Building insurance & exchanging of contract - when ???

Poniato

One of our solicitor's employee called me today (27th June) after 4 pm and confirmed, that funds arrived at their account and we are ready to exchange the contracts (seller's solicitor was very pushy to exchange today !)

Our building insurance wasn't bought and I said that it's too late for our mortgage advisor to arrange this today, so it can start on 27th June. I have been told that I can buy it one day later date (28th June).

At that moment I was concerned and asked what will be the scenario if something will happen to the property during the night. Who will cover that?


So I asked for the details and confirmation, that seller actually has building insurance and if we will be covered for that night.

She told me, that building insurance is in place, but could not respond to me with any details what will happen if for example will be a fire that night.

I did not agree to exchange the contracts without building insurance that day. Sorry, I am not an expert, but could someone explain me how does it work and if my thinking was right ??

SG27

I think you are right in what you did although the chances of something going wrong in one night are incredibly small.

According to standard conditions of sale you are responsible for insuring the property from exchange. The reason for this is that you are legally obliged to complete on the purchase even if it is damaged or destroyed. So if the house burnt down you would still have to pay the vendor the agreed sum on the completion date. So its in your interest to have insured!

onomatopoeia99

You were right not to exchange without insurance being in place, but can you explain why you cannot arrange buildings insurance yourself and need a mortgage adviser to do it for you?

Noobie2011

Sorry to jump on this thread but we are about to exchange next week on a new build house so from reading above do I need to arrange Building Insurance to cover us from the time of exchange then or am I reading it wrong and as it is not fully complete the developer will still be responsible up untilcompletion?

Also what about Life/Critical Illness. Do we need to have this in place from exchange also or again is it from completion?

SG27

Noobie2011 wrote: »

Sorry to jump on this thread but we are about to exchange next week on a new build house so from reading above do I need to arrange Building Insurance to cover us from the time of exchange then or am I reading it wrong and as it is not fully complete the developer will still be responsible up untilcompletion?

Also what about Life/Critical Illness. Do we need to have this in place from exchange also or again is it from completion?

New builds are different. In that case you arrange insurance from completion as the developer is still responsible for the property up until then.

As far as I am aware life insurance is not a requirement but is a good idea to get it sorted as early as possible.

davidmcn

Noobie2011 wrote: »

Also what about Life/Critical Illness. Do we need to have this in place from exchange also or again is it from completion?

Not compulsory to have them at all, but if you want them it makes sense to do so from exchange, as you're then committed to go ahead irrespective of illness/death.