Property damaged before completion of property

G_M

There is some mis-information flying aound.

The seller has contracted to sell the property in the condition it was in at Exchange of Contracts. So it should be in the same condition at Completion as it was at Exchange.

However:
a) that does not affect the obligation on the buyer to Complete the purchase (even if the property has burnt down) so clearly it is in the buyer's interests to ensure insurance is in place. He is the one who will be homeless (thus needing re-housing by the insurers) and he is the one who will want the property re-built.

b) reflecting the above, the Law Society changed the terms of their standard contracts (5th edition) , placing the obligation to insure from Exchange on the buyer.

But there IS still a requirement under contract law for the property to be handed over in the agreed condition (ie the Exchange condition).

The option to sue the seller exists therefore. However, the seller may defend this by arguing that under the contract you had an obligation to insure, and if the insurance you chose was inadequate/invalid, that is your problem, not his.

TranceNRG

G_M wrote: »

There is some mis-information flying aound.

The seller has contracted to sell the property in the condition it was in at Exchange of Contracts. So it should be in the same condition at Completion as it was at Exchange.

However:
a) that does not affect the obligation on the buyer to Complete the purchase (even if the property has burnt down) so clearly it is in the buyer's interests to ensure insurance is in place. He is the one who will be homeless (thus needing re-housing by the insurers) and he is the one who will want the property re-built.

b) reflecting the above, the Law Society changed the terms of their standard contracts (5th edition) , placing the obligation to insure from Exchange on the buyer.

But there IS still a requirement under contract law for the property to be handed over in the agreed condition (ie the Exchange condition).

The option to sue the seller exists therefore. However, the seller may defend this by arguing that under the contract you had an obligation to insure, and if the insurance you chose was inadequate/invalid, that is your problem, not his.

I'm not interested in suing the seller but want to make sure I'm not not financially penalised for buying a property that was in condition.

As I said in one of my previous posts, there was no option to get my own insurance. There was already joint building insurance and seller's name was on the policy. They advised me to pay my share of the insurance upon completion, which I did.

Even if I had put down my name on the policy on exchange (unlikely since the insurance broker wanted the seller to inform them of policy change and they wouldn't deal with me), the damage wouldn't have been covered as the property had been vacant for more than 30 days.

I want to solve this amicably. My solicitor has been in touch with seller's solicitor and and I believe seller has been notified.

If he says no and there's extensive damage, I'm screwed

G_M

TranceNRG wrote: »

I'm not interested in suing the seller but want to make sure I'm not not financially penalised for buying a property that was in condition.

Whether you sue/are interested in suing is not the point.

The point is how the law views the various liabilities of the parties.

If you have the legal option to sue, then the seller is more likely to respond positively to a request for financial restitution.

You raise in interesting point regarding the insurance though. Since this is (I assume) a flat, with insurance arranged by the freeholder/management company, then

a) I can understand that the onus would be on the seller to contact the freeholder/insurer to get the cover put in the buyer's name from Exchange and/or

b) the onus is on the seller to ensure he complies with the terms of the insurance arranged on his behalf by the freeholder.

The seller has thus, I suspect, been negligent in doing neither of the above which has resulted in the flat being uninsured.

Thus any legal case against the seller is strengthened.

and thus the seller is more likely to setle any claim - no one goes to court unless they have to.

However, you need specialist insurance advice and specialist conveyancing advice on these inter-related issues, to ensure that you approach the seller with a claim that clearly lays out the legal arguements why he should compensate you.

HouseBuyer77

I'm not interested in suing the seller

I think that's only avenue open to you if they don't just agree to pay up.

As I said in one of my previous posts, there was no option to get my own insurance. There was already joint building insurance and seller's name was on the policy. They advised me to pay my share of the insurance upon completion, which I did.

You can get buildings insurance for a flat though it is normally unnecessarry as the freeholder insures things. Though it is your responsibility to check the insurance you have via the freeholder is suitable. In this case if you'd read the policy you would have realised the cover wouldn't be valid for the period following exchange.

Though you do have a solicitor who is meant to represent your interests, did they know the property was unoccupied? Did they flag up that this could invalidate the insurance? Perhaps you'd also have a claim against them for not pointing out this risk to you?

TranceNRG

This is the reply I got from my solicitor just now:

The property should be in the condition it was in at the point of exchange of contracts so if the damage has occurred since then, you can try and claim against the seller but it will also depend on the cause of the leak. As previously discussed a report from your builder setting out how the damage occured, the extent of it and likely costs to repair it would be helpful.

We can then serve our initial letter on the seller notifying them of your intention to make a claim against them. Our fee for this would be £250 + VAT. This may be sufficient to persuade the seller into offering some form of compensation. However if it does not, and we need to commence court proceedings and so on, we can then discuss fees and how to move forward at that point.

Doesn't sound good. I don't want to be paying another £300 to my solicitor to send this letter to seller's solicitor. What if the seller refuses to cooperate? Remember he's living in Australia.

I will get my builder to have a look at the damage but thoroughly this time and tell me how much damage it has caused. If it's in thousands, then I might have to go down the legal path. Otherwise just going to have to absorb the costs and move on

moneyistooshorttomention

I seem to recall this insurance question came up when I went to insure my recently-bought house as from Exchange of Contracts time. That is - the seller still had insurance on it.

That did mean that I had to put the phone down on the first person I talked to at my insurance company (who was busily telling me that the house couldn't be insured by both myself and the seller and wasn't listening to me saying "But buyers are being told we HAVE to insure from Exchange time".)Then I waited briefly and phoned back - in hopes I would get someone different. I did get someone different - and just didn't mention the seller was still insuring the place, in order not to "explode their brains" with the concept of dual insurance. I just skated over whatever the seller might be doing - and just stated as fact "I am insuring from Exchange date - which is so-and-so" and thus it was.

I don't honestly know whose insurer would have paid up in the event if something had happened between Exchange and Completion.

TranceNRG

There's no separate freeholder. the owners of the 2 flats share the freehold so are responsible for building insurance hence the joint building insurance.
It looks like it's seller's fault (easy mistake I suppose) for not making sure the conditions were met stipulated in the insurance policy.

Dan-Dan

Pull the floorboards up , have a good look , save your cash , the solicitors can sense a cash cow , dont oblige them

Freecall

abinanthanb wrote: »

A quick question, maybe rhetorical one, if the keys are not handed over to the Buyer until completion, how is he expected to prevent any damage between exchange and completion?

Firstly, handing over the keys on completion is a largely symbolic act (and also for most house sales a practical one so that the new owner can get in).

It has little legal significance apart from positively identifying the seller's intention to transfer ownership.

Think what you might do if one day you simply lost your keys, you might perhaps break in. You don't have to have keys to gain access although it might be more difficult.

Also, consider the situation where the purchased property has no keys, a piece of land for example or even a derelict house with no door.

This does not fully answer the issue you raise however as in order to have checked in this case (and in most cases), the OP would have needed to have been granted access. If requested then the EA would probably have fulfilled this function.

On very large commercial sales it is not unusual for the buyer to have a second survey immediately prior to completion but in domestic sales this would generally be considered a somewhat excessive cost.

TranceNRG

G_M wrote: »

Whether you sue/are interested in suing is not the point.

The point is how the law views the various liabilities of the parties.

If you have the legal option to sue, then the seller is more likely to respond positively to a request for financial restitution.

You raise in interesting point regarding the insurance though. Since this is (I assume) a flat, with insurance arranged by the freeholder/management company, then

a) I can understand that the onus would be on the seller to contact the freeholder/insurer to get the cover put in the buyer's name from Exchange and/or

b) the onus is on the seller to ensure he complies with the terms of the insurance arranged on his behalf by the freeholder.

The seller has thus, I suspect, been negligent in doing neither of the above which has resulted in the flat being uninsured.

Thus any legal case against the seller is strengthened.

and thus the seller is more likely to setle any claim - no one goes to court unless they have to.

However, you need specialist insurance advice and specialist conveyancing advice on these inter-related issues, to ensure that you approach the seller with a claim that clearly lays out the legal arguements why he should compensate you.

Thanks for the very informative post G_M. There's no management company as such. The 2 freeholders (owners of ground floor and 1st floor flats) take joint building insurance.

As you said the seller has been negligent so it does sound like I have a good case but as I said in my previous post, my solicitor now wants to charge money to send a letter to them and who knows how much how much more money I will need to spend after that.

I'm hoping that there's no extensive damage and only cosmetic damage which can be repaired during renovations.