Who should pay for the insurance on our shared car park?

I own 50 per cent of the freehold of the car park in front of our property, along with the other 50 per cent freeholder who owns the lower apartment. There are two other properties on the same site which are also owned freehold, but they do not own the car park. Those two freeholders both have two spaces to park on the car park we own, and they each pay a €25 per annum service charge towards maintenance; any maintenance costs over and above that €25 are paid when work is done.

Who is responsible for paying the insurance on the car park: the owners/freeholders or the lessees? And does the insurance form part of the service charge that should be divided proportionately, as per the lease?

Finbar McDonnell writes: It is hard to be definitive without knowing more details of the apartment scheme and reviewing the leases, but here are some thoughts based on the information provided.

You do not mention an owners’ management company (OMC) so I assume such a structure is not in place and instead the car park arrangements are based on the legal documents signed by the four owners when they purchased their properties. I would note that, while parts of the Multi-Use Development Act (2011) that guides how multi-unit developments (MUDs) are managed relate only to developments of five or more residential units, certain sections apply to developments of between two and four residential units. However, you may feel that such a structure may be overly cumbersome in your case.

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A service charge is typically levied to cover the cost of services provided to owners or users of a property. In a development involving multiple properties, such as you have, these management services are generally listed in the lease agreements (while allowing flexibility for other required services to be provided). In a standard MUD, these could include insurance of the property, provision for public and employer’s liability insurance for common areas, lighting, cleaning, general maintenance and so forth.

In your case, the area under discussion is a surface car park in which it sounds like there are spaces being used by four different properties. Without knowing the specific car park, costs that may require to be met could include insurance (as per the above), electricity costs and maintenance of light fittings, litter picks and other cleaning, vermin control, maintenance of gates for vehicular or pedestrian access, possible CCTV, and maintenance of boundary walls or fencing. It might also be seen as reasonable that annual charges include a contribution towards a sinking fund for occasional larger-scale work such as replacement of gates, or resurfacing of the car park.

Given the above, the €25 a year charge sounds modest, although I note that the two other owners also pay towards other costs above that. The challenge there will be to include both those directly incurred as relating to the car park (such as car park lining) but also any portion of other charges (such as insurance or electricity) that may relate largely to the building but which also, in part, relate to the car park. It may not be feasible to set up a separate insurance policy or electricity meter for the car park, so some kind of apportionment will be needed and there will need to be agreement by those paying the charges that this apportionment has been done in a fair and reasonable manner.

As such, and in the absence of sight of the original legal documents, the answer to your specific queries would be that it would seem reasonable that all beneficiaries of the insurance should pay towards the annual premium and the insurance part of the service charge should be divided proportionately.

Finally, I would note that two issues on the agenda in many multi-unit developments in 2022 are the lack of secure storage areas for bicycles (including e-bikes) and a need for charge points for electric vehicles. Given your current arrangements, and the possible need for such investments in the coming years, a requirement for flexibility may also be important in any arrangements you reach with the users of all of the car park spaces.

Finbar McDonnell is a chartered property manager and a member of the Society of Chartered Surveyors Ireland, scsi.ie