the freeholder would take you to court.

But the big issue would be if the insurers refuse to pay out some or all of the money.

ExEstateAgent

If the insurer approved the works they should pay promptly. Some insurers will pay the contractors directly. I don't see why the freeholder would need to charge you unless they didn't have the funds to pay the contractors, so it's like a temporary loan until the insurance money comes through. 

The only thing you will need to pay as leaseholders is any shortfall due to the policy excess (and no doubt much higher premiums when the policy is renewed). 

Woodstock1953

Eddddy. There was no private contract between any leaseholder and freeholder. The water 'leak' was reported to the freeholder who got the plumbers involved, and contacted Zurich to start an insurance claim. We are responsible only  for the £500 excess on the claim - which we have paid. We should not be responsible for reimbursing any monies he chose to pay the plumbers. 
Incidentally,  it wasn't my flat involved.

Woodstock1953

Ex Estate Agent. Agree with what you're saying. Zurich approved the claim, we paid the £500 excess. Freeholder may well be having financial difficulties...Our insurance has already shot up by 31%. Not sure how much of this is because of the claim, or how much commission the freeholder has pocketed (he won't tell us!). 

eddddy

Woodstock1953 said:

There was no private contract between any leaseholder and freeholder. 

How can that be?

Are you saying the freeholder and plumbers repaired somebody's flat without the flat owner's agreement and consent?

In simplified terms...

If you agree to let a garage repair your car - you're entering into a contract with the garage.
If you agree to have a plate of fish and chips in a restaurant - you're entering into a contract with the restaurant.
If you agree to let a freeholder repair your flat - you're entering into a contract with the freeholder.


So what did the freeholder say about payment terms for the repairs to the flat right at the outset - because whatever the freeholder said would be a term of the contract?



Edit to add...

- Perhaps the problem is that the freeholder is dodgy and misled the leaseholder
- And/or the leaseholder was naïve and didn't understand how things work.

If we can agree that's the case, we can have a constructive discussion about how the leaseholder can dig themselves out of this problem.

Woodstock1953

You've completely misinterpreted what I said.
I regret I even bothered putting this question on the forum.
Topic ended.

eddddy

Woodstock1953 said:

You've completely misinterpreted what I said.
I regret I even bothered putting this question on the forum.
Topic ended.

With respect, I think you have looked at the situation and completely misunderstood it.

I don't think I'm misinterpreting anything, I'm trying to explain what the situation is much more likely to be.



For the sake of a rather naff analogy - you might be asking a question about how a lamp post travelling at 40mph hit a stationary car.

And I'm replying that you've probably misunderstood - and it's much more likely that the car was travelling at 40mph and the lamp post was stationary.