Building Insurance - Unit on a crosslease title

[Petals]

Hi, Hoping you all can give some guidance on this issue.

I have been looking around for a while now at units/apartments, and they are inevitably on a unit title or a crosslease title. All of the ones I have seen on a crosslease title, there is no body corp, but there is an owners committee and a fund whereby all the owners put in a certain amount each month which covers general maintenance and building insurance.

Now for the first time, I have come across a unit on a cross lease title and all the owners have separate building insurance. Is this correct. I have personally spoken with the building manager, and he has confirmed that this has always been the case for the 30 years he has been an owner in this block.

So my questions;

1 Is this correct
2 Are there issues with getting lending
3What happens if something happened to the building impacting multiple units....all differnent insurance companies doing assessments, claims?

Thank you.

[davtam]

Sounds like a strange set up, I would have a chat to your lawyer to get it clarified - especially as some owners may not have insurance??

[Tan]

Are the units stand alone or do they have adjoining walls?

[Petals]

Are the units stand alone or do they have adjoining walls?

The units have adjoining walls, which is why I am confused.

My PPOR is on a crosslease with another house behind mine, but the houses are completely dettached.

[TheLiberalLeft]

This confuses me. I have a unit that is attached and for as long as I've owned it, house insurance has been totally separate. But that aside, that set up would be my natural assumption in any case. Surely the make up of the residents is a variable when determining risk. A single woman, for instance, would be less of a risk than her neighbours, a group of 5 young male students. Perhaps insurance companies don't weigh these sorts of "personal factors" when determining premiums for builidng insurance, but I'm fairly sure I'm asked for my own place - "how many residing?".

[Ivan McIntosh]

Nothing wrong with it, in principal.

As an example, think of a row of commercial buildings with party walls. They're all owned by separate owners, who will all have separate insurance.

Cross leases don't usually require joint insurance.

Having said all that, you might find you can get cheaper insurance per property by going joint, with each mortgagee's interest noted. Against that is the hassle of sorting things out if one or more people don't pay.

I don't think it would impact lending, but I'm sure we'll get a broker along sooner or later for an opinion.

Havne't ever had the chance to see the insurance coys scrambling to sort out multiple claims from the one event.

[Petals]

Nothing wrong with it, in principal.

As an example, think of a row of commercial buildings with party walls. They're all owned by separate owners, who will all have separate insurance.

Cross leases don't usually require joint insurance.

Having said all that, you might find you can get cheaper insurance per property by going joint, with each mortgagee's interest noted. Against that is the hassle of sorting things out if one or more people don't pay.

I don't think it would impact lending, but I'm sure we'll get a broker along sooner or later for an opinion.

Havne't ever had the chance to see the insurance coys scrambling to sort out multiple claims from the one event.

Thanks Ivan, your post is very helpful

[AndyB]

" ... might find you can get cheaper insurance per property by going joint, with each mortgagee's interest noted."
Would that not require changing to a unit title with entitlements etc?

[Ivan McIntosh]

No, I wouldn't think so. I would think an insurer would be perfectly capable of offering an unit-title-style package without actually needing there to be a unit title scheme. In the end it isn't rocket science.....they're insuring a building, which they are well used to doing, and will pay out the proceeds to the mortgagees if it burns down.

Whether they can be bothered to develop such packages is another matter.