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  1. #1

    Default Building Insurance - Unit on a crosslease title

    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.

  2. #2
    Join Date
    Apr 2012
    Posts
    100

    Default

    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??

  3. #3
    Join Date
    Nov 2008
    Location
    Karratha WA
    Posts
    1,444

    Default

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

  4. #4

    Default

    Quote Originally Posted by Tan View Post
    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.

  5. #5
    Join Date
    Aug 2010
    Posts
    2,630

    Default

    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?".

  6. #6
    Join Date
    Dec 2010
    Location
    Cambridge, NZ
    Posts
    1,374

    Default

    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.

  7. #7

    Default

    Quote Originally Posted by Ivan McIntosh View Post
    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

  8. #8
    Join Date
    May 2005
    Posts
    149

    Default

    " ... 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?

  9. #9
    Join Date
    Dec 2010
    Location
    Cambridge, NZ
    Posts
    1,374

    Default

    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.


 

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