Freeholder's responsibility?

Franzipani

I own a leasehold first floor flat in a small block, converted from retail premises in 2013. Over time it has become evident that an internal wall and some of the floorboards are sinking (ie there is a problem with the underlying support/ excessive settling). A surveyor has concluded that it is the freeholder's problem to solve. However, the building insurer is refusing to pay because they say it is a construction problem and the original builders are not communicating. Who is legally responsible for this? Does/ should the building insurance assume responsibility for construction defects? The managing agents were first notified of the problem back in 2021 but they only started doing anything about it in the summer of 2024, and now we seem to have reached an impasse and nothing is progressing. Is there any time limit within which these things should be sorted out and what can I do to get to a resolution?

MyRealNameToo

Franzipani said:

I own a leasehold first floor flat in a small block, converted from retail premises in 2013. Over time it has become evident that an internal wall and some of the floorboards are sinking (ie there is a problem with the underlying support/ excessive settling). A surveyor has concluded that it is the freeholder's problem to solve. However, the building insurer is refusing to pay because they say it is a construction problem and the original builders are not communicating. Who is legally responsible for this? Does/ should the building insurance assume responsibility for construction defects? The managing agents were first notified of the problem back in 2021 but they only started doing anything about it in the summer of 2024, and now we seem to have reached an impasse and nothing is progressing. Is there any time limit within which these things should be sorted out and what can I do to get to a resolution?

No, design and build issues are normally explicitly excluded from insurance. 

So is the problem within your flat alone or impacting other units? 

user1977

Why has there been correspondence with the builders? Had they provided a warranty which ought to cover the defect? Or another member of the professional team involved in the development?

MeteredOut

Has anyone challenged the insurers statement that it is a construction problem, or do you/the freeholder accept that?

gwynlas

NHBC  cover if issued would have expired in 2023 so either it is covered by insurance or by the freeholder who will of course charge to leaseholders

eddddy

Just to clarify - did the conversion done in 2013 come with any warranty (i.e. a 10 year warranty) - as you mention that the issue was first reported to the management company in 2021 (i.e. within 10 years)?


Assuming there was no warranty, it sounds like there are 2 considerations:

• If the problem is subsidence, it should be covered by buildings insurance (but there might be quite a big excess)

• If the problem isn't subsidence, it's very unlikely to be covered by buildings insurance - and the leaseholders will probably end up having to pay for repairs

It sounds like the insurance company is saying it isn't subsidence - they're saying the problem is construction defects.

So your freeholder can either accept what the insurance company says - or dispute it.

If they want to dispute it, I guess the freeholder would need to hire expert surveyors, structural engineers, and/or insurance assessors etc to inspect the building and write up reports - and then 'argue' with the insurance company.

Franzipani

Thanks to everyone who has responded and apologies for taking so long to get back. For clarification, this is a first floor flat with a retail unit below. The original block was a 2 storey set of 4 retails units, which has been converted to one supermarket with 2 residential floors above. I am on the first floor and we have had a surveyor look from above and below (in the ceiling of the retail unit). According to the surveyor, there is no problem (eg subsidence) with the retail unit, so the issue is between the ground and first floors and it is evident in two adjoining flats.
As always, things are slightly more complicated than first described! The freeholder has a managing agent, so all information comes via them. We were told that the freeholder has been "talking to his solicitor" about the buildings insurer's refusal to cover it. Like "myrealnametoo" I suspected that they were not liable for a "construction" problem. So the freeholders agent has (apparently) been trying to chase the builders.
 Currently I am in a stalemate situation and need to work out my next step. Assuming there was some sort of insurance relating to the construction, it will have lapsed. So, from the replies above it looks like it creates a "black hole" where construction problems are no longer covered. If so, it becomes a direct problem of the freeholder (whether it is insurance or another mechanism it will always be charged back to the leaseholders) who will sit and do nothing for as long as possible. Is there a maximum time in which a freeholder has to respond? At minimum I am considering going to the managing agent's ombudsman on the grounds that they have exacerbated to problem by not responding properly in 2021. Additionally, it turns out that there may have been some movement noticed back in 2014 in the flat next door, which I have only recently found out about. This was rectified (probably just retiling) by the builders in the first year. I don't think anything was done in my flat ( I bought in 2018), but there is clearly some background which was never properly investigated.