“The insurer has paid, but the money went to the building's account – when will I get it?” This is one of the most common questions from residents that I come across as a broker, and the uncertainty behind it is understandable: the resident is looking at their own ceiling, while the insurer pays under a contract that the resident did not conclude. The roles on the condominium policy – policyholder, insured, injured party – determine who the money goes to, and the building's internal rules determine how it gets from there to the resident. This article separates the two steps.
- On the building's policy the condominium is the policyholder and the co-owners are the insured persons – under Hungarian policy conditions the insurer pays whoever is obliged to carry out the repair: the building for damage to common property, and typically the owner for damage to separate property.
- For mixed damage – common and separate property together – the conditions typically leave the choice of recipient to an agreement or statement of the representative and the owner; that is why it is worth clarifying this when the claim is reported.
- If the money arrives in the building's account, passing it on is a matter for the building's internal accounting – most disputes arise where no procedure for this has been set down in writing in advance.
Policyholder, insured, injured party: three roles, one policy
Under Section 6:439 of the Hungarian Civil Code (Ptk.), under an insurance contract the insurer provides the benefit set out in the contract when the insured event occurs, and the policyholder pays a premium. Under Section 6:440, the contract may also be concluded for the benefit of another person – one with an interest in preserving the property: this is exactly what happens with a condominium. The policyholder is the condominium as the community of co-owners, which under Section 3(1) of the Condominium Act (Tht.) may acquire rights and assume obligations under its common name; and under Hungarian policy conditions the insured persons are typically the condominium and the co-owners in proportion to their ownership shares. The parties are introduced in the article on the basics of condominium insurance.
The injured party is a separate concept. If the building's policy also covers damage to a resident's separate property, the resident is both an insured person and the injured party. If, however, the building causes damage to an outsider – falling plaster, a slippery staircase – the injured party is a third party and the liability section applies: under Section 6:470 of the Civil Code, the insurer relieves the insured, i.e. the building, of paying compensation, and payment is made to the injured party. This article is about the property section, where the question is settled between the building and the resident.
Who does the insurer pay?
The conditions typically give a clear principle on this question. One Hungarian condominium policy wording states literally that the insurance benefit is paid to the condominium community or to the co-owner, depending on whose obligation it is to repair the damage; if common and separate property were damaged together, payment is made on the basis of an agreement between the common representative (the building's elected manager) and the co-owner. Other conditions start from the co-owners' status as insured persons according to their ownership shares. The common principle: the money belongs to whoever has to carry out the repair – and who that is, is decided by the building's deed of foundation according to the boundary between common and separate property. The detailed rules vary by insurer, so it is worth checking the conditions of your own policy.
In practice, the insurer transfers the money to the account given in the claim report. Since the person reporting is typically the representative and the policy belongs to the building, by default the building's account goes on the form – even if the damage is in the flat. If the repair is the owner's task, the representative can state that the insurer should pay into the owner's account; for this, insurers typically ask for the representative's written statement and the owner's details. A separate case is where a loan-security (mortgagee) clause is registered for the flat: in that case the bank's statement may also be needed before payment.
When the resident's money arrives in the building's account
This is where most disputes arise, even though in principle the situation is simple: what was paid for repairing the resident's separate property belongs to the resident, while what the building carried out or paid for (for example opening up and rebuilding the riser inside the flat) is the building's cost, and the building keeps it. The representative cannot decide unilaterally to “hold on to” the amount due to the resident – under Section 43(1) of the Condominium Act, the representative implements the resolutions of the general meeting and takes care of the maintenance of the building, but may not handle other people's money at their own discretion. Whether unpaid common charges can be set off against the compensation due to the resident is a legal question that depends on the set-off rules of the Civil Code, not a matter for the representative's discretion – in a disputed case what is needed is a lawyer's opinion, not a peremptory e-mail.
A well-run building documents this transparently: the claim correspondence, the insurer's settlement statement and the proof of the onward transfer stay in the building's insurance file. Under Sections 39(3) and 45(2) of the Condominium Act, a co-owner may inspect the minutes and the Book of General Meeting Resolutions, and case law extends this right to the building's contracts and supporting documents as well – so the documents of a claim are not secret from the resident.
Leaks and burst pipes: the classic mixed case
The typical example: the commonly owned riser bursts, and the water ruins both the flooring in the flat and the wall of the stairwell. The insurer typically sees two items: the repair of the commonly owned parts – this belongs to the building – and the damage to separate property, which belongs to the owner, provided that the building's policy extends to it. How the cost of opening up and rebuilding is shared is detailed in the article on escape-of-water claims in practice. If the resident also has their own home insurance, they can report their own damage there as well; in the case of multiple insurance under Section 6:459 of the Civil Code the loss is not paid twice, the insurers settle the proportions between themselves, and under Section 6:468 of the Civil Code the insurer that has paid may seek reimbursement from the person responsible.
Good practice for the building: set it down in advance
The most effective way to prevent disputes is a short procedure adopted by the general meeting: who reports, with what details; for damage to common property the building's account, for damage to separate property the owner's account should go in the report; if the building nevertheless receives the resident's money, within how many days and against what supporting document it passes it on; and how flats with a mortgagee clause are handled. It is worth including this in the information notice for residents as well, so that the rules do not have to be invented when a loss occurs.
As a broker, I act on the building's behalf (as its agent, not the insurer's): the primary route for reporting a claim is the insurer's claims line, and if a case gets stuck on who should receive the payment, I help you find your way through what the insurer requires in order to pay the owner. In a settlement dispute between the building and a resident, however, I am not an arbiter – that is a matter for the general meeting and, if necessary, a lawyer.
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Sources
- Hungarian Civil Code (Ptk., Act V of 2013) – National Legislation Database (Nemzeti Jogszabálytár)
- Condominium Act (Tht., Act CXXXIII of 2003 on condominiums) – National Legislation Database (Nemzeti Jogszabálytár)
- Generali Házőrző policy conditions for multi-unit residential buildings (Nysz. 23521, 2022)
- Colonnade ATLASZ Társasház Biztosítás (condominium insurance) – policy conditions and customer information (2023)
- Generali claims settlement information (quoting Hungarian Civil Code (Ptk.) Sections 6:460–6:471)
- Dr. Enikő Nagy – Which condominium documents may an owner inspect? (Condominium Act (Tht.) Section 39, Curia decision Pfv.I.21.076/2014.)
