Insurance (you must get it once an offer is signed).....

[Brojac]

Hi All

Remember to get insurance (or at least ring a insurance company and go through the motions on the phone) when you place offers on properties. I believe once a contract has been signed the property is technically your responsibility.

My Partner and I have just purchased a number of properties in the Cairns area and two days before we settled on one of these properties a massive storm hit the area and a tree came crashing down on the house (and tenants car). Could have been costly....

Just a reminder to all don't forget the basics. I am thinking of doing up a purchase check list and a sales check list.

Regards

Brojac

 

[kierank]

I don't know whether this is correct but I was advised to get insurance once the offer became unconditional (i.e. finance approved, etc) when the property technically became mine. I didn't need it on signing of the offer.

I suppose if one is worried - get it on signing of offer - especially if it allows you to SAN.

The above was in Qld - could be different in other States.

 

[Rolf Latham]

HI Kieran and Brojac

As soon as your contract is "unconditional" or contracts are exchnaged you have an equitable interest in the property which you had better protect.

ta

rolf

 

[Crystal]

My solicitor advised against insurance until settlement. He said that if the property is not in the same condition as when you exchanged contracts - settlement can be delayed until the property is brought back to the same state of repair as when you signed the contract!
Cheers,
Crystal

 

[Blitzkrieg]

Originally posted by Crystal

My solicitor advised against insurance until settlement. He said that if the property is not in the same condition as when you exchanged contracts - settlement can be delayed until the property is brought back to the same state of repair as when you signed the contract!
Cheers,
Crystal

I agree with the principal of that crystal. It would then stand to reason that the vendor can then cancel their insurance or is the house at that point double insured? Then, if a tree falls through the roof, do you both get the money for the repair? I also believe that it should be the vendor's responsibility to ensure the house is delivered "as inspected" at settlement and not the purchasers problem to insure until that date .... but having said that, I have in the past always insured at the unconditional stage, I hate insurance companies.

 

[Aceyducey]

Originally posted by Crystal
My solicitor advised against insurance until settlement. He said that if the property is not in the same condition as when you exchanged contracts - settlement can be delayed until the property is brought back to the same state of repair as when you signed the contract!

Crystal,

Get a new solicitor!

This is VERY irresponsible advice.

Firstly, once the property has gone unconditional you have committed to buy the property pretty much regardless of it's condition at settlement. So you cannot threaten to pull out of the deal if there is new damage to the property (which may be caused by tenants, or even a vendor or by natural causes)

Secondly, do you really want the additional cost of taking the vendor to court & the lengthy delays it takes to settle this action - when you are required by the contract to settle by a specific date or lose your deposit?

Thirdly, property is sold as-is. It is very hard to assert what the precise condition was at exchange (your word against the vendor's) and thus equally hard to prove there has been any damage. You probably aren't even aware of condition at time of exchange, just at the time before exchange when you looked at it.

Fourthly, you are taking an equitable interest in the property after exchange/property goes unconditional. This implies you have a responsibility or stake that would lead to some form of sharing of costs should you manage to convince a court that the property's condition has degraded.

Fifthly, are you willing to take the risk that even if the vendor is ordered to take the property back to the condition at exchange that they will do this in a timely manner?

Once the property has gone unconditional you don't have many strings to pull to force the vendor to comply, even with a court ruling. The vendor may have insufficient insurance on the property, have all their funds in a new home, or simply feel put upon (not surprisingly).


For sound risk mitigation reasons YOU SHOULD IN EVERY CASE take out insurance on the property at exchange of contracts.

Otherwise you are really opening yourself up to needless additional cost, time and stress.

Get a new solicitor!!!!!

Cheers,

Aceyducey

 

[Michael Yardney]

Originally posted by Aceyducey
Crystal,

Get a new solicitor!

This is VERY irresponsible advice.

...........

Get a new solicitor!!!!!

Cheers,

Aceyducey

Well put.

I agree that your solicitor did not give you the advice I have always received from my advisors.

Even if both parties have insured the property, so what! We are not talking about a lot of money to hold it insured for 60 days or so.

I have an arrangement with my insurance broker that I have a cover note on the property and so my interests are covered, but proper insurance (and payment) starts at settlement.

 

[Jakk]

Originally posted by Michael Yardney
Well put.

I agree that your solicitor did not give you the advice I have always received.

Even if both parties have insured the property so what we are not talking about a lot of money to hold it insured for 60 days or so.

I have an arrangement with my insurance broker that I have a cover note on the property and so my interests are covered, but proper insurance (and payment) starts at settlement.

It's that simple folks, should anything happen, then there is 2 insurers to work out between themselves who is ultimately responsible for the restoration of the property back to original.
Either way, as a purchaser, you have the piece of mind that at settlement time, you will get possession of exactly what you bought. "Why spend valuable time arguing over the legalities of who is responsible for what. Life is way too short to quibble over a few dollars that are tax deductable anyway.

Regards

 

[Brenda Irwin]

In Queensland, REIQ contract say's:
Section 8. Rights Until Settlement
Subpoint 8.1 Risk: "The Property is at the Buyer's risk from 5pm on the first Business Day after the Contract Date."

 

[Denkel]

An "equitable interest"...?

Does that mean that any rental income should be shared between the vendor and the purchaser for the period between signing of the contract and settlement ... or the vendor should be paying the purchaser some rent?

Or is this where the law becomes fuzzy, not fair? You (the purchaser) have to accept responsibility but no compensation for your investment or risk?


Kel

 

[asy]

Originally posted by Denkel
An "equitable interest"...?

Does that mean that any rental income should be shared between the vendor and the purchaser for the period between signing of the contract and settlement ... or the vendor should be paying the purchaser some rent?

Or is this where the law becomes fuzzy, not fair? You (the purchaser) have to accept responsibility but no compensation for your investment or risk?


Kel

yeah, aint the law a b*tch... hehe

You are right Kel, but then the Vendor also has to keep the property in good repair for you, and if the HWS dies before settlement, they have to replace it... There are checks and balances...

Crystal, Acey is right... New solicitor... NOW!!!!!

asy

 

[kierank]

Originally posted by Brenda Irwin
In Queensland, REIQ contract say's:
Section 8. Rights Until Settlement
Subpoint 8.1 Risk: "The Property is at the Buyer's risk from 5pm on the first Business Day after the Contract Date."

Brenda,

Thanks for pointing this out (it was news to me). So, let assume the following sequence of events:

1. One signs a Contract and one does not take out insurance.
2. A week later, one is advised that finance is NOT approved.
3. Prior to advising the vendor that finance has not been approved (that is, the purchase will not be proceeding), the property suffers damage, say, from a storm.

Is it true that Subpoint 8.1 would mean that one is liable for the damage even though one cannot purchase the property.

This does not make sense - or am I missing something here?

 

[dwyerfam]

Just to throw in another dilemma (which I experienced, but did not go ahead with the purchase).

What if the property (waiting for a reno) is a "vacant procession"?

My understanding is that the insurance company (most of them?) may not cover you as "no-one is living in the property" and it's also a 60 day settlement. I assume you would not be covered in this situation?

So, the REIQ says it "your risk" and then insurance company says it won't give ya cover. How do you get around this?

Danny D.

 

[Aceyducey]

Originally posted by dwyerfam
What if the property (waiting for a reno) is a "vacant procession"?

So, the REIQ says it "your risk" and then insurance company says it won't give ya cover. How do you get around this?

Danny,

You go to a different insurance company (possibly via an insurance broker).

We've never had a problem getting insurance in this circumstance.

Cheers,

Aceyducey

 

[Gemini]

So, has anyone on the forum actually had the experience of having to make an insurance claim between signing the contract and settlement, and, whose insurance co. paid ??

 

[Lily House]

Yes Brenda,

This is exactly what our (hubby and me) solicitor told us recently.
Our offer accepted and contract signed (for a property in Qld) on a Saturday. We were advised to get insurance by 5pm the following Monday.

Lily

 

[Brojac]

All we can say is "get insurance once your offer has been signed".
Trust us...(Dirty stinking, rotten tree's....)
Regards
Tim
PS If any one tells you different find someone else to give you advice.
PPS why has this thread been moved to Propert Management????

 

[JumJones]

Hmm OK .. take it to another level - what about when you are purchasing off the plan?

The contract has gone unconditional, say 21 days after contract date, do you get insurance, and for what? Maybe the foundations are in place, maybe they arent!!

how does the insurer know what premimum etc

??

 

[Bmok]

And here's another 'What if' type question.

We have recently signed contracts on 3 properties that won't go unconditional until middle of May at the earliest, with settlement sometime in June.

Once properties settled, we intend to remove existing houses or demolish them to make way for a unit development.

Would it be a wise precaution to insure them in the meantime? [We haven't at this stage.]

Many thanks,
Cheers,
Bernard

 

[asy]

Jum...

Your contract probably states that you have to settle xx days 'after completion'...

I would imagine that if the building is 80% built and it burns down, then it was never completed, so you aren't liable.

The only other consideration is that the insurance would probably not be much, since it's only partially constructed, talk to your insurance agent and see what they think...


Bmok...

INSURE THEM!!!

if they burn down entirely, the insurance company will give you money to replace them...

now if you happen to replace them with a couple of units... that's your decision...

asy