Hi everyone,
Can anyone please explain to me why i would need to take out an insurance policy on my first IP at the same time that the current owner holds one whilst i am waiting for settlement? In the event of something going wrong during this period isnt it the responsibility of the current owner to ensure they have adequate cover until such time that the property becomes mine?
thanks for any insights in advance
lostie
Lostie
Who is responsible for insuring a property while it is between contract signing and settlement can vary depending on the standard contract used and any special terms on the contract. It is not purley the seller to settlement date. For me, while ever you have a vested interest in the property then you have an insurable interest. By entering into the contract to buy then you will have costs prior to settlement on that, (bank charges, legal fees, stampduty, mortgage insurance etc) therefore for the cost of insurance for 1 month it is well worth doing even if the contract says sell has insurable responsibility to settlement date.
Don
Hi Lostie,
It is in your best interest to insure property should the unthinkable happen: ie burn down – there is a fine line between who is responsible for it (this is how it was explained to me) If their insurance company decides to use an out clause and you are not insured then OUCH! It is a deductable cost of course.
Here is a legal jargon explanation from a legal site:
Insurance:
When you purchase a property the risk of damage to the property normally passes to you on settlement if it is residential (unless you have taken possession before settlement). If it is non residential, the risk can be passed earlier. You may, however, in some circumstances be obliged to settle your purchase notwithstanding that some damage has been occasioned to the property between exchange and settlement. For this reason it is prudent for you to insure the property at the time the contract is exchanged.All the best
MattHi lostie,
It might be prudent to take insurance after you go unconditional on the purchase.thanks everyone, i will get onto this straight away.
What if it were to burn down and the seller's policy was not in place – you could lose everything. You may be able to sue the seller, but if they had no assets, then not much point.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Just an update, I rang the insurance company today and they advised that I could take out a policy on the building only if I wished but in the event that the place did burn down, between now and settlement, I simply would not settle. Unfortunately I cannot insure the costs already incurred inspections, legals etc should this happen. They can only insure the house so that I can rebuild it after I settle.
Cheers
lostie
Hi Lostie
This reply maybe too late but this is how I understand the laws in qld & NSW. Not sure where your IP is, but if it is in Qld for example, your Solicitor would advise you to take out full insurance soon after signing the contract as you have a vested interest in the property even though the vendor has cover. However in NSW, insurance is not required until settlement. All other states I have no idea.Regards Bob (Insurance Assessor for AAMI)
Thanks Bob IP is in Victoria.
Cheers
lostie
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