Can management co withhold insurance cheque

[allie12]

If an owner is in arrears with their fees, but they had work done as a result of a leak (which obviously goes through the block insurance)- can the management company hold on to this cheque and refuse to pay the builder?

 

[ontour]

I have seen that approach taken in a number of developments. I can see the logic from the management company's perspective that if they did not do this then the member would be accruing a benefit from a service that they had not paid for.

When you say that the management company is refusing to pay the builder, who contracted the builder to perform the work? What agreement was in place with the management company prior to the work commencing?

It is unfortunate when the two get intertwined as most members are in arrears for genuine reasons which usually means that they can not afford any shortfall in the cost of repairs whether that is withheld arrears or high insurance excesses.

 

[shesells]

In the case of insurance claims, the unit owner should pay for the repairs and then claim for reimbursement from the management company where management company insurance policy has cover. The management company is not responsible for paying for the repairs within any unit. The management company then files the insurance claim (as they are the insured party) and receive payment from the insurance company less any excess as on the policy. It would be normal IMO to deduct any outstanding fee liabilities from the refund before making any payment to the unit owner.

Some developments exclude non paying units from insurance policies altogether. I wouldn't be in favour of that where it could potentially impact neighbouring units. However, I could not countenance paying a full insurance refund to a unit with outstanding fees. It would not be in the best interest of the overall development (whose premium may be affected by your claim) to facilitate fee avoidance. It may sound cruel but bear in mind that the directors of the management company are answerable to all owners in the development. Unpaid fees has a knock on effect for all owners and residents.