Failure to obtain block insurance which includes flood cover may result in the freeholder or the insuring party being in breach of their lease. Those leases with a provision for an insurance peril to be unavailable will normally revert the uninsured loss back to the service charge. Ultimately this not only impacts on the lower flats that are most at risk of flooding, but affects the block overall.
Lessees living in blocks that are unable to obtain flood cover will experience difficulty in obtaining a mortgage – making it hard to sell their flats. Lessees could see the value of their flats drop significantly and many will face the hardships of negative equity.
In response 1st Sure Flats, working with PM legal Services has come up with a ground-breaking solution. By re-writing a lease we can emulate the principles of strata living, bringing the insurance obligation to the lessee and allowing the flood element to be ceded to Flood Re. PM legal services has designed a cost effective format allowing leases to be quickly and easily modified.
Under our scheme, the block will be issued with a master policy covering the common parts and liability covers, along with the option of terrorism insurance. Each flat owner will be issued with a separate policy to coincide with the master policy, ensuring the whole block is protected -including affordable flood cover which can be ceded to Flood Re, making it viable for the insurer.
Together with PM Legal Services, we have streamlined the lease modification process – including the complex insurance regulatory requirements – to make it as simple as possible and we will be happy to lead you and your residents through the procedure.