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What if no PI cover was in effect in a managed estate

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  • 22-07-2012 10:13pm
    #1
    Lantus
    Registered Users Posts: 3,027 ✭✭✭


    A theoretical one that crossed my mind.

    If a person were to have an accident in an estate where a management company was in effect and the injured person successfully sued the company for a large sum of money (say a million euros) and that company had no PI cover. Would the members of that company (i.e. the residents) carry the judement against them?

    In other words could the court or management company make each member pay 10k towards the full cost of the damages awarded (whether straight away or over time if agreed.)

    edit: changed to PL cover (NOT PI)


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    #2
    Procrastastudy
    Closed Accounts Posts: 6,224 ✭✭✭Procrastastudy


    Not really a legal argument just pondering really but...

    I would think it would end up coming out of the Sinking Fund that management companies are supposed to maintain. Beyond that, aren't these companies LTDs? I would assume it would just bust the company and the person with the award would lose out.

    I'm probably wrong.


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    #3
    Paulw
    Moderators, Society & Culture Moderators Posts: 13,381 Mod ✭✭✭✭Paulw


    Not exactly sure how you can "bust" the management company, since, in effect, the management company is responsible for the property, and the unit "owners" only have a lease from the management company for 999 years or whatever.

    In practice, I am fairly sure that the debt would be split across all members of the management company.

    The directors of the management company may then open themselves up for a case against them for failing to properly run the management company (brain dead today, so can't remember the correct term).


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    #4
    Lantus
    Registered Users Posts: 3,027 ✭✭✭Lantus


    Thanks for reply's.

    I'm not sure how many OMC's would have a million in their sinking fund Lawstudent!?!?!?!

    Forgot to assume 100 houses (hence the 10k per membr/household if that wasn't clear.

    It's a worrying situation and does stress the importance of carying insurance.


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    #5
    mikemac1
    Closed Accounts Posts: 12,395 ✭✭✭✭mikemac1


    Similar has happened, you'll find cases online with farmers

    They need public liability insurance for this situation


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    #6
    Procrastastudy
    Closed Accounts Posts: 6,224 ✭✭✭Procrastastudy


    €300,000 in ours - they keep dropping the fee but it keeps getting bigger!

    It'd have to be some injury for a million too but I realise its just a hypothetical.

    On the bust management company - wasn't there a place in Dublin that the management company had ceased functioning somehow? I remember (briefly) looking at a flat where it was nice and cheap but also cash only as no bank would touch it as there was no management co.

    OP - Just an aside but in Scotland there aren't any management companies as apartments are Freehold. Everyone has to get their own insurance and if there are repairs to be done have to chip in and pay for it. Probably not very relevant.


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    #7
    Paulw
    Moderators, Society & Culture Moderators Posts: 13,381 Mod ✭✭✭✭Paulw


    GCDLawstudent wrote: »
    On the bust management company - wasn't there a place in Dublin that the management company had ceased functioning somehow? I remember (briefly) looking at a flat where it was nice and cheap but also cash only as no bank would touch it as there was no management co.

    In a situation like that, no property could be sold. Everyone is bound to the management company. No services would be provided - such as common area lighting, refuse collection, shared services, etc. It would be a nightmare to live in.

    Also, if no insurance is in place (block insurance), then you could be in trouble with your mortgage provider.


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    #8
    Procrastastudy
    Closed Accounts Posts: 6,224 ✭✭✭Procrastastudy


    Hence it being cash only... just wondering what happened to the management co.


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    #9
    juan.kerr
    Closed Accounts Posts: 2,766 ✭✭✭juan.kerr


    Paulw wrote: »
    Also, if no insurance is in place (block insurance), then you could be in trouble with your mortgage provider.

    OP specifically refers to PI insurance as opposed to building/block insurance.

    Estate suggests houses rather than apartments but could be a mix of both. If houses only then there won't be any building/block insurance required.


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    #10
    Paulw
    Moderators, Society & Culture Moderators Posts: 13,381 Mod ✭✭✭✭Paulw


    juan.kerr wrote: »
    OP specifically refers to PI insurance as opposed to building/block insurance.

    Yes, but if there is no PL insurance, the management company would then be liable for the full costs, and hence would have no funds for things like block insurance. It would all be tied in together.



    GCDLawstudent - no responsible solicitor would allow you to purchase a property where the management company was in such trouble.


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    #11
    juan.kerr
    Closed Accounts Posts: 2,766 ✭✭✭juan.kerr


    Paulw wrote: »
    Yes, but if there is no PL insurance, the management company would then be liable for the full costs, and hence would have no funds for things like block insurance. It would all be tied in together.

    Off on a bit of a tangent but yes, it's likely none of the normal services could be funded - garbage, common area electricity, even water supply potentially.

    Directors would have a fiduciary duty I guess but chances are they are ordinary joe soaps so probably wouldn't have the money. They may however have directors and officers liability insurance to claim against.

    If the Managment Company had appointed a Managment Agent to run things their professional indemnity insurance could be claimed against.

    Otherwise the owners would basically have to stump up the cash.


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    #12
    Victor
    Registered Users Posts: 78,266 ✭✭✭✭Victor


    Lantus wrote: »
    PI cover.
    PI = professional indemnity
    PL = public liability


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    #13
    Procrastastudy
    Closed Accounts Posts: 6,224 ✭✭✭Procrastastudy


    Nothing like MIBI for apartment complexes?


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    #14
    Our man in Havana
    Closed Accounts Posts: 29,476 ✭✭✭✭Our man in Havana


    No.


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    #15
    Del2005
    Registered Users Posts: 18,883 ✭✭✭✭Del2005


    juan.kerr wrote: »
    Otherwise the owners would basically have to stump up the cash.

    If the company is a PLC how would the owners be responsible? As I thought that was the point of being a limited company, the owner(s) aren't responsible for the debts of a limited company. How is Mick Wallace allowed be a TD if he is responsible for the debts of his PLC?


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    #16
    Lantus
    Registered Users Posts: 3,027 ✭✭✭Lantus


    Victor wrote: »
    PI = professional indemnity
    PL = public liability

    Thanks for noting this. The correct term I meant to use was PL. Public Liability insurance.


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    #17
    Lantus
    Registered Users Posts: 3,027 ✭✭✭Lantus


    Del2005 wrote: »
    If the company is a PLC how would the owners be responsible? As I thought that was the point of being a limited company, the owner(s) aren't responsible for the debts of a limited company. How is Mick Wallace allowed be a TD if he is responsible for the debts of his PLC?

    Thats a very good question! I think the answer possibly is because typically an OMC is limited by guarantee through its shareholders.

    I think its more accurate to say that the directors of a company are not personally liable, that doesn't absolve the debt though or the need to pay it.


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    #18
    Procrastastudy
    Closed Accounts Posts: 6,224 ✭✭✭Procrastastudy


    I thought the whole idea of limited companies was once the resources of that company were exhausted it was game over for any creditors.


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    #19
    juan.kerr
    Closed Accounts Posts: 2,766 ✭✭✭juan.kerr


    Would it not be a private limited company rather than a PLC i.e. public limited company?

    The problem is that the owners would never be able to sell their properties so in their own interests they would be compelled to settle to prevent the company being struck off. No doubt some owners with no plans to sell would object / not pay so it would be difficult to settle.


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