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House Burnt Down Day Before Settlement

Discussion in 'Legal Issues' started by RPI, 10th Nov, 2015.

  1. RPI

    RPI Property Lawyer, Town Planner Business Member

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    Client of mine was due to settle on a house today. House Burnt Down the day before.

    Good reminder as to why insurance is important straight away.

    In QLD Standard Form Contracts the risk passes to the Buyer a business day after the Contact Date.

    In the event the dwelling is damaged but habitable then the Buyer still needs to settle.

    In the event that the dwelling is not habitable then there is a statutory provision allowing you to terminate. The important thing to note with that is that you still need to claim on your insurance, it is just that the Seller gets the money, not you. You will need to pay the excess etc.
     
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  2. abbyfresh

    abbyfresh Well-Known Member

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    This is a buyers worst nightmare no doubt. Sifting through such an insurance claim is never going to be easy and fast.
     
  3. D.T.

    D.T. Adelaide Property Manager Business Member

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    eesh :(

    Remember to get your insurance setup guys, straight after contract.
     
  4. Perthguy

    Perthguy Well-Known Member

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    Did they have insurance?
     
  5. RPI

    RPI Property Lawyer, Town Planner Business Member

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    Yes sure did
     
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  6. larrylarry

    larrylarry Well-Known Member

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    so would you get insurance when the contract goes unconditional or days before settlement? this is pretty freaky.
     
  7. Xenia

    Xenia Adelaide Property Manager Business Member

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    We advise our purchasers to take out house insurance just after cooling off period as a precaution and I guess this here is the precaution.
     
    Last edited: 10th Nov, 2015
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  8. Marg4000

    Marg4000 Well-Known Member

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    Read the first post. You need it as soon as you sign the contract.
    Marg
     
  9. larrylarry

    larrylarry Well-Known Member

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    Thanks. I missed that bit. I panicked when i see the words "house burnt down". @Xenia yes, i agree.
     
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  10. Bran

    Bran Well-Known Member

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  11. Kangaroo

    Kangaroo Well-Known Member

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    How about a townhouse or strata titled unit ? Do I need to contact anyone to change the building insurance to my name ? Just got a TH but not settled yet. Fingers crossed !
     
  12. Scott No Mates

    Scott No Mates Well-Known Member

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    Queenslanders, you're a strange lot. Able to pass the risk to the purchaser before settlement.

    A little more straightforward elsewhere - you don't have an insurable interest until your name's on title.
     
  13. Rixter

    Rixter Well-Known Member

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    I've been putting a clause in my contracts that over rides the QLD standard T&C's, that the property remains at risk to the vendor until such time as settlement is effective.
     
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  14. Mumbai

    Mumbai Well-Known Member

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    Burned down a day before settlement! Suspicious mucho_O
     
  15. Beanie Girl

    Beanie Girl Well-Known Member

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    What if the Buyer still wants to go through with the purchase but claim on the insurance?
    Can the insurance company build the buyer a new house or payout the buyer the amount insured?
    Even if the dwelling is no longer habitable or indeed no longer even there? Burnt to the ground, burnt to a cinder, gone kaput!
     
    Last edited: 10th Nov, 2015
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  16. D.T.

    D.T. Adelaide Property Manager Business Member

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    Surprised the vendor would accept that.
    Be interested to see the outcome if it was ever tested. It might be ruled invalid if it goes against the Act (just because someone signs something doesn't mean you can contravene what the legislation says).

    Not really necessary though - just organise insurance from day dot.
     
  17. Ed Barton

    Ed Barton Well-Known Member

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    Mumbai, I'm sorry to hear out about your fire. Shh Ed, it's tomorrow.
     
  18. Rixter

    Rixter Well-Known Member

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    There's no legislation that states otherwise. My solicitor is the one who brought it to my attention and advised to do so. I'm aware of other solicitors advising the same.

    Its done to CYA for the very reason provided in OP to keep the risk & claims onus back on the vendor .
     
    Last edited: 11th Nov, 2015
  19. RPI

    RPI Property Lawyer, Town Planner Business Member

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    The vendor has, or should have insurance anyway so no big deal for them. If you are buying an old property then you may be better to leave as is, in the unlikely event it burns down you get a vacant block and a chq big enough to build new or you could re sell straight away vacant and come out ahead.
     
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  20. RPI

    RPI Property Lawyer, Town Planner Business Member

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    Buyer can choose to settle and insurer pays them. In lot of circumstances the buyer will be better off settling- vacant lot and chq for new build should = significantly more than purchase price