It seems wrong but will the insurance pay out?

oldcarpenter

I want to purchase a substantial Georgian house in the west country. My banks valuation notes ‘Historical Movement’ on the property but says there is no problem in the bank giving a mortgage on the asking price. Today my own survey warns of major problems with ground movement and it being structurally unsound. The selling agent has suggested I put a reduced offer in but continue the current owners insurance and make a claim later. The insurance company must be on risk now, so I presume the only loss will be my reduced offer by £100K to the owners who may not want the six months building work carried out.

forgotmyname

Not sure how you can continue the current owners insurance?

If its noted on the documents about ground movement it maybe possible that its not covered anyway.

Maybe thats why they are selling, before it falls down?

If you dont have the money to pay for repairs then you need to think twice.

hugoshavez

Yes, it's wrong.
If your asking price has factored in the cost of repairs, then you've suffered no loss you could possibly claim for.
Now you know (though you already suspected) that the only way to possibly get away with this would be fraud, and on this scale it could be very serious.

dacouch

hugoshavez wrote: »

Yes, it's wrong.
If your asking price has factored in the cost of repairs, then you've suffered no loss you could possibly claim for.
Now you know (though you already suspected) that the only way to possibly get away with this would be fraud, and on this scale it could be very serious.

Lol are you sure about that

hugoshavez

dacouch wrote: »

Lol are you sure about that

Pretty sure, but go on, I enjoy hearing brokers theories on claims;)

dacouch

It's common practice in these types of situations for the home purchaser to take over the policy and claim should the current home owner not wish to delay the sale while they have the work carried out.

It's also common for the purchaser in these situations to pay a substantially lower purchase price to reflect the considerable inconvenience caused by a subsidence claim, future loaded premiums and the affect on the future resale value of the house.

The building policy provides reinstatement thus would repair the subsidence.

The above does not constitute fraud but a house purchase where the buyer holds the cards in negotiation.

I've seen dozens of purchasers take over existing policies and subsidence claims in these situations. Discovering subsidence is often discovered due to a structural survey during a house purchase.

Personally I would get the current owner to instigate the subsidence claim and then go through the process of transferring the policy and rights of claim.

Your post is just scaremongering.

forgotmyname

But will the existing policy cover this even though its noted that the ground has had previous movement?

Reducing the offer by £100k. The sellers must be desparate to accept surely?

Even if it takes a year of works, If the insurance are paying it would be worth it.

Unless £100k is small change to them of course.

hugoshavez

dacouch wrote: »

It's common practice in these types of situations for the home purchaser to take over the policy and claim should the current home owner not wish to delay the sale while they have the work carried out.

It's also common for the purchaser in these situations to pay a substantially lower purchase price to reflect the considerable inconvenience caused by a subsidence claim, future loaded premiums and the affect on the future resale value of the house.

The building policy provides reinstatement thus would repair the subsidence.

The above does not constitute fraud but a house purchase where the buyer holds the cards in negotiation.

I've seen dozens of purchasers take over existing policies and subsidence claims in these situations. Discovering subsidence is often discovered due to a structural survey during a house purchase.

Personally I would get the current owner to instigate the subsidence claim and then go through the process of transferring the policy and rights of claim.

Your post is just scaremongering.

100k is a heck of a discount for inconvenience and future loadings.

The OP suggests that knowledge of the current issue only arose because of the survey he did.

Your scenario requires that the current owners have reported the problem to insurers and initiated the claims process, which isn't the case here.

Is it possible to sell a house which is undergoing a subs claim and reinstatement? Of course.

But the estate agent appears to be recommending that the OP makes a significantly reduced offer, complete the purchase and then advise the insurers of the issue.

Or do I have that wrong OP?

Edit: Re-read your post dacouch; we're in agreement on how this could legitimately happen, but that really doesn't appear to be what the OP is suggesting, does it?

oldcarpenter

The reduction in the asking price was under 8 % the owner is a vulnerable lady who has a sad and urgent reason to sell. The agent is a family friend of the owner so there was nothing underhanded regarding the sale. I acted in good faith when I accepted the asking price and had the full survey done. When the structural problem was found I rang the agent and said I was no longer interested. I refused to disclose why because I felt the owner should not have knowledge in her situation because she would have to disclose the problem. After two phone calls from the agent I agreed to explain the situation but only ‘off the record’. It was then he suggested I place a new offer and if reasonable he would recommend it be accepted without informing the owner her home has problems and I would rely on continuing her insurance to fix the problem.

dacouch

An 8% reduction is low for a property with underpinning especially if you're the one having to ensure the work which often requires you to move out

hugoshavez

OP
Be aware, that even though you may be able to continue with the same insurer, there's a fair chance that they will require you to agree with declarations concerning the condition of the house, at the same time as they enquire about your own details (occupation, claim history, criminal convictions, etc)

How would you answer such a question? And when the claim does go in, how will you answer when asked: when did you become aware there was a serious problem?

If the insurers get a sniff that you knew before the sale they'll investigate to the nth degree.

The only way you can be confident of the insurers paying is to do as Dacouch recommends and have the current owner notify the insurers before the sale.

I don't see that it would have to delay it significantly.