We heard recently of a case where a Body Corporate on a Standard Format Plan was denied insurance. The buildings in the Body Corporate had common walls and so the insurance needed to cover the buildings as well as the common property. An insurance inspection report had uncovered deficiencies in many of the lots (related to the integrity of the balconies). The insurer advised the Body Corporate that insurance would only be renewed subject to corrective action being completed. Most of the lot owners immediately complied and rectified the issue. However, two lot owners did not. Despite letters and lawyers,
they did not comply. The insurance policy expired and the entire property is without insurance. The insurer would not re-insure and exclude the two lots. The lot owners are finally taking action but they have put the entire Body Corporate at risk and people are not happy!
The Body Corporate might have got action faster by getting a BCCM adjudication authorising the Body Corporate to act if the lotowners fail to complete by a certain date. The legislation permits the Body Corporate to act and for the cost of the work to be a debt against the lot owner. However, before breaking down doors to gain access, it is best to get an adjudication that authorises the action.
The other lesson from this story is that all Bodies Corporate needs to maintain their properties in good condition as stated in the legislation. There can be consequences … as this story shows.