A Nightmare on Elm (or any other) Street…
It is the month of October and in the spirit of Halloween, a “frightening” tale is in order…
As the buyer, it is exciting and reassuring when you finally exchange contracts on your purchase. The completion date is usually within sight and you start planning your moving arrangements, any development at the property etc. All is going well but then the worst happens. The night after exchange, the property catches fire and is destroyed beyond repair. Do you as the buyer bear the risk of any damage and are you still required to complete?
While it does depend on the terms of the contract, normally the buyer is responsible for insuring the property between exchange and completion. This means that the buyer takes on the risk of something happening to the property from the point of exchange.
Once contracts are exchanged, the buyer is also legally obliged to complete the purchase of the property, even if the property is damaged. If the buyer refuses to complete, the seller could rescind the contract, forfeit the deposit and claim damages, all of which could be costly for the buyer.
Unfortunately, the plight of a property is not as predictable as the ending of a horror movie and so buyers are well-advised to insure the property from the moment of exchange or (if the seller is insuring between exchange to completion) to request that their interest is noted on the seller’s insurance policy.
The above is a summary of the position on insurance so if you would like more information, please do contact our Property team at Foskett Marr Gadsby & Head LLP who are based in Epping and Loughton on 01992 578 642. Further details on http://www.foskettmarr.co.uk/index.php/our-team/commercial-property-solicitor-essex/ and http://www.foskettmarr.co.uk/index.php/our-team/residential-conveyancing-essex/