View Full Version : Indemnity Insurance

09-02-2009, 17:21 PM
If a lessee takes legal action against the Lessor (A Flat Management Company) for service charge irregularities can the Lessor then take out indemnity insurance to protect the Officers paid for from the service charge fund?
I can not find any provision in the lease to enable them to do so. Basically if they comply with the lease, company’s articles and the Landlord & Tenant Act it wouldn’t be necessary.


09-02-2009, 17:31 PM
Company's officers are personally liable for a breach of lease committed by company only if they were personally at fault in some way. It's the company on which the duty to comply is placed (i.e. rather than the duty falling on its directors, unless blameworthy in some way). Yes- indemnity insurance can be obtained: I've seen a "Residentsline" policy underwritten by Norwich Union. Premium starts at £162.75 p.a. for block of up to 25 flats and max. cover of £100 000 (but larger blocks' insurance- and higher cover levels- are available).

Problem: one cannot usually insure 'after the event'.

09-02-2009, 18:06 PM
Thanks Jeffrey.

a. So, basically Officers who have a majority of the lessees supporting their actions can ignore the Lease, Companies Articles and the Landlord & Tenant Act while the minority suffer because of their actions and if they incur any fines along the way the insurance will pay.
Seems a bit unfair to me.

b. Does the LVT have the power to take any other actions than fining if there is evidence of serious miss-conduct?

09-02-2009, 18:14 PM
No to point 'a'. "Officers" (O) act in right of the company (C). It's C- not O- which is party to the leasehold arrangements and obligations.

This is my analysis:
If C fails to comply with leases, lessees can take enforcement action against it.
If O fail to comply with Memorandum/Articles, C's members can take enforcement action against them.

09-02-2009, 19:20 PM
Thank you Jeffrey