1. Why is it important for the owners’ corporation to have Third Party Risks Insurance?

In 1994, the canopy of a seafood restaurant situated at Albert House in Aberdeen collapsed. One passer-by was killed and 13 others were injured in the incident. The High Court held that the owners’ corporation, property management company, restaurant, licencee of the restaurant, owner of the unit at which the restaurant was situated and contractor that had built the canopy were liable for compensation to the victims, which amounted to more than HK$30 million. Since the owners’ corporation of Albert House did not have third party risks insurance, it was unable to pay the compensation. Eventually, the owners’ corporation had to be wound up. Pursuant to the Building Management Ordinance ( Cap. 344 of the Laws of Hong Kong), each of the individual owners was liable and had to pay a portion of the compensation for his/her share of the liability.

The message from this case is that compensation must be paid if the court rules that the victim must be compensated. If the OC does not have third party risks insurance, it has to make full compensation. If it does not have sufficient funds to pay compensation and has to be wound up, each individual owner becomes personally liable for the compensation. If individual owners are unable to pay compensation, they may be forced into bankruptcy. Procuring third party risks insurance protects the owners and any potential third party victims, thus reducing the financial risks faced by the owners should an accident occur.

For more about Owners Corporations and Third Party Risks Insurance, please visit Properties Arrangements > Maintenance and safety of real property > Third party insurance .

2. Does the owners’ corporation (OC) have the legal obligation to take out an insurance policy to cover liabilities arising from unauthorised building works?

No, it is not a mandatory requirement. But if the court finds that the OC is responsible for an accident caused by unauthorised building works, the OC and/or the owners are liable for all the civil liabilities incurred.

Generally speaking, insurance companies do not provide insurance for unauthorised building works. If there are unauthorised building works in the building, the OC should remove them for the benefit of the OC, building owners and third parties who may be affected by the unauthorised works.

For more about Owners Corporations and Third Party Risks Insurance, please visit Properties Arrangements > Maintenance and safety of real property > Third party insurance .

3. What are the Mandatory Building Inspection Scheme (MBIS) and a Mandatory Window Inspection Scheme (MWIS)?

In order to ensure that building owners take full and continuous responsibility for building maintenance and safety, the Government amended the Buildings Ordinance ( Cap. 123 of the Laws of Hong Kong) and enacted the Building (Inspection and Repair) Regulation ( Cap. 123P of the Laws of Hong Kong) to introduce a Mandatory Building Inspection Scheme (MBIS) and a Mandatory Window Inspection Scheme (MWIS). Each year, 2000 buildings are selected for both the MBIS and MWIS, to be carried out concurrently, and another 3800 buildings are selected for only the MWIS. The Buildings Department (BD) issues statutory notices to the owners of buildings targeted to carry out of the prescribed inspection and any repairs that may be required.

Under MBIS, owners of buildings at least 30 years old (except domestic buildings not exceeding three storeys) are required to carry out the prescribed inspection of the common parts, external walls and projections or signboards of the buildings once every 10 years.

Under MWIS, owners of buildings at least 10 years old (except domestic buildings not exceeding three storeys) are required to carry out the prescribed inspection of all windows of the buildings once every five years.

For more about MBIS and MWIS, please visit Properties Arrangements > Maintenance and safety of real property > Mandatory Building Inspection Scheme and Mandatory Window Inspection Scheme .

4. What can the Government do if the statutory notice under MBIS/MWIS is not complied with?

The Government may prosecute the owners/OC who do not comply with a statutory notice for mandatory building inspection or mandatory window inspection. The BD may also arrange for the required inspection and repair works to be carried out by a consultant and contractor, respectively, of its choice and then recover the cost of inspection and repair works, as well as a supervision charge, from the owners/OC, together with a surcharge not exceeding 20% of the cost.

For more about MBIS and MWIS, please visit Properties Arrangements > Maintenance and safety of real property > Mandatory Building Inspection Scheme and Mandatory Window Inspection Scheme .

5. Does the Government provide subsidy, loan or grant to assist property owners to carry out maintenance or repair works?

In order to assist property owners who may have queries about the statutory requirements for maintaining their residential building and those who may have financial difficulty in doing so, the Government launched the Integrated Building Maintenance Assistance Scheme (operated by the Urban Renewal Authority). The Scheme comprises subsidies, loans and/or grants in various forms to cater for different needs. For more details, owners can call the hotline at 3188 1188.

For a list of the major subsidies, loans and/or grants, please visit Properties Arrangements > Maintenance and safety of real property > Government subsidy, loan and/or grant .