Leasehold property to be insured by leaseholders

[Anna1985]

Hi, I'm co freeholder and dealing with the wonderful leaseholder who thinks his property exists outside the building in another dimension.

So FFs requested the leaseholder to provide a copy of the insurance policy within 21 days. Lease saying the policy should be provided when requested by FFs.

So far nothing was provided, we also waiting for Section 20 where LL again not communicated with us.

So my question is with insurance policy not provided, could we write to the lender and advise that we were unable to obtain the insurance policy and therefore would be taking the LL to the property tribunal for the breach of lease or best to wait for the section 20 lapsing? Thanks

[flyingfreehold]

No, I don't think that is the appropriate route. Your lease will almost certainly entitle to take out cover in the event the leaseholder fails to provide evidence that he has done so in accordance with the lease. Take out such cover, comprehensively and sue the lessee for the premium as a debt; which may be reserved as rent in arrear; depending on the terms of the lease.
Incidentally the following abbreviations are more readily understood
F/H freeholder or lessor or in the long leasehold context landlord
L/H leaseholder or lessee or long leasehold tenant

[Anna1985]

flyingfreehold, unfortunately not. The lease states the property should be insured by L/H and L/H should provide the insurance when requested by F/Hs

[Anna1985]

So the only way I see is to apply for forfeiture to make L/H follow the lease or sell the property

[flyingfreehold]

You don't have the right to insure in breach of the leaseholder doing so and recovering the cost as a debt? In that case write to the mortgagees and tell them that their borrower refuses to prove the mortgaged premises are insured and that the borrower may be uninsured and you are reserving your rights but in the meantime under the circumstances ask them add the risk address to their block policy and debit the mortgage account with the cost.. The landlord and the mortgage lender's interests very often coincide

[Anna1985]

flyingfreehold , thank you ever so much! What a fabulous solution - wonder if we receive the policy shortly after))

[Gordon999]

Almost all leases states the Lessor ( freeholder ) insures the property because the building belongs to the freeholder. The freeholder owns the building and has the insurable interest.

The flat owner ( leaseholder ) owns a lease ( which is a long term rental agreement ) and normally contributes to the building insurance through paying the annual service charge.

The insurance clause in your lease may be defective.

[flyingfreehold]

You are right that modern conveyancing requirements are that the freeholder or management company insures nonetheless there are many many tens of thousands of leases where the covenant to insure rests entirely with the lessee. Sometimes there is an obligation to place the cover with a designated insurer and in joint names with the lessor, and sometimes, more rarely there is simply a covenant to keep insured without any such restrictions. It was quite normal in the late 50s and 60s. Back then it was not unusual for people buying flats to buy their general insurance cover from the mortgage lender who operated vast insurance block policies. We sometimes have leaseholders solicitors who bleat on about the lease being defective and desire us to reverse the arrangement under an older residential lease and give a freeholders covenant to insure. They go awfully quiet if I am able to point out that it was their firm who acted on the purchase!

[Anna1985]

Just to add yes, there is a lease requirement to have F/Hs name on the policy.

[Anna1985]

flyingfreehold, hope you are well. Our drama continues, we were provided the insurance but the co freeholders names are not on the policy.
also, it does see that the policy taken is residential rather than a BTL, so invalid by default.

And there is another point - property is in disrepair, and i do think the leaseholder lied or was very economical with truth in order to obtain policy.

This basically leaves us with the property where there is no insurance (co freeholders insurance would cover full rebuilding costs) but trace etc any other options would not be covered.

I'm thinking of writing to mortgagees with pictures of disrepair (it is literally falling to pieces) and basically ask them to work with co freeholders to protect the property.

However, according to lease the repairs to the walls etc are joint and we have evidence going back several years that we tried to contact the leaseholder in order to arrange the repairs - is there a chance we could apply to court to argue that the leaseholder didn't follow the lease and the cost of repairs should be born by him due to not taking any action?

Thank you

[flyingfreehold]

litigation right now is pretty much a non event. The leaseholder has some sort of cover. Is the indemnity amount adequate?* If so park this issue and think about what's for dinner tomorrow evening!


* not advertising, because I am not connected to them but these people give a remarkably accurate reinstatement value at about a third of the cost of the traditional route. I know they are are pretty accurate because we have double checked a sample of the valuations they have done for us desktop against traditional QS valuations. Lesson learned this year is that one must add VAT to the (nett) declared value because a calamitous loss would count as repair and be standard rated for VAT https://www.rebuildcostassessment.com/

[Anna1985]

Yes, it is understood that at the moment, you only see a judge if your name is Depp)

Trouble is that the policy is not valid, due to leaseholder taking on residential building insurance rather than BTL and the property being in disrepair.

1/3 of property would not be covered, although the insurance of cp freeholders more than cover the full rebuild costs, i don't think they would be looking to cover rebuilding costs of 3rd leaseholder.

[Namaste]

As a leaseholder with an ignorant and nightmare freeholder, I was advised to take out contingency insurance. I suggest you speak to your solicitor - it was they who suggested and arranged mine.