Large number of apartment buildings uninsured
The management committee of apartment buildings is legally obliged to insure the jointly owned building and keep it insured at all times against fire, lightning and earthquake, with a licensed insurer for the amount that it considers to correspond to its replacement value.
For any other risks, insurance is mandatory, only if it is decided by 50 per cent of owners.
Despite this legislative regulation, however, a large number of apartment buildings are uninsured or do not have satisfactory insurance, with the result that in the event of a damage, the owners of the units are obliged to cover it themselves.
The phenomenon of each unit owner ensuring their own units separately and the management committee insuring the jointly owned areas is not satisfactory, since the entire building is not insured.
Insufficient insurance coverage
The insurance coverage provided for common areas is insufficient, as it does not cover repairs for damage sustained to the frame or main wall that separates the jointly owned building and the units.
The same applies to the insurance coverage of a unit in a jointly owned building. The insurance company again does not contribute to the damage to the common wall that separates the unit from the jointly owned building, since it considers that the damage concerns the main wall of the jointly owned building. Consequently, the owner would have to pay that specific expense themselves.
The limited insurance of common areas does not cover the cost of debris removal or the fees of consultants, such as an architect or civil engineer. Moreover, it does not cover civil liability that the management committee may be legally liable to pay in relation to bodily injury to a third party or damage to their property. Therefore, the insurance of a jointly owned building is considered an important task that the management committee must perform with due diligence.
In this context, it should seek offers for insurance coverage for the entire building, that is, to include all units and inform each owner about the insurance of their unit and choose the most advantageous insurance coverage.
In this way, comprehensive insurance of the jointly owned building is achieved at a lower cost and with greater coverage. Also, any differences that may arise due to non-insurance coverage when comprehensive insurance is not provided or there is no insurance are avoided.
It is worth emphasising that any building consisting of at least five units is a jointly owned building that can be registered as such. While each unit of a jointly owned building belongs and is subject to enjoyment as private property, the same is not true in the case of jointly owned property that belongs to the owners of the units in proportion to their unit.
The area of a unit, such as an apartment, consists of the covered area enclosed by its external walls and includes the covered and uncovered verandas and balconies.
On the other hand, the jointly owned property of a jointly owned building includes the entrance, stairs, roof, foundations, main walls that support the entire jointly owned property, elevators, corridors and spaces or facilities that are intended to serve all or some of the owners.
It is possible that in a jointly owned building there may be limited jointly owned property that is registered specifically to one of the units to which it belongs.
Total or partial destruction of a jointly owned building or unit
In the event of partial destruction of a jointly owned building for any reason, the management committee must, as soon as it receives the insurance money, allocate it for the reconstruction, repair or restoration of the jointly owned building.
If there is total destruction of a jointly owned building, it is considered to be completely destroyed when the owners of 100 per cent of the units decide so in a general meeting convened for this purpose.
If there is partial or total destruction of a unit for any reason, the owner of the unit, within the absolutely necessary period of time and at their own expense, must take measures to rebuild, repair or restore it to its previous condition.
Finally, the replacement value of the unit or jointly owned building must be insured when the insurance is taken out.
George Coucounis is a lawyer specialising in Immovable Property Law, based in Larnaca. E-mail: coucounis.law@cytanet.com.cy, tel: 24818288