My sister has just purchased an IP and some damage has occurred to the manhole (she noticed it up when doing the inspection prior to settlement).
The RE Agent said that this must have been casued by either her Termite Inspector or her building Inspector, as the property was sitting empty, but as neither reported damaging the manhole, it’s anyone’s guess as to which it was.
Further the RE Agent said that the current owner isn’t liable as her was her inspectors that caused the damage and that she should get it fixed out of her insurance. Well, as it hadn’t settled yet she hadn’t taken out insurance yet. The RE Agent said insurance should be taken out from the time that an offer is accepted, not from when the property becomes hers at settlement.
Now in this case the damage is small and she can fix it herself but I’d like to know others opinions. Should the current owners insurance cover it? Should we (investors) be taking out insurance as soon as offer is accepted? (I normally take it during the week prior to settlement unless I’m taking pre-possession then I take it out earlier).
Opinions please…
PK
I always take insurance out once I signed the contract ie. offer accepted.
If its only minor damage – just fix it yourself or get it fixed and pay for it.
Dont sweat the SMALL stuff. You wont last long in this game if you stress over small stuff and dont see the bigger picture.
The law is that any insurance held by the vendor between signing & settlement is for the purchaser’s benefit. Therefore, if the vendor doesn’t have insurance, it’s your responsibility (also your responsibility to renew insurance if it runs out between signing & settlement).
(“,) $$$ HoLdEnCoMmOdOrE $$$ (“,)
Yack,
LOL, Not sweating the small stuff, just want to learn the correct way before something “big” occurs. Much cheaper to learn with a small mistake before a big one happens. Will be fixed ourselves.
Holden commodore, thanks for the legal standpoint, it is something I didn’t know.
Regards both,
PKGood questions,
I am in the process of settling atm, and hadn’t thought to get insurance until we took ownership.Thanks
J
Hi guys, read your contracts, I think you will find that they state (the QLD REIQ one does definitely) that insurance is the responsibility of the purchaser from 5pm on the next business day after signing of the contract.
Cheers
CDCastleDreamer
IN NZ its different – the purchaser is responsible for insurance from the day the property settles.
CastleDreamer
Thanks Milkmanjnr, at least someone else admits to not knowing this!
I’ve just gone back and read our last contract and it’s not in that unless it’s part of “The 2002 General Conditions” as the offer and acceptance states that these general conditions form part of this contract so perhaps that is the case. (This is a standard REIWA offer and acceptance form).
Anyway, main thing is that a lesson is learnt at minimal cost. In future I will get insurance as soon as offer is accepted just to be on the safe side.
Must admit though, if I was selling my home, I wouldn’t cancel insurance when an offer is accepted, I’d wait until settlement had occurred. Would play it safe both ways.
<<<Must admit though, if I was selling my home, I wouldn’t cancel insurance when an offer is accepted, I’d wait until settlement had occurred. Would play it safe both ways.>>>
So would I.
Hi,
Although I agree you do seem to have to get insurance immediately after signing the contract if you want to be fully covered, I just want to comment that I think this rule stinks. How is it fair that while waiting for settlement, the current owner can continue to collect rent from existing tenants and yet, if the tenants damage anything in the meantime, you (the purchaser) have to get it fixed through YOUR insurance?! Seems to me that during the settlement period, the seller gets all the benefits of ownership and none of the associated responsibilities!!
Anastasia
Specify it in the contract then. “Vendor is responsible for insurnace untill settlement”. Quite easy…
Rgds.
Lucifer_au
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