Long term rental contract query

Bob99754096

I am about to sign up to lease my apartment to the local council for a 10 year period. There is one section of the contract which is puzzling me and was wondering if anyone had advice on it:

Under the "Termintation" section:
"If the unit or, any part thereof, shall be destroyed or damaged or a reasonable means of access thereto is denied by fire or otherwise then the lessee shall have the right to terminate this lease by notice in writing to the lessor and, if such notice is served by the lessee on the lessor, this lease shall be deemed to be at an end and any rent paid in respect of a period of time where occupation or reasonable access is denied shall be refunded by the lessor to the lessee".

To me this sounds that if whoever they have in the apartment set the place on fire, the council can calcel the contract and walk away!!! please tell me i'm wrong!

paddydriver

Will you not need to retain the fire insurance on the place even during the 10 years the council take it on? They just become the tenent in this case - if there was any other tenent in there then they could just walk away if the place burnt down?

All said it sounds like a good deal getting a contract for 10 years - how did you go about getting it?

Bob99754096

It is under the governement long term rental scheme.
I still have to pay the maintenance fees which cover building structure insurance and i believe it covers fire insurance as well.
My worry is that this clause appears to state that if it does burn down, they don't wait for repair, they just cancel the contract and walk away?

paddydriver

The maintenance/management fee's would cover the actual main structure and common areas but my understanding is that the internal's of your appt need also to be insured against fire damage - I am not 100% certain on this but I continue to pay insurance on an appt we have rented and that covers our posessions against all risks.

When a tenent moves in I highlight to them that it is their responsibility to insure their own posessions at they are not covered by my policy.

The_Conductor

Bob99754096 wrote: »

if it does burn down, they don't wait for repair, they just cancel the contract and walk away?

This is entirely normal- and is part of any comprehensive longterm lease. If the building is uninhabitable for any period of time- the lease is automatically voided- and any rent paid in advance refunded.

Were the building to burn down- it could take several months to reconstitute the building- even with the best of builders- so its a reasonable course of action.

Bob99754096

Thanks smccarrick. So would i be right in saying that my building/fire insurance would cover against the potential loss of income from loss of rent for this time as I would still need to pay the mortgage?

The_Conductor

Bob99754096 wrote: »

Thanks smccarrick. So would i be right in saying that my building/fire insurance would cover against the potential loss of income from loss of rent for this time as I would still need to pay the mortgage?

No- your building/insurance policy would cover the reconstitution of the building- nothing more, nothing less. If you want your income protected- you'd need to take out some sort of an income continuance plan with an insurance company- and to be honest with you- I've never heard of one that covers rental income (thats not to say it doesn't exist- just that I haven't heard of one).

Shane

Bob99754096

Thanks again. Last query on it though. If the owner was living there and the place burnt down. Surely the insurance would cover the cost of another place to live while it is being rebuilt if they are still paying the mortgage?

The_Conductor

Bob99754096 wrote: »

Thanks again. Last query on it though. If the owner was living there and the place burnt down. Surely the insurance would cover the cost of another place to live while it is being rebuilt if they are still paying the mortgage?

Most private residence mortgages have a mortgage protection policy associated with them- that would kick in if the property became uninhabitable (or if the mortgagee became incapable of servicing the mortgage through illhealth or death (they also used have unemployment as an insurable risk- but I think thats been cancelled given the state of the economy). So- yes, there would be a contribution made towards alternate accommodation in all probability in the case of a private residence mortgage- however it would be the mortgage protection policy kicking in, not the building insurance (whose sole task is restitution of the property to its former state).

S.

Bob99754096

Thats exactly what i needed to find out. Thanks for all your help.