Insurance claims have been filed and disbursements have been made. Now it’s time to rebuild – these tips from Harneys will help
Many owners of hurricane-damaged properties have now either agreed a settlement figure after filing an insurance claim, or received an insurance payout. As a result, an increasing number of property owners have the benefit of greater certainty in relation to their financial position and are able to commit to undertaking repairs.
Judging from the scaffolding surrounding many buildings throughout the Territory, it is clear that many property owners are taking steps to fix the damage caused by the hurricanes last year. While we all hope for the best for the 2018 hurricane season, it is prudent to plan for the worst and to ensure that all repairs are completed to the extent they can be at the earliest opportunity.
When doing so, care should be taken to ensure that repairs are undertaken in accordance with the legislative and regulatory environment and this article aims to address some of the main pitfalls that property owners should bear in mind when planning and undertaking work to their properties.
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Property owners should take care to employ reputable suppliers and contractors with a track record of quality workmanship. Ask to see examples of previous work, talk to previous customers to ask them about their experience and make sure the contractor or supplier enters into a contract for the work they will be undertaking. Doing so will ensure that the obligations of both parties are clearly set out and this will help to reduce the risk of disputes arising during the project. Particular thought should be given to the terms of payment and what obligation the contractor or supplier is under to return after the project has been completed, to deal with any snagging issues that might arise. With the onset of the 2018 hurricane season, consider who is responsible for insuring any incomplete works and the property and who will be responsible for protecting the property and any materials against adverse weather, should the need arise.
Many property owners will have lost mooring balls or docks as a consequence of the hurricanes and will be eager to replace them. Owners should bear in mind that the seabed surrounding the Territory is owned by the Crown and structures should not be affixed to it without securing the appropriate right to do so, which will involve an application to the relevant government department. Note that the same is true for floating docks, notwithstanding they may not be physically attached to the seabed.
Non-Belongers who hold title to their property under a non-belongers land holding licence should review their licence carefully before undertaking any works. It is common for such licences to be granted subject to a condition that any alterations to the property will require the prior consent of the Cabinet of the Virgin Islands. Particular care should be taken where property owners add (or remove) structures such as swimming pools or gazebos and increase (or decrease) the numbers of bedrooms and bathrooms at the property.
Where a licence has been issued subject to a development commitment and that development commitment is no longer achievable within the original timescale as a consequence of the hurricanes, the holder of the licence should apply to the Ministry of Natural Resources and Labour for an extension before the expiration of the original timescale, explaining the reason for the failure to comply with the condition. Failure to do so could result in a financial penalty being imposed by the Government.
Many properties are located on residential estates on which homeowners’ associations have been established to manage and maintain the common areas within those estates and to enforce rules and regulations that govern the residential estate for the benefit of all homeowners. In such cases, property owners are likely to be subject to the terms of a declaration of covenants that regulates the relationship between an individual property, the remainder of the properties on the estate and the homeowners’ association. Many of these declarations of covenants contain provisions that restrict to some degree the works that may be undertaken to the properties that is subject to the declaration of covenants. It would not be uncommon for a declaration of covenants to include restrictions on the timings of any works, or for proposed works to first be subject to review and approval by an architectural committee, to ensure that appropriate design and building standards are maintained on the estate. A requirement to obtain approval should therefore be factored in to the overall timescale anticipated for the works to be completed.
Properties Subject to a Charge
Property owners who acquired their property with a mortgage should review their loan documentation carefully before undertaking any alterations. The loan documentation might contain restrictions on undertaking alterations without the lender’s consent, or other restrictions to the manner in which such alterations are to be carried out.
It is not uncommon for properties in the Territory to be held on a leasehold basis and owners of such properties should check the terms of their lease carefully to understand who is responsible for carrying out any repairs to the property in the event of damage. Leasehold property owners may need to obtain approval from their landlord before undertaking certain repairs and may need to liaise with their landlord to the extent that access is required to the landlord’s property in order to facilitate the required repairs.
Planning and Building Authorities
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Property owners should consider whether their proposed works require approval from the Building Authority and also from the Town and Country Planning Department under the Physical Planning Act 2004. An interim reconstruction policy was introduced after the hurricanes last year which provides that applications for certain types of improvements which are deemed to afford greater protection against hurricanes are to be fast-tracked, which property owners may be able to take advantage of, depending on the nature of their proposed works.
About Harneys’ Private Client Team
Harneys Private Client team regularly advises clients on the acquisition of BVI real estate, including devising ownership structures to satisfy the tax, regulatory, succession planning and other needs of each client. For more information on these solutions or any other matters relating to acquiring property or a yacht, registering a business, or planning for future generations, please contact Sheila George, Johann Henry or Paul Mellor.