Scottish Tenement Block Insurance

In March 2003, a draft document was prepared, based on the recommendations of the Scottish law commission, asking for views and opinions relating to the draft tenements Scotland Bill. The document ran to some 10 chapters, and in chapter 6, the issues relating to insurance in respect all blocks of flats was discussed. In essence, the commission recommended that blocks of flats insurance for tenement buildings should be made compulsory. Whilst insurance is usually required to secure a mortgage on a property. It is not normally compulsory by Act of Parliament. It was felt that the owners of tenement buildings were in a fairly unique situation, in that their own individual properties to a certain extent relied on the upkeep and maintenance off neighbouring properties in the same block. Without adequate insurance protection being kept in force, it was felt that an individual flat owner may not be fully protected in the event that a neighbour does not ensure that a insurance policy is kept in force.

Tenement Block Insurance valuations

The commission went on to suggest that the blocks of flats insurance should be provided for the full reinstatement off the property and not for it’s market value. This has led to some confusion as quite often with the construction and build off these buildings, the reinstatement value is often more than the market value. The commission pointed out that in the case off stone constructed properties sums in sure could quite often be higher than the market value. If you all concerned with regard to obtain an adequate sum insured in respect of flats, a professional opinion, should always be sought, in most cases, following a survey for a mortgage lender, the surveyor will state the required sum insured for insurance purposes. The commission also noted that whilst it felt compulsory insurance for tenement blocks of flats was necessary, it was not to be recommended that insurance on a block basis be made compulsory, and it was further felt that it should still be left to the individual flat owner to arrange his or her own insurance contract. However, it was noted that a communal policy should be the recommended option for owners in blocks all the flats. Ideas and recommendations that were produced in this document, went on to form clots off the tenements Scotland (Act) 2004. Section 18 off the tenements Scotland act 2004 placed an obligation on the owner to be sure the property. It was to state as follows.

The commission went on to suggest that the blocks of flats insurance should be provided for the full reinstatement off the property and not for it’s market value. This has led to some confusion as quite often with the construction and build off these buildings, the reinstatement value is often more than the market value. The commission pointed out that in the case off stone constructed properties sums in sure could quite often be higher than the market value. If you all concerned with regard to obtain an adequate sum insured in respect of flats, a professional opinion, should always be sought, in most cases, following a survey for a mortgage lender, the surveyor will state the required sum insured for insurance purposes. The commission also noted that whilst it felt compulsory insurance for tenement blocks of flats was necessary, it was not to be recommended that insurance on a block basis be made compulsory, and it was further felt that it should still be left to the individual flat owner to arrange his or her own insurance contract. However, it was noted that a communal policy should be the recommended option for owners in blocks all the flats. Ideas and recommendations that were produced in this document, went on to form clots off the tenements Scotland (Act) 2004.

Section 18 off the tenements Scotland act 2004 placed an obligation on the owner to be sure the property. It was to state as follows.

[1] it shall be the duty of each owner to effect and keeping in force, a contract of insurance against the prescribed risks for the reinstatement value of the owners flat in any part of the tenement building attaching to that flat as a pertinent.
[2] The duty imposed by subsection [1] above may be satisfied, in whole or in part by way of a common policy of insurance arranged for the entire tenement building.
[3] The Scottish ministers may order or prescribe risks against which an owner shall require to insure.
[4] Where, whether because of the location of the tenement or otherwise, an owner -
[a] having made reasonable efforts to do so, is not able to obtain insurance against a particular prescribed risk; or
[b] would only be able to obtain insurance at a cost which is unreasonably high. The duty imposed by subsection [1] above shall not require an owner to insure against that particular risk.
[5] any owner may by notice in writing request, the owner of any flat in the tenements produced evidence of-
(a] the policy in respect all of any contract of insurance which the owner of that flat is required to have or to affect; and.
(b] payment of the premium for any such policy, and not later than 14 days after that notice is given the recipient shall produce to the owner giving the evidence as requested.
[6] the duty imposed by subsection [1] above on an owner may be enforced by any other owner. In May 2007, an order was attached to the tenements Scotland act 2004 stating the prescribed risks that an owner of a flat in a tenement block should seek insurance against. Article 2, of the order specifies the following prescribed risks; fire, smoke, lightning, explosion, earthquake, storm, and flood, theft or attempted theft, riot, civil commotion, labour or the physical disturbance, malicious persons or vandals, subsidence, heave or landslip, escape of water from water tanks, pipes, apparatus and domestic appliances, condition with the building course to buy any moving object originating outside the building, each each of oil from fixed heating installations, accidental damage to underground services. An explanatory note was included, stating that the above perils were presently the risks that any flat owner was required to insure against. In practice, however, most modern UK blocks of flats insurance wordings will in any case provide wider cover than that down by this act. However, it is worth checking with an insurance company or insurance broker, that any suggested policy wording does meet the requirements off the above. For the purposes of the act, the definition of a tenement block, not only included the more traditional sandstone tenement building, but also was extended to include converted houses, purpose built blocks, tower blocks, etc.

The rights of tenement flat owners – In 2004, the Tenements (Scotland) Act came into force in Scotland, in essence effecting everyone owing a flat in Scotland. This change to Scotland’s property law was designed to provide benefits for in excess of 1.4 million homeowners living in tenements and buildings such as blocks of flats.

The law applies to any building, converted into, two or more flats or apartments and is based on a ‘common repair – common sense’ approach. The consultation for this act started in 2003 with the emphasis on obtaining a better deal for homeowners based on the principal that in the event of certain issues not being specified in the lease, then the majority decision was to rule. The new legislation, was designed to close several gaps in the law, which previously had allowed often essential repair work to property to be delayed for many years. In some extreme cases, some works had failed to be carried out, simply because one owner in a block had vetoed the plans. As well as other changes, the act outlined the requirement for owners off tenement blocks of flats to ensure that their property was insured to protect not only themselves by their neighbours, property. The law imposed a requirement on owners to disclose to other interested policies. [Such as a neighbour in the same block] details off their insurance and the premiums paid within 14 days of a written request, being received. Whilst it is allowed for individuals to make their own arrangements, this disclosure requirement, seems to point the way to block insurance being more convenient and manageable.
In many cases, the conditions of management and maintenance of tenement blocks of flats are specified within the title documents to the property. however, if details of management and maintenance arrangements are not stated, then under the old system, having any works carried out to the building, often proved problematic. a default common-law developed by the courts, designed to fill the gap was fraught with delays and difficulties, as mentioned, sometimes as little as a single residence in a large block, has successfully managed to to delay essential repairs and maintenance for a considerable amount of time.

The main purpose of the tenements Scotland act 2004 was to modernize the common law arrangements and to help clarify who actually owns which part of the building. It created a far more fair system of shared responsibility for maintenance of tenement buildings and introduced a statutory system off management processes but only where,s no management, was outlined within the title deeds. Each tenement building now had to have a ‘management scheme’, setting out a basic framework for maintenance and management off the block. Individual owners are still subject to the legislation, even if they have not ‘signed up’ to the arrangements.

It’s important to note that not all buildings will have the same scheme. If not specified in the title then the tenement management scheme will apply. The law endeavours to make default decisions based on them being both workable and pragmatic and in the main they are commonsense decisions. In essence, decisions need to be made by the majority when no decision process is outlined in the deeds, this seems to make perfect sense with the majority in a property deciding on when repairs or maintenance be carried out, thus forcing, the minority owners who may be opposed to spending money to fall into line and to contribute towards the total costs. Also under the bill, the tenement management scheme would include a list called scheme property, basically, this means that unless the title deeds say otherwise, every owner will be obliged to contribute usually on an equal basis to the cost of maintaining the most important parts off the tenement building. This will include the roof and the external walls. Thus somebody living on a ground floor apartment will be equally responsible for the upkeep of the property roof, and will be unable to claim it does not form part of their own building. The act was not designed to replace provisions made under property title deeds and these will continue to take precedence over this legislation, each block will therefore have the the most up to date and appropriate system in force. Other ‘rules’ listed in the scheme include:

• A full description of what constitutes ‘Scheme Property’
• What the owners can and cannot decide for themselves.
• Procedures relating to voting
• How costs are to be apportioned amongst the individual owners.
• What the term maintenance actually means
• How can a manager be appointed
• Procedures for acting during an emergency.

To help clarify matters, the act also outlined a full description of a tenement building, the act not only recognized traditional tenement buildings such as those all sand stone construction, but also included converted houses, tower blocks, purpose built blocks of flats, and commercial premises.