Insuring before Exchange?

squibbs25

Hello All.

My nan has been told by the solicitor that she has to get the bungalow that she is buying insured now, even though she has not exchanged contracts.
When nan queried this with the solicitor she was told that if anything was to happen to the property then both her and the vendors are liable (50-50).
(no date set for signing contracts yet! surveyor only went on on Friday - waiting to hear from him)
I thought that only for the purpose of mortgage companies that the property had to be insured for exchange to start on date of completion?
Nan is 90 and selling her current home in London to move closer to family. Obviously the current home is insured and, as she is sellling, there is no mortgage on either property.
Totally and utterly confused to say the least! :rolleyes:

If anyone can clear this up for us, i would be most grateful.

TIA

Squibbs

STAR_BUCK

I don't think that's true! We are hoping to exchange within the next few weeks and our solicitor has asked us to start looking around for building insurances ( i.e. get quotes etc) with the view to buy insurance once the exchange date has been set ( so that the policy starts from this date).

squibbs25

When we were buying our house nearly 4 years ago, we were told that the insurance had to start from the completion date.
How can you insure a property that you dont live in or own?
After all the sale can still fall through even after exchange can't it?

freebo_2

The house should be covered from the exchange date and not before. Once you have exchanged you have committed to buy, before this happens you have no obligations with regard to the property.

STAR_BUCK

Just did a google search and this useful guide came up which will answer your Q :

http://www.bbc.co.uk/consumer/guides_to/buying_contracts.shtml

As a rule of thumb Lenders will not release the mortgage loan amount until they/ sol. have seen the building insurance policy

squibbs25

As a rule of thumb Lenders will not release the mortgage loan amount until they/ sol. have seen the building insurance policy......

To be honest, i'm still confused!
There will be NO mortgage on the property that nan is buyng. She will be paying out of the proceeds from the sale of her house.
There has been no date set for exchange (she saw bungalow on Monday, again on the thursday, put the offer in on thursday accept thursday pm, surveyor instructed on Monday to survey property on Friday ( last week )), so at the moment as she is not the legal owner of the property why does she need to insure it?
Surley if anything was to happen to the property then it is down to the vendors?

Squibbs

freebo_2

Yes, that's right, she has no need to insure it prior to exchange.

Its a good idea to have it insured starting on exchange day, even though no mortgage is involved since from that day she is legally committed to buy it.

MissMotivation

The current owner of the property is responsible for the property up until exchange of contracts. You Nan only needs to get insurance to run from the day her Solicitor exchanges contracts.

HTH

STAR_BUCK

Yes I agree. Even WITHOUT a mortgage you still need buildings insurance to run from exchange day ( once you reach that part of the buying process!)

At exchange of contracts the buyer had legal responsibility for the property

silvercar

If you have no mortgage you own the property outright and can do what you like regarding insurance. If you had a mortgage you would need buildings insurance from exchange; with no mortgage the choice is yours. If the house burnt down between exchange and completion you would still be obliged to buy it, hence insurance is sensible but not compulsary.

squibbs25

Thank you so much for helping with your replies.
Just one last question, What shall she tell the solicitor about not insuring the property until exchange. She will take out insurance but why are they getting her to insure it now?