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Management Company & Insurance

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  • 23-04-2009 8:00pm
    #1
    godtabh
    Moderators, Science, Health & Environment Moderators Posts: 23,215 Mod ✭✭✭✭


    Just got word from our Managment Company that our insurance is due to expire on the 31st of April.

    They want an interm service charge paid before this or the insurance will be cancelled.

    Does any one know what happens if a block insurance is cancelled?


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    #2
    Jo King
    Banned (with Prison Access) Posts: 2,139 ✭✭✭Jo King


    It is a bit late for an April fool joke. There are only 30 days in April. How can your insurance run out on 31st of April? IS the management company or the management agent threatening to leave you without insurance cover?. the management company is obliged under covenant to insure the building. Not insuring leaves the owners at risk of losing their apartment if the building burns down.


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    #3
    godtabh
    Moderators, Science, Health & Environment Moderators Posts: 23,215 Mod ✭✭✭✭godtabh


    Jo King wrote: »
    It is a bit late for an April fool joke. There are only 30 days in April. How can your insurance run out on 31st of April? IS the management company or the management agent threatening to leave you without insurance cover?. the management company is obliged under covenant to insure the building. Not insuring leaves the owners at risk of losing their apartment if the building burns down.

    So a typo/ The last day of april so

    This is what was sent to us
    email wrote:

    Dear XXXX,



    We received the email below from the Insurance Company yesterday.



    We are now sending a letter to all the owners, advising that we must pay the insurance by the 30th April 2009 or the insurance will be cancelled. Therefore the Interim Service Charge of €1000 must be paid immediately.



    Regards



    Dip ****


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    #4
    godtabh
    Moderators, Science, Health & Environment Moderators Posts: 23,215 Mod ✭✭✭✭godtabh


    Jo King wrote: »

    the management company is obliged under covenant to insure the building.

    How?


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    #5
    Paulw
    Registered Users Posts: 13,381 ✭✭✭✭Paulw


    Sounds like your management company is suffering from a lack of funds.

    If the block is not insured, then you are all in for some very serious issues, never mind the fact that you're not insured, should there be a fire or something.

    Lack of insurance would also require your mortgage provider to be notified, and would be grounds for you to have issues there. Your bank/mortgage provider requires your premises to be insured.

    So, my advice - make sure everyone pays up, and your block insurance is restored ASAP.


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    #6
    MysticalSoul
    Registered Users Posts: 1,266 ✭✭✭MysticalSoul


    Sounds like a whole load of waffle, as the management company fee, is supposed to be inclusive of buildings insurance, refuse collection etc. Can you get together with the other owners in your block, and seek legal advice?


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    #7
    Paulw
    Registered Users Posts: 13,381 ✭✭✭✭Paulw


    That's assuming that people are actually paying their management fees, and there isn't a large list of people still owing.

    Of course, that should be clear from your AGM and audited accounts.


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    #8
    godtabh
    Moderators, Science, Health & Environment Moderators Posts: 23,215 Mod ✭✭✭✭godtabh


    Paulw wrote: »
    That's assuming that people are actually paying their management fees, and there isn't a large list of people still owing.

    Of course, that should be clear from your AGM and audited accounts.

    The AGM is a few months over due and we cant get singed off accounts as one of the directors fled the country (he lives in Oz now)

    There is a lack of funds but the managment company appear to be doing sweet fa


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    #9
    connundrum
    Registered Users Posts: 5,563 ✭✭✭connundrum


    MysticalSoul wrote: »
    Sounds like a whole load of waffle, as the management company fee, is supposed to be inclusive of buildings insurance, refuse collection etc. Can you get together with the other owners in your block, and seek legal advice?

    The management fee is inclusive of all of those items, but it'd be silly of the managing agent to simply ask for everyone's portion of the insurance fee.

    A word to the wise, as a managing agent I used to put out similar letters with the intention of:

    A) Getting owners with outstanding fees to pay up
    B) getting owners who have paid up to put pressure on those who haven't paid

    We used to finance the insurance premium on behalf of each management company, with payments spread over 12 months. I wouldn't really be afraid that the block won't be insured all of a sudden - that is unless no one is paying their fees, that'd be a different story altogether.

    I've known of several developments being uninsured for months at a time due to lack of funds. While it is one of the main responsibilities of the managing agent to look after, if there are no funds - there is no insurance.


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    #10
    Paulw
    Registered Users Posts: 13,381 ✭✭✭✭Paulw


    kearnsr wrote: »
    The AGM is a few months over due and we cant get singed off accounts as one of the directors fled the country (he lives in Oz now)

    There is a lack of funds but the managment company appear to be doing sweet fa

    In that case, get a quorum, call an EGM and vote out that director, and elect new directors. Then you can sign off on the accounts.

    Funds are the biggest issue for every management company, and in many cases, there isn't much the management agent can do, without proper instruction from the directors of the management company.

    So, get yourselves organised and sort out your issues. Don't expect someone else to do it.


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    #11
    Jo King
    Banned (with Prison Access) Posts: 2,139 ✭✭✭Jo King


    kearnsr wrote: »
    How?

    There will be a covenant in the lease. Remember it is the management company not the managing agent who has the obligation under the covenant. Under the Residential Tenancies Act 2004 the management company is obliged to insure the building. You should write to the directors of the management company and remind them of their obligations. If the block burns down and there is no insurance in place you will be left with nothing but a mortgageto pay and no money top rebuild.


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    #12
    Paulw
    Registered Users Posts: 13,381 ✭✭✭✭Paulw


    Jo King wrote: »
    You should write to the directors of the management company and remind them of their obligations.

    Of course, if the management company has no funds, then there is nothing the directors can do.

    You might have better luck writing to all shareholders and make sure that they pay their management fees.


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    #13
    Jo King
    Banned (with Prison Access) Posts: 2,139 ✭✭✭Jo King


    Paulw wrote: »
    Of course, if the management company has no funds, then there is nothing the directors can do.

    You might have better luck writing to all shareholders and make sure that they pay their management fees.

    the Directors should resign if they have no money to pay for insurance. They could be sued and made personally liable for the debts of the company. The company could be liable in damages oif it breached the covenant to insure. The directors should arrange a bank loan if there is no money in the company. It is just ridiculous not to insure. If no a fire, someone could sipl and fall on the stairs and sue for millions.


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    #14
    Paulw
    Registered Users Posts: 13,381 ✭✭✭✭Paulw


    Jo King wrote: »
    the Directors should resign if they have no money to pay for insurance.

    Now, I don't see the logic here. The directors can't make the shareholders pay their management fees. They can only do so much. Yes, if the directors are failing in their duty, they should resign, but if they are doing all they can, then the fault is with those not paying their fees.
    Jo King wrote: »
    They could be sued and made personally liable for the debts of the company.

    Most directors, if they've any sense, have insurance, so would not be personally liable at all. You would also have to prove their negligence, and if you lost, then you'd be liable for all court costs. And, even if you won, since you're a shareholder of the company, you're paying for their directors insurance, and so would then have an increase in management fees.
    Jo King wrote: »
    The company could be liable in damages oif it breached the covenant to insure.

    The shareholders ARE the company. Therefore, the shareholders are liable. If they paid their fees, there wouldn't be an issue.
    Jo King wrote: »
    The directors should arrange a bank loan if there is no money in the company.

    In this climate, it's hard enough to get any loans. If they are not getting money in (via management fees), then no bank will give you a loan since you'd have no visible way to pay back the loan.
    Jo King wrote: »
    It is just ridiculous not to insure. If no a fire, someone could sipl and fall on the stairs and sue for millions.

    Yes, I agree here, it is totally ridiculous. But, it is the responsibility of every shareholder to pay their management fees, so that such a situation doesn't arise.


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    #15
    mdebets
    Registered Users Posts: 1,747 ✭✭✭mdebets


    Paulw wrote: »
    Now, I don't see the logic here. The directors can't make the shareholders pay their management fees. They can only do so much. Yes, if the directors are failing in their duty, they should resign, but if they are doing all they can, then the fault is with those not paying their fees.
    But it's the directors' fault for only noticing the shortfall 8 days before it's due.
    Insurance bills are not suddenly appear. You know for a year that they are coming (not the exact amount, but a ball-park figure).
    They should have therefore noticed well in advanced that they have a shortfall and need to do something about it. Not coming 8 days and demanding money from everyone.
    For this incompetence they should be sacked.

    OP I would also check that they are telling the truth and not just making the story up, to extract more money from the owners. It sounds really odd that they noticed the shortfall only 8 days ago.


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    #16
    Jo King
    Banned (with Prison Access) Posts: 2,139 ✭✭✭Jo King


    Paulw wrote: »



    The shareholders ARE the company. Therefore, the shareholders are liable. If they paid their fees, there wouldn't be an issue.



    The company is a seperate legal personality from the shareholders. See the case of Solomon v Solomon 1897 AC. Directors should do cashflow projections and be aware that they have the funds to pay insurance. Have the Directors complained to the PRTB about invoices not being paid? It is gross negligence on behalf of anybody to let the insurance on a residential apartment block lapse.


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    #17
    Paulw
    Registered Users Posts: 13,381 ✭✭✭✭Paulw


    I'm well aware of the legal separation, however, if you take the company to court and win, then your magement fees must increase to pay any fines, etc.

    As for the PRTB, I think we're all well aware how quickly the PRTB work ... and how quick such issues would be resolved ..... I guess they'll be waiting another year or two to have the necessary funds.

    I doubt the first request for payment of fees came with the notice of the fact the insurance was about to lapse. I would assume that frequent invoices and reminders went out asking people to pay their fees.

    People not paying, or delaying their management fees are the cause of this issue. If people paid on time, then there would be funds for services, including the insurance.


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    #18
    Jo King
    Banned (with Prison Access) Posts: 2,139 ✭✭✭Jo King


    Paulw wrote: »
    I'm well aware of the legal separation, however, if you take the company to court and win, then your magement fees must increase to pay any fines, etc.

    As for the PRTB, I think we're all well aware how quickly the PRTB work ... and how quick such issues would be resolved ..... I guess they'll be waiting another year or two to have the necessary funds.

    I doubt the first request for payment of fees came with the notice of the fact the insurance was about to lapse. I would assume that frequent invoices and reminders went out asking people to pay their fees.

    People not paying, or delaying their management fees are the cause of this issue. If people paid on time, then there would be funds for services, including the insurance.

    From what I can see the AGM was delayed and no vote on the accounts took place and thus no invoices were sent out. Now there is an attempt to secure "interim payments". This shows cack-handed management. Insurance is the most important outlay in an apartment block and any director who remains on board while a situation develops where there are no funds to pay for insurance is grossly incompetent.


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