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STRATA TITLES ACT 1985 - SECT 57

57 .         Insurance of mortgaged lot

        (1)         Where a building is insured to its replacement value, a proprietor may effect a contract of insurance in respect of any damage to his lot in a sum equal to the amount secured at the date of any loss referred to in the policy by mortgages charged upon his lot.

        (2)         Where any contract of insurance of the kind authorised by subsection (1) is in force —

            (a)         payment shall be made by the insurer under the contract to the mortgagees whose interests are noted thereon in order of their respective priorities, subject to the terms and conditions of the contract;

            (b)         subject to the terms and conditions of the contract, the insurer is liable to pay thereunder —

                  (i)         the value stated in the contract; or

                  (ii)         the amount of the loss; or

                  (iii)         the amount sufficient, at the date of the loss, to discharge mortgages charged upon the lot,

                whichever is the least amount;

            (c)         where the amount so paid by the insurer equals the amount necessary to discharge a mortgage charged upon the lot, the insurer is entitled to an assignment of that mortgage;

            (d)         where the amount so paid by the insurer is less than the amount necessary to discharge a mortgage of the lot, the insurer shall be entitled in order to secure the amount so paid to have the mortgage transferred to the insurer and the mortgagee as tenants in common in undivided shares proportional to the amount paid by the insurer and the balance necessary to discharge the mortgagee’s interest.

        (3)         A contract of insurance entered into as referred to in this section shall not be liable to be brought into contribution with any other such contract of insurance except another such contract of insurance which —

            (a)         is in respect of damage to the same lot; and

            (b)         relates to the same mortgage debt,

                as that referred to in the contract of insurance first-mentioned in this subsection.

        (4)         Where a building is uninsured or has been insured to less than its replacement value, a proprietor may, notwithstanding any existing contracts of insurance, effect a contract of insurance in respect of damage to his lot in a sum equal to the amount secured, at the date of the loss referred to in the last-mentioned contract, by mortgages charged upon his lot and the provisions of subsection (2)(a), (b), (c) and (d) apply in respect of any payment pursuant to that contract.

        (5)         Nothing in this section limits the right of a proprietor to insure against risks other than damage to his lot.



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