Asked to exchange 95 days before completion

pinkteapot

If you're being given a long-stop date then is it really a fixed completion?

The fact the builder's willing to do a long-stop so soon after the date is a good sign. However, we bought a new-build recently. Offered in July when they were doing internal work and it was due for completion end of September. We got the keys end of November. Things happen with new-builds, so be prepared for the possibility that it's delayed and you have to get an extension to your mortgage offer from the lender.

Your biggest issue will be insurance. You have to have buildings insurance from exchange of contracts (it'll be a condition of your mortgage). We were once in a chain that ended up with 8 weeks from exchange to completion for reasons I won't bore you with. Most insurers said no because they're systems are only set up for a maximum of 28 days between exchange and completion. We had to use Hiscox who are a more high-end insurer, so our buildings insurance that first year was expensive.

So long as you can get insurance, I wouldn't worry unduly. As I said, I did an 8 week exchange to completion once. Not ideal but it was quite nice as we could arrange removals, new furniture/white good deliveries etc at our leisure! I think we had five different deliveries the day after completion. :rotfl:

SmashedAvacado

You have to have buildings insurance from exchange of contracts (it'll be a condition of your mortgage). We were once in a chain that ended up with 8 weeks from exchange to completion for reasons I won't bore you with. Most insurers said no because they're systems are only set up for a maximum of 28 days between exchange and completion. We had to use Hiscox who are a more high-end insurer, so our buildings insurance that first year was expensive.

This is not correct.

you only have to have insurance between exchange and completion if risk passes on exchange. You can ask your solicitor to insist that risk passes on completion which would mean that the seller continues to insure.

The standard position is that risk passes at exchange but there re many reasons why you might change this - one of these is a long completion. another would be where you have a conditional deal.

pinkteapot

SmashedAvacado wrote: »

This is not correct.

you only have to have insurance between exchange and completion if risk passes on exchange. You can ask your solicitor to insist that risk passes on completion which would mean that the seller continues to insure.

The standard position is that risk passes at exchange but there re many reasons why you might change this - one of these is a long completion. another would be where you have a conditional deal.

:eek:

Our solicitor never mentioned that this was an option so we paid stupid money for that buildings insurance.

SmashedAvacado

pinkteapot wrote: »

:eek:

Our solicitor never mentioned that this was an option so we paid stupid money for that buildings insurance.

Perhaps you have a claim against your solicitor.....
maybe ask them why they didnt suggest you changing the risk allocation?

davidmcn

pinkteapot wrote: »

You have to have buildings insurance from exchange of contracts (it'll be a condition of your mortgage)

No, mortgage lenders don't care about what happens between exchange and completion. That's all your problem, their money is still safe. They will need insurance to be in place for completion.

davidmcn

SmashedAvacado wrote: »

Obviously you can put an obligation in the contract to make routine repairs etc

So do that? In Scotland the norm is to "exchange" at a relatively earlier stage than would be the case in England, with the seller remaining liable for maintenance (and insurance). It's not viewed as a significant risk.

SouthLondonUser

SmashedAvacado wrote: »

This is not correct.

you only have to have insurance between exchange and completion if risk passes on exchange. You can ask your solicitor to insist that risk passes on completion which would mean that the seller continues to insure.

The standard position is that risk passes at exchange but there re many reasons why you might change this - one of these is a long completion. another would be where you have a conditional deal.

True, BUT IMHO it's not worth the risk.

Say you agree the seller will continue to insure the property between exchange and completion, then doesn't - e.g. misses a monthly payment on the insurance which automatically voids the policy. Then something happens (a stowaway falls from the sky, a flood, whatever) while the house isn't insured. Then what? Sure, you can sue the seller, but how much is that going to cost you, and what are the odds of recovering how much?

To me it's not worth the risk. Sure, we are talking about veeery low-probability risks here, but the whole point of insurance is to get cover against low probability risks.

I wouldn't consider it, but to each their own.

davidmcn

SouthLondonUser wrote: »

Then something happens (a stowaway falls from the sky, a flood, whatever) while the house isn't insured. Then what?

Then you have a provision in the contract allowing you to walk away if the property has suffered material damage. Which is what we typically have in Scotland.

Even if there is insurance in place, what are you going to do in practice? Your mortgage lender won't allow you to complete if the place has been wrecked.

GDB2222

I have twice sold a property with a delayed completion, and I have once bought on that basis. It’s never been a problem. The seller should insure.

Bear in mind that there’s a procedure if the vendor does not complete on time. This effectively gives them two weeks grace, which is getting towards the end of your mortgage offer.

GDB2222

SouthLondonUser wrote: »

True, BUT IMHO it's not worth the risk.

Say you agree the seller will continue to insure the property between exchange and completion, then doesn't - e.g. misses a monthly payment on the insurance which automatically voids the policy. Then something happens (a stowaway falls from the sky, a flood, whatever) while the house isn't insured. Then what? Sure, you can sue the seller, but how much is that going to cost you, and what are the odds of recovering how much?

To me it's not worth the risk. Sure, we are talking about veeery low-probability risks here, but the whole point of insurance is to get cover against low probability risks.

I wouldn't consider it, but to each their own.

What on Earth makes you think your insurance covers against the house being hit by a deep frozen stowaway? That’s a risk we all incur all the time, without a moment’s thought to be honest.