Do I need a building insurance even before property goes unconditional?

Discussion in 'The Buying & Selling Process' started by Samj, 24th Jul, 2021.

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  1. Samj

    Samj Well-Known Member

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    My bank lender asked me to take a building insurance just after signing the contract. It's just a friendly reminder. He said in 2011 flood time there was a case that a house got flooded, just after signing a contract. Then seller insisted the buyer to get it as is and eventually buyer had to pay for flood repairs. He says it's a law in QLD only.

    That's bit unbelievable to me. Can someone please tell me when should I need to get the building insurance (after signing the contract or after going unconditional)? Thanks.
     
    Last edited: 24th Jul, 2021
  2. Archaon

    Archaon Well-Known Member

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    Seems ridiculous, I wouldn't settle if the property wasn't in the same condition as I signed the contract.
     
  3. PinkPanther

    PinkPanther Well-Known Member

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    You can take insurance after the contract goes unconditional. Your lender is probably just letting you know that you need to get one ... usually banks like to see the insurance document before settlement.
     
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  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Not a conveyancer, Im reasonably sure the risk passes to the buyer at uncon

    ta
    rolf
     
  5. skater

    skater Well-Known Member

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    My belief is that it's different in different States, HOWEVER, I've always just paid for insurance as soon as unconditional.
     
  6. Firefly99

    Firefly99 Well-Known Member

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    In Qld the buyer is responsible the day after the contract is signed by both parties (just signed, not unconditional). So yes your bank is correct. I have always taken out insurance the day the contact is signed.
     
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  7. Firefly99

    Firefly99 Well-Known Member

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    See attached
     

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  8. PinkPanther

    PinkPanther Well-Known Member

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    Huh ok. I stand corrected then. We just bought a property in Brisbane North and we were asked about the insurance only after the contract went unconditional.
     
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  9. Firefly99

    Firefly99 Well-Known Member

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    To be fair it’s a bit odd. And if the contract was subject to building and pest inspection surely you could pull out of it if, for example, the house burnt to the ground or something. The B&P report wouldn’t exactly be complimentary ;)

    But you can cancel the insurance and get a refund if you don’t go through with the contract so I don’t see any point taking a gamble.
     
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  10. marty998

    marty998 Well-Known Member

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    Interesting story in Sydney a few years back of a house at Kurnell having a tornado ripping it apart while the property was unconditional (the day after it was auctioned), prior to settlement.

    A tornado!

    Insurance is a must just in case...
     
  11. wylie

    wylie Moderator Staff Member

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    I've argued this here on the forum a few times, but never gone looking for anything in writing to prove it.

    Thanks for posting the link showing this to be the case and expectation in Queensland.
     
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  12. Archaon

    Archaon Well-Known Member

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    That's a joke, surely?

    So why bother going through settlement if all the liability is already on you as the purchaser?
     
  13. wylie

    wylie Moderator Staff Member

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    What do you mean by that?

    You go through settlement to own the property. In Queensland you insure it from 5pm the next day so you're paying insurance for a month longer than required in some other states I guess.

    In the old days, we would get a cover note, but most insurers don't do that these days. Probably got wise to people trying to get a free month of insurance.
     
  14. Archaon

    Archaon Well-Known Member

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    If you don't own something, why are you responsible for damage to it?
    Can you go in and start renovating upon signing?
     
  15. wylie

    wylie Moderator Staff Member

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    That is just what is expected in Queensland. I don't know what would happen if you chose not to insure it, but every purchase we've made, we've been prompted by the lawyer as soon as the contract goes to him, to ensure it is insured by 5pm that day.

    And the broker wants proof as well, long before settlement.

    And you can go into the house to renovate if you get approval, just as you can in any other state I'd guess. We've done this before with a signed authority from the vendor.
     
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  16. Hills123

    Hills123 Well-Known Member

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    I found out as well on the day I signed contract that in QLD you need to insure (even if it’s not unconditional)

    I just setup a months insurance incase the contract fell through (approx $100) - can cancel and only out of pocket by $100 worst case if I didn’t go ahead with the purchase - but I think $100 is worth the peace of mind!!
     
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  17. Firefly99

    Firefly99 Well-Known Member

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    Why would I post a joke like that? It’s not very funny ;)
     
  18. Nathan J

    Nathan J Well-Known Member

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    I was just provided the same advice by our solicitor for house we signed contract on. So I took out a monthly policy - no huge deal.

    But it does seem odd. As Firefly said, couldn't you just rely on the B and P inspection to null and void the contract? Maybe there is something in the fine print that stipulates a B and P inspection can't be relied on in that type of circumstance.
     
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  19. wylie

    wylie Moderator Staff Member

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    Building and pest clause expires several weeks prior to settlement.
     
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  20. Nathan J

    Nathan J Well-Known Member

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    Yes, but we are talking about the requirement to take Insurance immediately upon signing contract - whilst the B and P clause is in effect.