Proposed New Sectional Title Regulations and Insurance Excess

In last week’s blog we summarised some of the anticipated changes soon to be implemented.  This week we unpack the excess rule and compare. Presently, prescribed management rule 29.(4) states:

“The owner of a section is responsible for any excess payment in respect of his or her section payable in terms of a contract of insurance entered into by the body corporate, provided that owners may, by special resolution, determine that the body corporate is responsible for excess payments in respect of specified damage”

This means that by default, an owner with damage to their section pays their excess or proportionate share unless a special resolution states otherwise, i.e. that the excesses are to be paid by the body corporate under certain circumstances.

In a previous blog article, we dealt explained this in some more detail. The new proposed rule 23.(2) states:

“(2) A member is responsible —

 (b) for any excess amount that relates to damage to any part of the buildings that member is obliged to repair and maintain in terms of the Act or these rules, and must furnish the body corporate with written proof from the insurer of payment of that amount within seven days of written request.”

Our interpretation of this is that the owner is still responsible for his or her own excess for the damage to their section. This leads to quite a few questions.

For example:

  • What about previously amended rules?
  • What about special resolutions previously adopted ito rule 29.(4)?
  • Where damage is from outside cause e.g. wind, hail, storm, is this claimable from the body corporate?
  • Can owners in a section claim from owners above where damage is caused from above section?

We also feel that this rule should be better structured as while the last sentence makes sense in terms of proposed rule 23.2(a), it makes no sense when applied to rule 23.(2)(b).

The excess rule (or lack thereof) prior to 2008, has always been a hotly debated point. We feel that this proposed rule needs some work in terms of clarity and its effect before finally being implemented.

 

Author Mike Addison

Contact Addsure – The Leaders in Sectional Title Insurance – to get fit and proper advice from advisors who understand Sectional Title. Contact us in Johannesburg (011) 704-3858; Durban (031) 459-1795; Cape Town (021) 551-5069