Maintenance vs Insurance in Community Schemes
In this article, we touch on the subject of Maintenance Vs Insurance in Community Schemes.
Owners in community schemes all too often misconstrue maintenance and/or insurance matters. We aim to shed some light on the difference between the two and hopefully create a better understanding of what is considered maintenance and a claimable event.
Maintenance vs Insurance: The maintenance aspect within a Community Scheme is often brought into debate in both Sectional Title as well as Owners Associations. There are some that may argue that because they pay levies the onus falls on the Community Scheme to undertake all maintenance repairs, this is both true and false and can be explained as follows:
Homeowners Association (HOA)
In an HOA Scheme, the purchaser owns the house (free standing unit) as well as the land it is built upon. The HOA is governed by Directors who are responsible for approving the budget and ensuring the common property is adequately insured. As for the levies that are paid by all owners, this is put towards the maintenance of the common property, upkeep of the roads and payment of vital services such as security, council charges and insurance for the common property.
In essence, in a Homeowners Association, each owner is responsible for the insurance, repairs and maintenance pertaining to his/her own unit making it that much more important to have regular maintenance checks and repairs done.
In a Sectional Title Scheme (Body Corporate), the purchaser only owns a section of the scheme (unit) and has no claim to the land the unit is built upon. The sectional title scheme is governed by Trustees who are responsible for a number of actions such as approving the budget, enforcing the conduct rules, the general upkeep of the common areas and ensuring that the Body Corporate is adequately insured.
As for insurance in a Sectional Titles Schemes the Body corporate is responsible for insuring the buildings (the shell) and fixtures and maintaining the common property and the outside of the buildings (the structure).
Before submitting an insurance claim, one should ask?
Was it a sudden or unforeseen event?
Can a date and time be placed to the event?
Did the event occur due to a lack of maintenance?
It is also important to note that an owner of a section will be liable for the excess portion of any claim pertaining to his/her unit. Should the excess portion exceed that of the claimed amount, the insurance will not entertain the claim.
As for the interior of the unit and any moveable assets, the onus falls on the owner to insure any moveable assets through his/her own personal insurance/content insurance.
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