Victorian Consolidated Legislation

Owners Corporations Act 2006 - SECT 58

Insurance if lot mortgaged

58. Insurance if lot mortgaged



(1) If an owners corporation has taken out an insurance policy over the land
affected by the owners corporation, a mortgagee of a lot affected by the
owners corporation must not require the lot owner to take out an insurance
policy over the lot and the lot owner's interest in the common property
unless-

   (a)  the mortgagee's interest is noted on the owners corporation's policy;
        and



   (b)  the sum insured in respect of the lot and interest in the common
        property under the owners corporation's policy is less than the sum
        owing under the mortgage and the extra insurance is for the amount of
        the difference.

(2) A requirement that contravenes subsection (1) is void.

(3) The following provisions apply where an owner's corporation has taken out
an insurance policy and the lot owner has mortgaged the lot owner's lot and
interest in the common property and the mortgagee's interest is noted on the
policy-

   (a)  if the lot owner's property is damaged or destroyed and is not to be
        reinstated, the insurer must pay to the mortgagee the amount owing
        under the mortgage (up to the sum insured in respect of the lot and
        interest in the common property) and, if there is a surplus, pay the
        balance to the lot owner;

   (b)  if the owner's property is damaged or destroyed and is to be
        reinstated, the insurer must pay for the reinstatement up to the sum
        insured in respect of the lot and interest in the common property.