Buildings Insurance between Exchange and Completion

longblue

Hi,

I was wondering if anyone can help. We should be Exchanging Contracts on a house in the next week or so but unfortunately can't complete until the end of April due to complications in the chain. My mortgage company need to see evidence of me having Building Insurance on the house before we can Exchange (my Solicitor has to check on their behalf) but I'm really struggling to find a provider that can help me.

All I want is Building Insurance on a property that I won't be living in for approx. 4 months but will be occupied during that time by the current owners. One insurer I tried transferred me to a broker (as they couldn't help) but their policy cost twice as much as a quote I did based on 'normal' conditions (i.e., occupied by me or my family etc... etc...)

Can anyone help? I'm really unsure on what to do next. My current provide for the house I'm in at the moment would only cover up to 30 days which isn't anywhere near enough in my circumstances.

Many thanks,
Steve

kingstreet

Who is accepting liability for the property in your contract?

If it's the vendor, you don't need to start your buildings cover until completion. I know it's normally advisable to start from exchange as a "belt & braces" approach, but in the solicitors' guide the party with liability should be the one to insure it.

If in doubt, speak to your solicitor. I also don't remember any lender insisting insurance cover starts from exchange. They have no right to make such a demand until completion takes place, IMHO.

kingstreet

Have a read of this;-

http://forums.moneysavingexpert.com/showpost.php?p=52527557&postcount=20

Only if the contract follows the 4th edition of the Standard Conditions of Sale without amendment - the 5th Edition would oblige the buyer to complete as it essentially reverts to the Common Law position where it is the buyer's risk from exchange.

All this stuff about who is insured is interesting but the essential point is firs to establish liability under the contract and that depends on which version was being used.

longblue

Thanks Kingstreet - I initially thought it was an odd situation but the info I've read since supports the purchaser having the insurance although I'll check with my Solicitor, as you've advised. I'm not sure though since it was in the Solicitor's letter that came with the Contract etc... that said I had to submit evidence of buildings insurance along with all the usual stuff (i.e., the deposit!) and that the mortgage company have said he's only authorised to Exchange when I've given him a copy of the insurance ... I tried the mortgage company and even their Buildings insurance policy won't cover me!

What a mess

I wonder if a copy of the vendors insurance (if they'll pass a copy through the solicitors) would be Ok? Hummm.

Quentin

kingstreet wrote: »

I also don't remember any lender insisting insurance cover starts from exchange. They have no right to make such a demand until completion takes place, IMHO.

They do have a right - you are committed to purchase the house after exchange - even if it burns down! So the lender needs that security from exchange.

Lenders do insist on it, and they won't allow exchange if the solicitor cannot confirm insurance is in place. (Except for new builds, which remain the builder's responsibility till completion)

Quentin

longblue wrote: »

.....One insurer I tried transferred me to a broker (as they couldn't help) but their policy cost twice as much as a quote I did based on 'normal' conditions (i.e., occupied by me or my family etc... etc...)

You will be hard pressed to find "off the peg" insurance for these circs, and a local broker (not swinton) may be the only way to sort this.

kingstreet

It is odd.

The vendor is expected to continue to insure the property between exchange and completion and if something did take place, my understanding is the insurers would split the liability between them if the purchaser had also taken out cover from exchange.

I don't know how one of the broker offices would treat the situation. It's never come up for me, so I've had no recent experience. However, you might wish to speak to an adviser who uses firms like Paymentshield, Select & Protect, The Source, Towergate etc.

kingstreet

Quentin wrote: »

They do have a right - you are committed to purchase the house after exchange - even if it burns down! So the lender needs that security from exchange.

Lenders do insist on it, and they won't allow exchange if the solicitor cannot confirm insurance is in place. (Except for new builds, which remain the builder's responsibility till completion)

It must be in the solicitor's instructions, or CML Handbook. I don't recall seeing it in a mortgage offer.

I'm aware of the commitment being made and have routinely started buildings insurance from exchange all my career. However, the issues Richard sets out in the Standard Conditions of Sale I linked to do suggest there may be times the purchase should not be required to insure the property, similar to, as you mention, the case of a newbuild.

opinions4u

Have you got a quote from the lender for cover?

longblue

Quentin is definately right, no 'normal' insurer will touch me but I've contacted another broker who is going to see what they can do - the goods news is that he's said although it's not something they deal with very often, they've quote for similar situations in the past. I did try calling Paymentshield directly (didn't realise you had to be an intermediary) but the chap I spoke to, who also checked with his team manager, said they couldn't cover me on a property I didn't live in.

There are definately solutions although the cost of them, compared to 'normal circumstances' is going to be a hard pill to swallow.

Cheers for all your advice so far.

kingstreet

opinions4u wrote: »

Have you got a quote from the lender for cover?

See post #4;-

I tried the mortgage company and even their Buildings insurance policy won't cover me!

Which is ironic, considering it's the lender's condition in the first place.