Property related issues addressed

Eight months since Ivan and the property market is still reeling from ongoing and unresolved difficulties.

Appleby attorneys Paul Greven, a Property Associate, and Ward Sykes, a Commercial Litigation Associate who is also a local Strata law specialist, address a number of common Ivan-related legal questions affecting property owners, strata executive committees, buyers, landlords and tenants.

What are some of the pressing property related legal issues that have evolved since Ivan?

There is considerable frustration among many stemming from delays associated with the rebuilding process. While some of the delays are linked to the difficulty obtaining supplies and the skilled trades necessary to repair or rebuild a damaged property, it has been our experience that the biggest hurdle typically faced is the inability of property owners and strata corporations to commence rebuilding because insurance payments have not been made, either fully or in part, on a timely basis.

Secondly, we have seen a significant increase in disputes involving the purchase of properties that occurred prior to Ivan.

For example, pre-Ivan, a purchaser may have signed an agreement of purchase and sale to buy a property. Fast forward a few weeks and the property may have been destroyed or suffered considerable structural damage as a result of Ivan; something not anticipated nor agreed to when the parties executed the agreement in the first place. As such, we are finding that many purchasers are seeking abatements from sellers (in order to bring the property back to the state it was when the parties first signed the purchase agreement) and many sellers have simply tried to walk away from the deal altogether because they no longer have anywhere else to live at an affordable level of rent if required to complete the transaction.

Another common issue concerns landlord and tenant disputes.

In the immediate weeks following Ivan, some landlords with undamaged premises tried to either evict their tenants or terminate their lease agreements in an attempt to rent their properties to visiting business executives/consultants whose employers were willing to pay disproportionate rental rates.

Equally, we have seen an increase among tenants who are bringing proceedings against their landlords for damages associated with destroyed or missing property that had been located on the premises. Most residential lease agreements have damage abatement provisions requiring the landlord to grant an abatement of rent in proportion to the damage to the rented premises. The Registered Land Law provides for abatement in the absence of a lease provision. As the extent of damage, and thus the amount of abatement, is not an exact science, disputes over abatements are common.

What can be done to assist those who are currently experiencing difficulties relating to property concerns?

The following steps are important to keep in mind when experiencing difficulties involving such areas as obtaining insurance proceeds, purchasing property, landlord/tenant disputes, and disputes involving construction and renovation projects:

Carefully review the terms of your existing legal contract.

Whether as an insurance policy holder, vendor, purchaser, landlord, or tenant, it is important to get familiar with and more importantly, understand, the terms of the contract that has been previously entered into.

Generally, a legal contract will outline the obligations between the parties, set out certain dispute mechanisms in case one arises and impose timelines and obligations that parties are required to adhere to.

As basic as it sounds, understanding rights in advance of taking any action will help in preventing foreseeable problems from occurring down the road and will assist in the negotiating process. If unsure about any meanings contained in the agreement, seek assistance from a property attorney who can clarify legal rights and obligations. Sometimes, a simple 10 minute phone call is sufficient to prevent any misunderstandings which can hamper abilities to achieve a successful resolution to the issue down the road.

Keep lines of communication open with the other side.

It is a good idea to attempt independently to resolve issues/differences that may exist between the parties involved. Keeping the lines of communication open between the parties and being considerate to the other person’s position will go a long way to help minimise any differences of opinions and often assists both parties in reaching their respective goals quicker and easier.

Seek Legal Representation immediately if:

a) you are not getting anywhere with the negotiation process; or

b) your phone calls are no longer being returned by the other side

Assuming all avenues to reach an agreement have been exhausted (for example, your letters and phone calls to your insurance provider requesting payment have gone unanswered), retain the services of a trusted attorney familiar with the nuances of contentious property matters to assist you.

It is often the case that matters that have been dragging on for months can quickly be put ‘back on the agenda’ as a result of a scheduled meeting or a carefully drafted demand letter forwarded on your behalf by an attorney. In other situations it may simply be the case that you are left with no other option but to initiate court proceedings in order to protect your rights and seek what you may be rightfully entitled to.

Seek Legal Representation when entering new contracts to help avoid similar Ivan related issues from arising in the future

It was only after Ivan that many individuals on the Island were faced with such new dilemmas as ‘Am I liable if my agent entered the tenant’s premises in an emergency without giving appropriate notice’ or ‘Is my landlord responsible for paying for my possessions that were either damaged, or destroyed or stolen in the days following Ivan?’

In these scenarios, the answers are more often than not found in the writing contained in the lease agreement or contracts themselves. If issues such as:

liability;

tenant’s requirements to obtain contents insurance;

what constitutes reasonable notice to access a property during an emergency crisis?

are not clearly defined in your current contracts, then have an attorney create new agreements on your behalf or review your current contracts to ensure that your rights are protected and your exposure to potential liability issues are minimised as best as possible for future events.

What types of problems do Strata Executive Committees face?

An executive committee is required to comply with the obligations set out in the Strata Titles Registration Law and the By-Laws. That is easily said. The difficulty is that many questions arise as to how this should be done in the context of a complicated and time consuming rebuilding process and numerous owners. A typical example is where an Executive Committee is engaging a contractor to rebuild or reinstate all damaged property, including damaged portions of strata lots and either one or more owners are engaging or wishing to engage their own respective contractors to do repairs to the individual strata lots. The reasons for the individual owner wishing to do this vary from simply wanting at least the interior of the project completed as early as possible to requiring specialty work to being simply impatient.

The Executive Committee will have to balance the rights of the owners to work on their own units with the administrative simplicity of having only one contractor engaged for the entire project with the legal obligation to reinstate the property with the insurance proceeds. A strata lot owner may wish to go it alone and have works completed by his or her own contractor. In such circumstances, the Executive Committee will have to equitably address issues relating to: quality of reinstatement, reimbursement of owner, adjustment for upgrades, coordination with Strata reinstatement works and fairness to all owners. The Executive Committee must efficiently work within the confines of the Law and the By-Laws. Accordingly, it is important for a Committee to understand what its legal obligations are under the Strata Law, the Regulations and the By-Laws. It is usually easier (and cheaper) to avoid a problem than to fix it afterwards.

Who they are

Appleby Spurling Hunter is a leading provider of sophisticated, specialised offshore legal services. With more than 400 lawyers and staff, the organisation is uniquely positioned in the key offshore jurisdictions of Bermuda, the Cayman Islands and the British Virgin Islands, and the financial centres of London and Hong Kong.

The organisation is structured around four practice groups: Corporate and Commercial, Litigation and Insolvency, Trusts and Property. Complementing our legal expertise are our service groups: Appleby Corporate Services, Appleby Trust and Reid Management, providing corporate administrative, trust and management services, making Appleby Spurling Hunter one of the largest and most respected offshore-based legal and business service providers.

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