No buildings insurance at exchange

GDB2222

Bendy_House said:

I haven't read through the links provided, but one question comes to mind - at 'exchange of contracts' (ie, before 'completion'), who does the property belong to?

Surely the vendor? In which case, if it burns down, then they carry the insurance can? Surely?

The very worst the buyer would be potentially out of pocket by, is the deposit, and even that should not be at risk (ie, it's the vendor who has defaulted on the contract, by, er, no longer having a house...).

I have never taken out insurance on a property purchase with a date prior to actual 'completion'. Gulp - was I wrong?

As Canaldumidi says, the 5th edition puts the onus of insurance on the buyers. You are contractually bound to buy the property after exchange even if it burns down.

The 4th edition had it the other way round, which as you say is far more obvious. 

The good news is that I have never met a seller who cancelled their house insurance on the day of exchanging. 

eddddy

Bendy_House said:

I have never taken out insurance on a property purchase with a date prior to actual 'completion'. Gulp - was I wrong?

It depends when you last bought a property.

Under the 4th Edition of the Standard Conditions of Sale, the seller carried the risk between exchange of contracts and completion. (So the seller should have insured.)

Under the 5th Edition of the Standard Conditions of Sale, the buyer carries the risk between exchange of contracts and completion. (So the buyer should insure.)


The 5th Edition was introduced in April 2011, but some conveyancers might have stuck with the 4th Edition beyond that date.

Bendy_House said:

The very worst the buyer would be potentially out of pocket by, is the deposit, and even that should not be at risk (ie, it's the vendor who has defaulted on the contract, by, er, no longer having a house...).

If a buyer exchanges contracts agreeing to buy a house for, say, £300k - and it burns down before completion, the buyer is still committed to buying the heap of ashes for £300k. They can't "walk away".

So the buyer should take out buildings insurance.

Bendy_House

Thanks for the scary clarification :-)

Our house purchase was in 2003, so phew.

A conveyancing solicitor would normally point out this onus as a professional courtesy when they send out the 'exchange' docs? Or would a buyer be expected to have read/discovered this by themselves?

GDB2222

Bendy_House said:

Thanks for the scary clarification :-)

Our house purchase was in 2003, so phew.

A conveyancing solicitor would normally point out this onus as a professional courtesy when they send out the 'exchange' docs? Or would a buyer be expected to have read/discovered this by themselves?

Some solicitors have a booklet that contains this sort of thing, but of course you can take a horse to water …

user1977

Bendy_House said:

A conveyancing solicitor would normally point out this onus as a professional courtesy when they send out the 'exchange' docs? 

Not so much a professional courtesy as the fact you've paid them ££££ to give you legal advice - which includes explaining the contract to you.

Though judging from many of the threads here, some conveyancers seem to regard providing any sort of guidance to their clients as being a somewhat bizarre suggestion.

TripleH

But do you have a claim against the vendor in that instance as they have failed to provide you with 'the property you bought'?

Otherwise what's to stop them acting with a duty of care? (I understand the need for insurance at exchange).

eddddy

TripleH said:

But do you have a claim against the vendor in that instance as they have failed to provide you with 'the property you bought'?

Otherwise what's to stop them acting with a duty of care? (I understand the need for insurance at exchange).

Yes - the seller has a duty of care. 

We're talking about typical building insurance risks - like fire, flood, storm, theft, etc. None of those would be the seller's fault. The 5th Edition of the Standard Conditions of Sale says the buyer has to bear those risks.

If the seller had intentionally set fire to the house, or intentionally or negligently damaged the house in some other way, that would be a different matter.



FWIW, I was recently involved in a sale where a vandal smashed the window of an empty house between exchange and completion. The solicitor advised that the damage was the buyer's responsibility, but suggested that the seller had a 'duty of care' to board-up the window to stop further damage due to rain and/or due to trespassers climbing in.

(TBH, the solicitor described the responsibility for boarding-up as a 'grey area' - but suggested it would be easier to board it up, rather than risk fighting a claim for negligence.) 

GDB2222

user1977 said:

Bendy_House said:

A conveyancing solicitor would normally point out this onus as a professional courtesy when they send out the 'exchange' docs? 

Not so much a professional courtesy as the fact you've paid them ££££ to give you legal advice - which includes explaining the contract to you.

Though judging from many of the threads here, some conveyancers seem to regard providing any sort of guidance to their clients as being a somewhat bizarre suggestion.

It would be normal for solicitors to have standard letters containing this advice, but I don’t think that they would have to say it more than once or particularly prominently to avoid being negligent. As I said, rather than hand-crafting the advice, they may rely on a general booklet.  

It takes so long at the moment to get through the conveyancing process that advice given at the start may have been forgotten by the time of exchanging.

aoleks

my mortgage lender asked specifically, during the application stage, for a building insurance (quote) reference number.