Insurance between exchange/completion for share of freehold

neil1979

We are buying a share of freehold flat and are somewhat confused about the pre-completion buildings insurance we need to get, and where to get it from. We've been told that we need buildings insurance between exchange and completion. But as this is a share of freehold terrace house (there is one other freeholder) the situation seems complicated.

Do we just insure the two bedrooms, kitchen, living room and bathroom in our 1st floor part of the terrace house?
Or do we insure the whole terrace house including the ground floor flat's two bedrooms, etc.
Is it even possible to claim on for a full house rebuild when we only own half the house?

The bottom flat is in the process of being sold so we don't think it would be practical to get a joint policy with the other freeholder who will be moving out.

Also where do we get this insurance from? I've looked at various comparison sites and they just seem geared to people who own a whole house. In this case:
1. We would only own the first floor parts.
2. And at exchange we wouldn't actually own it yet.

If anyone has suggestions for what kind of policy is needed, and who to buy it from that would be much appreciated.
Thank you!

Gonzo1987

The block should be insured as a whole and covered under the maintenance charges - the managing agent should have sent confirmation of the policy to your seller's solicitor as part of the pre-contract enquiries to forward onto your solicitor.

Speak to your solicitor.

neil1979

Hi - just for clarification - there is no managing agent. This is a simple terrace house which has been split into two flats. And each of the flats is share of freehold.

Also our solicitor isn't being very responsive, so I'd like some insight of what people in this situation do about their insurance. Thanks

eddddy

So it sounds like there are currently 2 joint freeholders, and you will soon be replacing one of the joint freeholders.

(It's better to talk about joint freeholders, rather than owning shares of a freehold. It makes the concepts easier to understand.)

The joint freeholders should currently have buildings insurance for the property (unless they are really dopey, which is possible).

Your solicitor probably has a copy of the policy. The things that you/your solicitor should check include:
- That the policy is suitable
- That it isn't due to end between exchange and completion
- The the current joint freeholders don't plan to cancel it

In future, you and your joint freeholder will have to renew this insurance each year, and split the cost. (Which could get very messy if your joint freeholder refuses to pay, etc)

G_M

Is this England? are you sure its freehold?

More likely you are buying a lease for the part of the building (flat/maisonete) you will live in plus a share of the freehold.

If that is the case, READ THE LEASE. It will specify how the building should be insured. In most cases, 'the freeholder' (ie the two? peple who share the freehold) must insure the building, and pass he cost to each leaseholder (who happe to be the same two people.

And if that is the case, the building should already be insured.

You need to
a) read the lease and se if that is the set up
b) ask the current freeholder to show you the insurance policy

neil1979

Yes this is buying the lease plus the share of the freehold.

Unfortunately the contract (standard conditions of sale 5th edition) section 5.1.1 and 5.1.2 states that the seller is under no obligation to insure the property between exchange and completion. And that the property is at the risk of the buyer from the date of the contract.

5. RISK, INSURANCE AND OCCUPATION PENDING COMPLETION
5.1.1 The property is at the risk of the buyer from the date of the contract
5.1.2 The seller is under no obligation to the buyer to insure the property unless:
(a) the contract provides that a policy effected by or for the seller and insuring the
property or any part of it against liability for loss or damage is to continue in force, or
(b) the property or any part of it is let on terms under which the seller (whether as
landlord or as tenant) is obliged to insure against loss or damage.

The solicitor has highlighted that we are responsible for insurance from exchange

I have found one place that offers this kind of insurance (Bickers - they have a specific exchange to completion policy) Does anyone know of any others?

G_M

This is very common. Indeed, it happens everytime a leasehold flat is sold in England!

The seller may be under no obligation under the contract to insure between exchange & Completion, but the freeholder IS under an obligation, under the terms of the two leases, to insure.

So it should be insured.

Ask. If it is, then there's no problem. If it isn't, then you need to query why not.

the two joint freeholders have a responsibility to ensure it is insured.

Provided of course that that is what the leases say - but you have not yet read the lease, have you?