Bizarrely, the excess figure came down and the insurance premium came down after the claim? It has not been easy to get quotes from some brokers and we were turned down by a few after the claim
Secret commissions
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Whilst technically correct that it is not consistent with most leases, the Law Commission have confirmed that charging D&O to the service charge is very common, seem to think D&O is desirable, and also are in favour or changing statute to make payment of company expenses from service charges legal, even when the lease doesn't allow that
My gut feeling is that whilst it might not pass as a defective lease, there would be a lot of sympathy towards accepting a request to change the lease based on an overwhelming majority supporting the change,
If you did win a a case I think that would just increase the pressure to legitimise this by statute.
Whilst I wouldn't advise the other side to start doing this, I don't think it is an appropriate issue on which to raise a challenge, as there seems to be a general feeling that the strict legal position is inappropriate in the modern world.
I've certainly come across people who refused to become directors because they couldn't have it.
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Originally posted by Stacker View PostOn reading through previous FTT cases yes obtaining the insurance on a like for like basis is required. As an example the previous insurance covered the permitted pets and now it does not. Another example the % paid out for alternative accommodation has been substantially reduced.
I really don't see why a Freeholder would have to provide like for like insurance, and cover things that the lease didn't require, just because these might have been included in the past.
It would be reasonable for the freeholder to have made sure that leaseholders were informed that less would be covered, so that they could potentially arrange their own additional cover if they considered this necessary.
Originally posted by Stacker View PostWithout the leaseholder knowing the Director wrote to the insurance company and stated in writing that "the leaseholder was responsible because of a faulty washing machine not plumbed in properly", she put this in writing, the insurance loss adjustor of the company then contacted the leaseholder and started asking him lots of questions, he thought it was odd they were asking about the plumbing to a washing machine when the leak was due to something else as confirmed by a plumber.
Could be a genuine mistake however this same Director collaborated on a secret commission deal which came out of the woodwork many months later.This same director also did not tell the insurance company that a business where people are coming, staying and going from the property through the communal parts...was going on...did not declare this to the insurance company. No business allowed for in the lease.
Originally posted by Stacker View PostSpoke with LEASE and D&O insurance can not be recovered from the lease or any company expenses. Also LEASE said that if a leaseholder paid towards this directors insurance they would be helping the directors to insure their losses against him if he won!
Morally though, and if you actually want people to be prepared to agree to take on the role of looking after your building, you should accept the inclusion of these in the service charges (really legislation should be passed to permit this and remove the problem).
I'll ask again, would you be prepared to take on the role of director if you would have then have to pay company expense out of your own pocket, and would also have to pay to insure yourself in case you make a mistake and end up getting sued? Not many people would, which means that leaseholder owned companies may be more likely to end up being run by people who think they can use the position for their own benefit than by people who would genuinely look after the interests of all leaseholders.
Company expenses, including D&O insurance, are likely to be an insignificant cost when split between all leaseholders, but may be significant enough to prevent potential directors from standing if they have to pay these themselves.
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Originally posted by eagle2 View PostA leaseholder is only able to challenge on the basis that he can obtain like for like insurance at a lower premium.
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Originally posted by Macromia View PostYes, I am well aware that D&O insurance, and other company expenses are expenses that are not recoverable under the terms of most leases.
Morally though, and if you actually want people to be prepared to agree to take on the role of looking after your building, you should accept the inclusion of these in the service charges (really legislation should be passed to permit this and remove the problem).
I'll ask again, would you be prepared to take on the role of director if you would have then have to pay company expense out of your own pocket, and would also have to pay to insure yourself in case you make a mistake and end up getting sued? Not many people would, which
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Originally posted by leaseholder64 View PostA lot of people here seem to want ground rents made illegal, and a lot of ground rents have been eroded by inflation to the point where they are too costly to collect.
Ground rents (which lessees knowingly sign up to) are a minuscule problem in comparison with theft and various other illegal and inappropriate behaviours by freeholders (which lessees do not knowingly sign up to). The whole legislative debate about leaseholds in misguided and misdirected.
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Originally posted by AndrewDod View Post
Or that the insurance insures things that are not within the remit of the lessor to insure. We successfully claimed a policy was invalid as a result. So yes, like for like (like the same insured value -- unless that is wrong, and the same statements of fact -- if those are truthful). FTT would hardly only accept a challenge on the basis of quotes which reproduced a fraudulent statements of fact.
However, if the insurance previously included cover that the leaseholders all considered worthwhile, but which the freeholder was not obliged to include under the terms of the lease, the freeholder does not need to continue to provide 'like-for-like' insurance and continue to cover these additional risks (unless they have been providing that level of cover for so long that the 'estoppel' argument could be used). In fact, the freeholder might be wise not to continue to provide like-for-like cover under these circumstances because any additional costs would be ruled unrecoverable if a leaseholder decided to challenge them.
So, it is wrong to say that like-for-like insurance cover must be provided. What must be provided is the insurance cover that meets all of the requirements given in the lease (and all legal requirements, with legal requirements taking precedence if they contradict the lease), no more, no less.
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