House buying contract

[hiasakite]

First time buyer and in the process of buying a house here...

Had a read through my contract (not signed it yet) and it states that the house is the 'buyers risk' between exhange and completion.

If I understand this correctly, this is saying that if something happens to the house following exchange (and whilst the seller is still living there..) its my responsibility to sort out...

This seems absurd to me?

So potentially if the house burns down in this period.. the seller still gets their money and moves into their new house.. while I'm homeless, waiting for the insurance to rebuild the house (because I will have insured the house from exchange) and paying the mortgage....

Or if something goes wrong on the house not covered by insurance..I'm liable to foot the bill...

This seems ridiculous.. why would I agree to this?
Can anyone suggest alternatives..and their pro's and con's... I appreciate the views of the PH collective on this.. particularly any conveyence solicitors/estate agents....

Thanks all,

A.

[Muncher]

As soon as the contract is exchanged it is your house, so your risk!

I can't see how it would work any other way, as the seller could not insure it once contracts have been exchanged as they have no insurable asset at that point!

If the house burnt down while they were in it, you could sue them in negligence for any uninsured losses though.

[hiasakite]

eh?.. I thought it wasn't my house until completion (ie until money changes hands).....

though I am prepared to be corrected on this...

If that is the case.. why would I let them still live in my house? (ie why should I not insist on same day exchange and completion)

[hiasakite]

PS: Muncher ..thanks for responding!

[Muncher]

I should point out I have no practical experience of this other than reading some contracts this week but that seems logical to me.

[Stuart]

The house can be on your insurance cover between exchange and completion, and the distance between these two dates need only be tiny if everyone gets their act together.

[pdV6]

You'll probably find that the mortgage lender won't hand over any cash unless you can prove you have buildings insurance in place, so in practical terms, you need to arrange insurance for the exchange date onwards anyway, so what's the problem?

[pdV6]

The "at buyer's risk" clause in the contract ought to sort that one out...

[superlightr]

Your probably talking about less then £90 for a few months building insurance.

I wouldnt rock the boat, have ressless nights over £90 ish thinking i you are insured or not for something like a house.

Your policy would normally cover alternative accommodation if it does burn down.

[smirnoff]

Hi check with your building insurance, many companies insure the property between exchange and completion for free and you only start paying once you move in.

You put the property on risk at exchange then pay on completion.

Adrian

[z1000]

As said earlier , no lender will releaes money on an uninsured property , you need the loan before completion takes place , so you have to insure it. Quite normal as far as I am aware.

[hiasakite]

ok.. but if something does happen to the house between exchange and completion.. even if I am insured, I'm left with having the house to be rebuilt etc, whilst paying out on the mortgage with nowhere to live (unless the insurance company comes up with something) whilst the seller gets their money...

[hiasakite]

Thanks for your comments people.

however even with insurance (which I intend to get anyway) I still end up (if say the house burns down) paying a mortage for a property that is being rebuilt taking n months whilst the seller gets my money... and I wasn't even living in it when this may happen (if between exchang and completion)...

Why should I agree to being put in this position..if the house 'disappears' before completion surely thats the sellers problem not mine?

[wiggy001]

As you are a first time buyer, is there any onward chain?

If there's no chain, exchange and completion on the same day should be possible...

[hiasakite]

Nope.. no onward chain...

I was thinking about same day exchange completion too..

[siwil1]

I have been a mortgage broker for 14 yrs and only once in my experience has anything happened between exchange and completion, The property was gutted by fire and the purchaser spent the next 6 months in a rented property paid for by the insurer whilst having the new property redecorated from top to bottom.

you need to switch on all protection at exchange of contracts as at this stage you are legally bound to complete on the property.

Simon

[minimax]

smirnoff said:

Hi check with your building insurance, many companies insure the property between exchange and completion for free and you only start paying once you move in. You put the property on risk at exchange then pay on completion. Adrian

most ins companies insure between exchange and completion gratis and if you're really worried then arrange to exchange and complete on the same day

[minimax]

z1000 said:

As said earlier , no lender will releaes money on an uninsured property , you need the loan before completion takes place , so you have to insure it. Quite normal as far as I am aware.

unless you have complete utter berks as conveyancers working for your client who complete without any buildings cover in place (clients had refused my offer of cover )

...with apologies to rudeboy et al

[Rude-boy]

minimax said:

Stuff then... ...with apologies to rudeboy et al

Nar worries mate

It is a condition of your mortgage offer that you must have buildings insurance in place during the entire duration of your mortgage.

You should place the property you are buying on cover on the day of exchange.

IMO you shouldn't cancel your buildings insurance on a property you are selling either before completion. If the Buyer fails to complete it will still be your property if the contract is rescinded. You are also on dodgy ground re the lender.

TBH for the sake of a few £ just do it.

If you wish to have a full on consultation about this and for me to advise you on the full nature of the standard conditions of Sale (4th Edition) as amended by that particular contract, please send a full copy of the contract to me together with your cheque for £300+vat as it will take me about 2 hours to give you the most basic of crash courses


>> Edited by Rude-boy on Tuesday 19th July 19:17

[hiasakite]

Rude-boy said:

minimax said: Stuff then... ...with apologies to rudeboy et al Nar worries mate It is a condition of your mortgage offer that you must have buildings insurance in place during the entire duration of your mortgage. You should place the property you are buying on cover on the day of exchange. IMO you shouldn't cancel your buildings insurance on a property you are selling either before completion. If the Buyer fails to complete it will still be your property if the contract is rescinded. You are also on dodgy ground re the lender. TBH for the sake of a few £ just do it. If you wish to have a full on consultation about this and for me to advise you on the full nature of the standard conditions of Sale (4th Edition) as amended by that particular contract, please send a full copy of the contract to me together with your cheque for £300+vat as it will take me about 2 hours to give you the most basic of crash courses >> Edited by Rude-boy on Tuesday 19th July 19:17

Thanks rude_boy!....
Seriously though.. I have no problem with insuring the property from exchange and plan to do this anyway, however section of 5 of the standard T&Cs has been amended by the sellers solicitor to state that the property is buyers risk between exchange and completion... ..is this a normal state of affairs? It seems wrong to me that I should be taking the risk on the property whilst the seller is still living there.... surely it should be their risk since they are actually living there?