The owners in the scheme known as Twin Oaks do not get along. Trouble is, the entire body corporate is now at loggerheads. Yes, 50% of the owners are pitted against the other 50% in disputes and unpleasantness. How come? Simple – there are only two owners! A body corporate comprised of just two units!
It is my humble opinion (having at various stages myself been an owner, resident, tenant, trustee, chairperson, managing agent and insurance broker) that sectional title works very well – if everyone plays their part, that is. Things can go very pear shaped, however, when people don’t play their part, especially when all owners are not co operating!
Twin body corporate’s owners cannot get along. Person A (Mary Jones) is pedantic about upkeep and orderliness and Person B (Tom Smith) is far more carefree. There is a clash – two completely different sets of values; some positive, some negative on both sides. With Tom’s regular parties and untidy grounds and Mary’s complaining and wanting to spend money on trees, gardening and, picket fences, the two just cannot speak to each other. Sound familiar? Maybe so, because we see this quite often.
The trouble is, the common property binds them together. For some reason, when folk buy into sectional title, they do not look at the bigger picture, nor do they necessarily realise that the entire outer skin and anything above the ceilings is common property. Sometimes, there is a perception that this is my house and that is yours so we don’t have to get along – just stick to our own. This is wrong. Both owners in this two unit body corporate (or “Duet” as I often see described), need to understand that they both own this common property by way of undivided share in the property. So, if both owners are not talking, how do you go about arranging the insurance in such a situation?
I feel very strongly that they cannot each take out a separate policy, as I so often see happen, just because Section 45 provides that owners may purchase their own cover. Always remember that this is “over and above” or “notwithstanding” the body corporate’s policy, which trustees must arrange to full replacement value for the buildings and all improvements to the common property.
The problem here is that the two owners, each with a 50% share in the common property, do not speak to each other, and are certainly not going to be willing to meet and discuss an insurance policy.
I feel that the easiest is that if one owner cannot cooperate in this regard, the other must simply take it upon themselves and arrange the insurance, thereafter claiming the expense from the body corporate, i.e. a pool of their income and expenses. Whether or not the owners can meet, the entity does exist – it is best to simply keep a record of expenses and at all times, keep the other party notified.
Another way is that the broker can contact each owner and deal with them separately and each agree to pay 50% of the premium as annual payments – a minor inconvenience to get the show on the road.
In an extreme case, one could structure two policies with, let’s say, R1,000,000 excess on each others’ section. The only important thing is to make sure such policies are with the same underwriter or insurer, and the interest of each owner is noted in each other’s policy for their respective rights and interests. The underwriter or insurer should understand the situation and note the exceptional circumstances in each policy. By doing it this way, one is not really taking a separate policy for each, you are doing two policies for the same buildings. Under this scenario, the claims could become more challenging as again, strictly speaking, both owners are being insured half each in the matters of the the outside skin of the wall. So, in essence, one owner may not wish to claim where the other does, and so on.
So in a nutshell, try to keep it to one policy and bear in mind, both owners are trustees by default (you need at least two).
Always remember, the body corporate is always the insured and you must take out a policy for the buildings, take out a minimum amount of liability cover and consider fidelity cover.
Mike Addison is a specialist sectional title insurance broker – www.addsure.co.za – also find Addsure on Facebook!
Article reference: Volume 6, Issue 7, Page 2
This article is published under the Creative Commons Attribution license.