Strata Titles Act 1985

The owner of a lot in a strata titles scheme may enter into a contract of insurance (a contract of mortgage insurance) against damage to or destruction of the lot or a building or other improvement on the lot for an amount equal to the amount secured by mortgages of the lot at the date of any loss referred to in the contract.

If a contract of mortgage insurance is in force —

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

subject to the terms and conditions of the contract, the insurer is liable to pay the lesser of the following —

the value stated in the contract; or

the amount of the loss; or

the amount sufficient, at the date of the loss, to discharge mortgages of the lot;

if the amount so paid by the insurer equals the amount necessary to discharge a mortgage of the lot, the insurer is entitled to an assignment of that mortgage; and

if the amount so paid by the insurer is less than the amount necessary to discharge a mortgage of the lot, the insurer is 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.

A contract of mortgage insurance is not liable to be brought into contribution with any other such contract of mortgage insurance unless both contracts cover the same lot and relate to the same mortgage debt.

Nothing in this Act limits the right of the owner of a lot to effect insurance for the lot.