Question: I have a few questions about The Registration (Strata Titles) Act and the duties of the strata corporation. They are:

1) Must the corporation effect peril insurance against fire and hurricane?

2) Who pays for the repairs of damage to an owner as a result of an uninsured loss?

3) Does the law allow a change of use from a shop to a dwelling, for example?

4) If the corporation operates as a hotel managed from the clubhouse, can the clubhouse be changed into dwellings?

5) Who is responsible for damage to an apartment due to leaks from the roof?

- john_ogilvie@btconnect.com.

Answer: Insurance and other issues relating to buildings in strata plans (condos) are hot-button items. Local and foreign readers of this column pose many questions on the topic. My friends who own or rent houses in these types of developments - even in the so-called upscale areas - speak regularly about these matters. Nuisance, difficulties in collecting maintenance fees, bad management, ignorance of the condo and other laws, and downright selfishness, are the topics of these conversations.

Area of competence

Only a few of your questions are within my area of competences so, here goes.

The Palm Beach Post published two articles (July 27, 2008, and January 1, 2009) that provide the context for my response.

Two hurricanes hit a 42-storey condo on Singer Island, Florida, in 2004 and made it unlivable. One year later, Hurricane Wilma took another swipe at it. The building was insured for US$88 million. The estimated cost of repairs amounted to US$140 million. Each owner had to pay between US$110,000 and US$150,000 to cover construction expenses not covered by insurance. It took four years to complete the repairs. Owners had to pay for the cost of alternative housing. They also had to continue to pay taxes and maintenance fees. Those costs added another US$40,000-US$50,000 to the bills of each owner.

Duties of the strata corporation:

Section 5-(1) of the act says that the duties of the corporation shall include the following:

"(a) To insure and keep insured the building to the full replacement value thereof against fire, earthquake, hurricane and such other risks as may be prescribed, unless the proprietors by unanimous resolution otherwise determine;

"(b) to effect such insurance as it may be required by law to effect;

"(c) to insure against such risks other than those referred to elsewhere in this subsection as the proprietors may from time to time by unanimous resolution determine;

"(d) subject to the provisions of section 14 and to such conditions as may be prescribed, to apply insurance moneys received by it in respect of damage to the building in rebuilding and reinstating the building so far as it may be lawful to do so;

"(e) to pay premiums on any policies of insurance effected by it;

"(f) to keep in a state of good and serviceable repair and properly maintain the common property;

"(g) to comply with notices or orders by any competent public or local authority requiring repairs to, of work to be done in respect of, the parcel;

"(h) to comply with any reasonable request for the names and addresses of the members of the executive committee."

Who pays for uninsured losses?

Condos consist of individual or 'strata lots' and 'common property'.

Buildings on strata lots and common property are insured under one policy in the name of the strata corporation. Repairs to damage on common property - insured or uninsured - based on (f), appears to be one of the duties of the strata corporation.

Other kinds of uninsured losses to buildings on strata lots fall in the twilight zone.

Item (a) of the duties of the corporation lists three insured perils. But there is also an escape clause. It also says, "and other risks as may be prescribed, unless the proprietors by unanimous resolution otherwise determine".

It is clear from this, section (2)(b) of the act - which deals with the power of the corporation to levy contributions from owners - and the example of the Florida condo, that there is not a simple answer to your question.

Questions 3, 4 and 5 are, primarily, legal matters. The condo law deals mostly with issues relating to insurance. I suggest that it would be wise to retain the services of an attorney. This would ensure that your property rights are properly protected given the problems you seem to be having.

Cedric E. Stephens provides independent information and free advice about the management of risks and insurance. Email aegis@cwjamaica.com.