Insuring a house for license to occupy help

flat4fanatic

Hi, wondered if anyone had any suggestions as starting to tear the proverbial hair out.
We were in the process of selling my Mums house when she passed away last month (I'm executor).
The buyer needs to move in this week as they are at the end of a long chain which will collapse if they can't.
Solicitor has suggested a 'license to occupy' which lets her move in before exchange whilst I'm waiting for probate to come back (and also protects the estate/house).
As part of this license the buyer has to insure contents and I have to insure the house. Mums existing insurance won't cover this and every insurer I've rang so far won't cover the house in this scenario either. Has anyone been in a similar situation before?
Thanks,
Steve

user1977

I can't answer the insurance specifically (though I'm not surprised it's tricky), but in general this sounds a terrible idea. I presume your solicitor has already advised you of all the risks in having difficulty kicking out the purchaser etc? Why can't they find somewhere else to stay while you sort out probate?

flat4fanatic

Solicitor says it makes it very easy to kick out the purchaser as it gives them virtually no rights when compared to say a tenancy (the wording of the agreement backs this up too). They are a friend of the family so known rather than a stranger.

DullGreyGuy

Have you spoken to those offering landlords insurance? Whilst it may not be an AST its the closest proxy to your situation

martindow

flat4fanatic said:

They are a friend of the family so known rather than a stranger.

I'm not sure this is an advantage as it could be harder to have a difficult conversation with them than with a stranger.  If they dig their heels in this situation could cause ructions within the family.

km1500

Double-check because it could very well be that if they have ***exclusive*** occupation then a tenancy is created irrespective of 'licence to occupy' or zero rent.

https://www.fieldingsporter.co.uk/site/blog/commercial-blog/a-licence-to-occupy-useful-or-dangerous

thegreenone

AirBnB?  I would wait until Exchange at the least.  Otherwise, you could have a squatter who sells her property, moves into Mum's and doesn't want to leave or pay rent.  Worst case scenario, of course.

I don't wish to be rude, but weren't you a bit hasty putting the property on the market just a month after your Mum's death and presumably before you had applied for probate?

MaiTai

thegreenone said:

AirBnB?  I would wait until Exchange at the least.  Otherwise, you could have a squatter who sells her property, moves into Mum's and doesn't want to leave or pay rent.  Worst case scenario, of course.

I don't wish to be rude, but weren't you a bit hasty putting the property on the market just a month after your Mum's death and presumably before you had applied for probate?

I interpreted this as the sale being in progress prior to Mum’s passing therefore conveyancing has stalled until the Grant of Probate has been obtained.

Annisele

Whose solicitor has suggested this? Yours, or the prospective buyer's? If theirs, ignore them and get your own legal advice.

If you don't have probate yet, I'm not entirely sure how you can grant a license to occupy anyway - unless you were already a joint owner of the house, I don't see how you'd have the right to grant anything.

Unless you are also living in the house, I'd be worried about a tenancy. If the prospective buyer has exclusive occupancy and pays rent, that would sound on the face of it very like a tenancy.

Plus, what would happen if there's a delay in getting probate and you think that the house value has gone up in the meantime? (Or if the prospective buyer thinks the house value has gone down?) It might not be easy to get the occupier/tenant/whoever they are out of the house if there's a disagreement about that.

flat4fanatic

Thanks all. Quick follow-up in case it helps anyone. I got insurance through the firm my friend uses for her BTL. Comparable to the normal house insurance £ wise and they had no issue with a license. As for the working of the license itself, the buyer paid the full sale amount to her solicitor who then held the funds, transferring the agreed amount to my solicitor each month, which was then taken off the total on completion (held by my solicitor until then so not classed as income for the estate). Probate came through surprisingly quickly and sale all went through fine, with a good refund on the insurance too (which the buyer had paid for). 

To answer a couple of the q's - sale was already in process when mum passed. It was my solicitor who suggested it, but in a small rural place scenario the buyers solicitor had been mum and dads solicitor for many years. 

CKhalvashi

flat4fanatic said:

Thanks all. Quick follow-up in case it helps anyone. I got insurance through the firm my friend uses for her BTL. Comparable to the normal house insurance £ wise and they had no issue with a license. As for the working of the license itself, the buyer paid the full sale amount to her solicitor who then held the funds, transferring the agreed amount to my solicitor each month, which was then taken off the total on completion (held by my solicitor until then so not classed as income for the estate). Probate came through surprisingly quickly and sale all went through fine, with a good refund on the insurance too (which the buyer had paid for). 

To answer a couple of the q's - sale was already in process when mum passed. It was my solicitor who suggested it, but in a small rural place scenario the buyers solicitor had been mum and dads solicitor for many years. 

I'd recommend them finding somewhere on Airbnb/Booking Monthly Stays in this case.

If you don't want to take that advice, make sure you've exchanged before any keys are handed over (to ensure you don't get into a difficult situation) and make sure someone temporarily moves in (preferably a beneficiary to ensure that runs smoothly) to avoid creating a tenancy is my advice here.

That everyone knows each other is irrelevant and actually making this a higher risk situation. There are large amounts of money on the line and this needs to be looked at from an independent situation rather than one of friends.