New Build Buildings Insurance

LGib

I am buying a new build off plan (building work has not started) and am getting closer to the exchange date. My solicitor says that our mortgage offer requires buildings insurance to be in place from the exchange however my mortgage broker says to be in place before completion as the property is covered by the developer during the building process. The contract that I have read through (not signed) states that the property is at the sole risk of the seller until completion.

Does any one have any advice? 

Thanks! 

davidmcn

LGib said:

My solicitor says that our mortgage offer requires buildings insurance to be in place from the exchange 

You've got a copy of the mortgage offer - does it say that? 

LGib

davidmcn said:

LGib said:

My solicitor says that our mortgage offer requires buildings insurance to be in place from the exchange 

You've got a copy of the mortgage offer - does it say that? 

It’s says
‘You must have appropriate buildings insurance for the duration of the mortage’ My mortage broker advised this is from release of their funds and once we fully accept the mortage offer. This is also how I read this sentence as the mortgage bank aren’t providing any funds until completion.

sorry FTB here if you hadn’t guessed! 

davidmcn

The mortgage doesn't start until the completion date. That's all the lender cares about - even in the "normal" (non-newbuild) situation where you take on the risk from exchange, it's your risk, not the lender's.

I reckon your solicitor is just confused - point them at the relevant clause in the contract about risk staying with the builder.

LGib

davidmcn said:

The mortgage doesn't start until the completion date. That's all the lender cares about - even in the "normal" (non-newbuild) situation where you take on the risk from exchange, it's your risk, not the lender's.

I reckon your solicitor is just confused - point them at the relevant clause in the contract about risk staying with the builder.

Thanks for the advice! It’s good to know that what I thought re the mortage start seems to be correct. I’ve asked the solicitor why they think it’s needed so if there is a clause I have misinterpreted they should clarify. 

teachfast

Solicitor being lazy and not checking terms. Standard practice, I'm afraid. 

mat1964

I am in the same position.  Solicitor has said 'consider' building insurance at Exchange, but legal docs clearly says developer has insurance up to completion date.  

teachfast

I wouldn't trust the developer. Better to be over insured than under. 

davidmcn

teachfast said:

I wouldn't trust the developer. Better to be over insured than under. 

It's what's in the contract which matters - they don't need to trust the developer. And although buildings insurance is relatively cheap, it's a bit daft to be paying for it for months unnecessarily (at the moment, insuring a patch of mud under the pretence it's got a fully-built house on it).

teachfast

davidmcn said:

teachfast said:

I wouldn't trust the developer. Better to be over insured than under. 

It's what's in the contract which matters - they don't need to trust the developer. And although buildings insurance is relatively cheap, it's a bit daft to be paying for it for months unnecessarily (at the moment, insuring a patch of mud under the pretence it's got a fully-built house on it).

So the contract says developer insures but they don't insure...

davidmcn

teachfast said:

davidmcn said:

teachfast said:

I wouldn't trust the developer. Better to be over insured than under. 

It's what's in the contract which matters - they don't need to trust the developer. And although buildings insurance is relatively cheap, it's a bit daft to be paying for it for months unnecessarily (at the moment, insuring a patch of mud under the pretence it's got a fully-built house on it).

So the contract says developer insures but they don't insure...

If they've failed to deliver a built house (for whatever reason), you don't need to hand over the purchase price.