Staring insurance cover from the moment you sign contracts

antiskeptic · 13-11-2020 1:43pm #1

I used a commercial level solicitor for a few house buys/sells - they were very much more clued in than run of the mill solicitors I used at other times.

They insisted (i.e. "if you don't take our advice you need to email us as to your free choice not to take our advice") I take out insurance cover on a property purchase from the moment of contract signing.

Their reasoning:

The contract you sign (and are required to complete on, on peril of court order) is to buy House X.

If House X suffers from water damage post-contract signing, it doesn't alter your contractual commitment to buy House X.

There is nothing in the contract which says you are buying House X without water damage. Obviously, this issue extends to the house burning down completely.

The point was that you are tied into a binding contract and should anything happen between contract sign and getting the keys, then you're at least partially on the hook.

And so ought to have cover in place for that eventuality. I followed that advice and got the insurance.

I've never been advised thus by any run of the mill solicitor. Then again, when I compare a conveyancing pro vs a run of the mill solicitor on any number of fronts, the latter falls down significantly.

Anyone else advised thus? Thought to flag since it doesn't cost you much to get the insurance. And that period between contract sign and keys got has the house very much in the hands of someone else. Big risk...

Dolbhad · 13-11-2020 10:59pm

antiskeptic wrote: »

I used a commercial level solicitor for a few house buys/sells - they were very much more clued in than run of the mill solicitors I used at other times.

They insisted (i.e. "if you don't take our advice you need to email us as to your free choice not to take our advice") I take out insurance cover on a property purchase from the moment of contract signing.

Their reasoning:

The contract you sign (and are required to complete on, on peril of court order) is to buy House X.

If House X suffers from water damage post-contract signing, it doesn't alter your contractual commitment to buy House X.

There is nothing in the contract which says you are buying House X without water damage. Obviously, this issue extends to the house burning down completely.

The point was that you are tied into a binding contract and should anything happen between contract sign and getting the keys, then you're at least partially on the hook.

And so ought to have cover in place for that eventuality. I followed that advice and got the insurance.

I've never been advised thus by any run of the mill solicitor. Then again, when I compare a conveyancing pro vs a run of the mill solicitor on any number of fronts, the latter falls down significantly.

Anyone else advised thus? Thought to flag since it doesn't cost you much to get the insurance. And that period between contract sign and keys got has the house very much in the hands of someone else. Big risk...

In our pre contract queries, our solicitor asked was the property insured at standard rates with any excess or premiums. She said if the house was not insured to insure it the minute contracts were signed. If not, it just needed to be insured before drawdown of funds. It is insured. She said that if something was to happen to the property it’s the normal course that the sellers would claim on their insurance. She did say to check the house could be insured before signing contracts and was not in an area of flood risk or subsidence and to be aware of any restrictions.

So I don’t think it’s unique to “commercial” solicitors and hope you were not paying over the odds for that advice.

Chris_5339762 · 14-11-2020 12:13pm

Its an odd one from me on the apartment I was selling... due to various reasons it took 15 months from signing of contracts to the buyer sending payment to my solicitor. Despite all warnings and legal actions (themselves delayed for Covid reasons).

I kept my insurance going during that time, just to be sure. Just in case I had a radiator leak or something because I had moved back to my parents house 250km away.

Yes I know, block insurance and everything like that is involved too, but its another layer to think about.

antiskeptic · 14-11-2020 12:59pm

Dolbhad wrote: »

In our pre contract queries, our solicitor asked was the property insured at standard rates with any excess or premiums. She said if the house was not insured to insure it the minute contracts were signed. If not, it just needed to be insured before drawdown of funds. It is insured. She said that if something was to happen to the property it’s the normal course that the sellers would claim on their insurance. She did say to check the house could be insured before signing contracts and was not in an area of flood risk or subsidence and to be aware of any restrictions.

I think the idea was to have your own insurance. Relying on anothers insurance doesn't necessarily cover you.

Let's say the now owner of the property didn't declare all that needed declaring at the time they got the insurance. They have a cert. But the cert, come claim time, is useless.

Or they are paying by installment but stopped paying installments. They have a cert but the cert is useless.

I've a mate whose got 10 points on his licence. He hasn't declared this to his insurance co. Which will mean his insurance will be void should he need to claim. He has a cert to display on his car window though.

That kind of thing.

So I don’t think it’s unique to “commercial” solicitors and hope you were not paying over the odds for that advice

Did your solicitor consider problems that might occur in another's insurance and the risk you would be exposed to in that event?

I think the commercial solicitor is dealing with big money and is used to ensuring all risks are covered (else his neck is on the line). And this trickled down to me .. someone buying a single property.

Dolbhad · 14-11-2020 3:12pm

antiskeptic wrote: »

I think the idea was to have your own insurance. Relying on anothers insurance doesn't necessarily cover you.

Let's say the now owner of the property didn't declare all that needed declaring at the time they got the insurance. They have a cert. But the cert, come claim time, is useless.

Or they are paying by installment but stopped paying installments. They have a cert but the cert is useless.

I've a mate whose got 10 points on his licence. He hasn't declared this to his insurance co. Which will mean his insurance will be void should he need to claim. He has a cert to display on his car window though.

That kind of thing.

Did your solicitor consider problems that might occur in another's insurance and the risk you would be exposed to in that event?

I think the commercial solicitor is dealing with big money and is used to ensuring all risks are covered (else his neck is on the line). And this trickled down to me .. someone buying a single property

There could also be something that can be covered on their insurance and not yours. Actually in the boat myself now. We are sale agreed and house needs a wall underpinned. The sellers are claiming through their insurance to underpin a wall. Now we have insurance lined up but it won’t cover subsidence because we are aware there is an issue with subsidence. Equally a lot of places got flood insurance 10 or 20 years ago in Cork but too many claims later, new purchasers can’t get the same insurance the sellers have.

I would not always assume your cover is better than the sellers. Also if the house burnt down between signing contracts and closing, it would
Be their insurance to cover it, not yours (our solicitor actually told us this happened to a client of hers before). The bank aren’t going to lend funds on closing to buy a house that no longer exists. If you have a subject to loan clause, you can get out of the contract.

You don’t want to start your insurance policy with a claim immediately going forward.

Equally can you guarantee your insurance will pay out? Our insurance said as we don’t legally own the house yet (just contracts signed so only a beneficial interest) that we have to be in the property within 30 days of the policy being activated for it to be valid. So we activated not and not in within 30 days it’s void. We haven’t activated the policy as sale doesn’t close until wall is underpinned and engineer signs of that the specs agreed have been met.

Dolbhad · 14-11-2020 3:22pm

Chris_5339762 wrote: »

Its an odd one from me on the apartment I was selling... due to various reasons it took 15 months from signing of contracts to the buyer sending payment to my solicitor. Despite all warnings and legal actions (themselves delayed for Covid reasons).

I kept my insurance going during that time, just to be sure. Just in case I had a radiator leak or something because I had moved back to my parents house 250km away.

Yes I know, block insurance and everything like that is involved too, but its another layer to think about.

Actually that’s a very good point. What happens if the apartment above you leaks cause damage to the apartment underneath. Who pays for that? Compared to the a leak in the main apartment building which block insurance should cover. Those apartments by Lee Fields in Cork have been in and out of court due to leaks with the main ceiling and fire defects as far as I am aware.

antiskeptic · 14-11-2020 5:30pm

Dolbhad wrote: »

There could also be something that can be covered on their insurance and not yours.

The issue is them not having insurance and you signing a contract to buy the property. You being obliged to fulfill the contract hasn't really anything to do with them having or not having insurance.

I would not always assume your cover is better than the sellers.

The point was, I gather, not to assume the seller has insurance. And not to assume the seller would/could make a claim on their insurance.

Insurance having nothing to do with a contract to fulfill you've signed

Also if the house burnt down between signing contracts and closing, it would
Be their insurance to cover it, not yours (our solicitor actually told us this happened to a client of hers before). The bank aren’t going to lend funds on closing to buy a house that no longer exists. If you have a subject to loan clause, you can get out of the contract.

I was thinking of a situation where you've not got an escape clause. Burnt down house X has the same legal description and title as not burnt down house X. That's what your buying, burnt down or not. It would seem.

Equally can you guarantee your insurance will pay out? Our insurance said as we don’t legally own the house yet (just contracts signed so only a beneficial interest) that we have to be in the property within 30 days of the policy being activated for it to be valid. So we activated not and not in within 30 days it’s void. We haven’t activated the policy as sale doesn’t close until wall is underpinned and engineer signs of that the specs agreed have been met.

I'm no insurance expert but the solicitors view was that things could get very.messy in the event anything untoward happened.

This is from England but our law derives from there often times. Probably the same thing I was told of by my solicitor.

Note, the property burnt post contract but the sale still closed according to contract and the new owner (poor them) claimed on the insurance they had taken out.

https://www.frettens.co.uk/site/library/frettensnews/Insuring_a_property_after_exchange_of_contracts

Chris_5339762 · 14-11-2020 6:02pm

Dolbhad wrote: »

Actually that’s a very good point. What happens if the apartment above you leaks cause damage to the apartment underneath. Who pays for that? Compared to the a leak in the main apartment building which block insurance should cover. Those apartments by Lee Fields in Cork have been in and out of court due to leaks with the main ceiling and fire defects as far as I am aware.

AFAIK, the block insurance won't pay because its not an issue with anything that the block insurance covers for. The "recipients" contents insurance doesn't cover enough in general, or only covers for "things" and not water damage.

I've heard of people personally suing the person whos pipes leaked in the apartment above them.

Dolbhad · 14-11-2020 6:18pm

Our solicitors advice was to put insurance in place at the point of signing contracts if the sellers had no insurance which I would agree with. However as I said the insurance company said we would
Need to be in the house within 30 days or it would be void so in reality there is the possibility a house isn’t covered.

Just going back your original point, I think insurance and enquiry about is part and parcel of a conveyance transactions so conveyance solicitors do check into it.

Not having a subject to loan clause is a debate for another day! But in reality I wouldn’t expect courts to force you to buy the house if a seller tried to enforce the contract in courts (and I’m from a legal background).

In the case of the house burning down, she said the purchasers withdraw from the contract with no issues and sellers claimed on their policy to have the house rebuilt.

antiskeptic · 14-11-2020 6:36pm

Dolbhad wrote: »

Our solicitors advice was to put insurance in place at the point of signing contracts if the sellers had no insurance which I would agree with. However as I said the insurance company said we would
Need to be in the house within 30 days or it would be void so in reality there is the possibility a house isn’t covered.

Just going back your original point, I think insurance and enquiry about is part and parcel of a conveyance transactions so conveyance solicitors do check into it.

Not having a subject to loan clause is a debate for another day! But in reality I wouldn’t expect courts to force you to buy the house if a seller tried to enforce the contract in courts (and I’m from a legal background).

In the case of the house burning down, she said the purchasers withdraw from the contract with no issues and sellers claimed on their policy to have the house rebuilt.

"After exchanging contracts a fire caused extensive damage to the property but the sale completed according to the terms of the sale contract. The buyer claimed under his policy with NFU"

And

"This case confirmed that there is no legal requirement for the seller to insure a property between exchange and completion. Common law provides that the risk in a property passes to the buyer on exchange of contracts unless the contract provides otherwise."

I take all that to mean the buyer completed the contract and claimed for the fire damage from their insurance - them being the risk holder upon exchange of contracts.

Appreciate your legal background but the commercial solicitors I used (who would be used to the actuality of these cases) more or less insisted I get insurance upon contract signing.

Many will complete within 30 days of contract. Just heads upping in any event.

Dolbhad · 14-11-2020 9:00pm

antiskeptic wrote: »

"After exchanging contracts a fire caused extensive damage to the property but the sale completed according to the terms of the sale contract. The buyer claimed under his policy with NFU"

And

"This case confirmed that there is no legal requirement for the seller to insure a property between exchange and completion. Common law provides that the risk in a property passes to the buyer on exchange of contracts unless the contract provides otherwise."

I take all that to mean the buyer completed the contract and claimed for the fire damage from their insurance - them being the risk holder upon exchange of contracts.

Appreciate your legal background but the commercial solicitors I used (who would be used to the actuality of these cases) more or less insisted I get insurance upon contract signing.

Many will complete within 30 days of contract. Just heads upping in any event.

I’m a bit confused at your comment. My conveyance solicitor had insisted on the same thing as your commercial solicitor especially if there is no insurance in place. Your original post was that you felt your advice was unique to having a commercial solicitor act for you rather than a conveyance solicitor. I was merely pointing out that it’s not the case. We both seem to have the same experience with our solicitors. I was just hoping you weren’t being charged a lot more for the advice than I’m being charged.

Granted my practice of law is not conveyance but
in regards to U.K. caselaw, also remember both parties are bound by the general conditions of sale 2019 and replies to objections and requisitions with your contract which would impact situations like the above. General condition 39 deals with risk between signing contracts and completion and does not absolve the seller. It’s a condition automatically in Irish contracts to cover the situation where purchaser can withdraw.

I agree with your point that insurance is something to be looked into and insurance is set up on signing contracts. And definitely set up if seller has none in case you do want to go ahead and claim on it and try complete the contract.

antiskeptic · 15-11-2020 1:18pm

Dolbhad wrote: »

I’m a bit confused at your comment. My conveyance solicitor had insisted on the same thing as your commercial solicitor especially if there is no insurance in place. Your original post was that you felt your advice was unique to having a commercial solicitor act for you rather than a conveyance solicitor. I was merely pointing out that it’s not the case. We both seem to have the same experience with our solicitors. I was just hoping you weren’t being charged a lot more for the advice than I’m being charged.

Granted my practice of law is not conveyance but
in regards to U.K. caselaw, also remember both parties are bound by the general conditions of sale 2019 and replies to objections and requisitions with your contract which would impact situations like the above. General condition 39 deals with risk between signing contracts and completion and does not absolve the seller. It’s a condition automatically in Irish contracts to cover the situation where purchaser can withdraw.

I agree with your point that insurance is something to be looked into and insurance is set up on signing contracts. And definitely set up if seller has none in case you do want to go ahead and claim on it and try complete the contract.

I think I was confused by this:

"In the case of the house burning down, she said the purchasers withdraw from the contract with no issues and sellers claimed on their policy to have the house rebuilt"

The English link appears to indicate that irrespective of the house burning down, the buyer must complete as there is a contract to complete. The buyer was the one to claim on their insurance for the cost of reinstatement of the house. Your solicitor has the buyer allowed to withdraw from the contract.

So which is it? If the buyer can withdraw, why would they need insurance at the point of contract signing.

Bar for an up to date statement from the sellers insurance co. the insurance status of the seller can't be known. I've not heard of such certification being sought. Is it sought?

Confused..

Dolbhad · 15-11-2020 2:20pm

antiskeptic wrote: »

I think I was confused by this:

"In the case of the house burning down, she said the purchasers withdraw from the contract with no issues and sellers claimed on their policy to have the house rebuilt"

The English link appears to indicate that irrespective of the house burning down, the buyer must complete as there is a contract to complete. The buyer was the one to claim on their insurance for the cost of reinstatement of the house. Your solicitor has the buyer allowed to withdraw from the contract.

So which is it? If the buyer can withdraw, why would they need insurance at the point of contract signing.

Bar for an up to date statement from the sellers insurance co. the insurance status of the seller can't be known. I've not heard of such certification being sought. Is it sought?

Confused..

Ah. I was saying in Irish law, under the general condition of he contract for sale at condition 39, the seller still carries the risk between signing of contracts and sale unless it’s damage in the normal wear or tear nature or purchasers causing the damage.

So say the house burns down, you can withdraw from the contract. If both parties have insurance, it’s more than likely the sellers would claim on theirs but if a purchaser didn’t want to wait, they can withdraw from the sale.

The reason it appears to be important for the purchaser having insurance at the point of signing contracts is if seller doesn’t have insurance in place and house burns down, then purchaser can claim on their insurance or withdraw. But if nobody has insurance than purchasers only option is to withdraw.

Unless of course the seller has a clause in the contracts that says they delete general condition as to risk (which most bank sales do), than you will have an issue as a purchaser.

I hope that makes my point clearer but if not we can say we disagree! However I do think your very knowledgable as a purchaser.

In relation to the insurance cert, it’s not really provided. If a sellers solicitor confirms insurance is in place, purchasers can rely on that.

With our current issue on the house we are sale agreed on, she had asked for the most recent insurance certificate to ensure it covers subsidence just so we weren’t wasting our time waiting on their insurance company to come back and say they will cover the works.

antiskeptic · 15-11-2020 2:42pm

Dolbhad wrote: »

Ah. I was saying in Irish law, under the general condition of he contract for sale at condition 39, the seller still carries the risk between signing of contracts and sale unless it’s damage in the normal wear or tear nature or purchasers causing the damage.

So say the house burns down, you can withdraw from the contract. If both parties have insurance, it’s more than likely the sellers would claim on theirs but if a purchaser didn’t want to wait, they can withdraw from the sale.

The reason it appears to be important for the purchaser having insurance at the point of signing contracts is if seller doesn’t have insurance in place and house burns down, then purchaser can claim on their insurance or withdraw. But if nobody has insurance than purchasers only option is to withdraw.

Unless of course the seller has a clause in the contracts that says they delete general condition as to risk (which most bank sales do), than you will have an issue as a purchaser.

I hope that makes my point clearer but if not we can say we disagree! However I do think your very knowledgable as a purchaser.

In relation to the insurance cert, it’s not really provided. If a sellers solicitor confirms insurance is in place, purchasers can rely on that.

With our current issue on the house we are sale agreed on, she had asked for the most recent insurance certificate to ensure it covers subsidence just so we weren’t wasting our time waiting on their insurance company to come back and say they will cover the works.

Tbh my knowledge extends to experience of a number of purchases and sales as an occasional flipper.

I opted to pay for a pricier solicitor when my dealings with general practice solicitors proved dissatisfactory. Having investor money in the pot meant I couldn't risk part/obscure/uncertain answers. Which had been my experience.

No solicitor (bar the pricey one) told me I ought have insurance. You speak of buyer insurance as a sort of buyer option: you could chose to proceed with a purchase of a family home that burnt down with the aim of rebuilding it (as opposed to pulling out)

I was more thinking of any liability attaching to me - such as risk transfer (which you don't seem to think applies in Ireland).

Or the house burning down due to carelessness on the part of my surveyor or some such. Leaves a window unlocked, gurriers get in.

Given amounts involved and the probable uncertainty as to precisely what could land on your plate, insurance at contract signing (providing the cover will stretch from there to closing) appears the way to go. Relative pennies to cover potential total loss.

Dolbhad · 15-11-2020 8:22pm

antiskeptic wrote: »

Tbh my knowledge extends to experience of a number of purchases and sales as an occasional flipper.

I opted to pay for a pricier solicitor when my dealings with general practice solicitors proved dissatisfactory. Having investor money in the pot meant I couldn't risk part/obscure/uncertain answers. Which had been my experience.

No solicitor (bar the pricey one) told me I ought have insurance. You speak of buyer insurance as a sort of buyer option: you could chose to proceed with a purchase of a family home that burnt down with the aim of rebuilding it (as opposed to pulling out)

I was more thinking of any liability attaching to me - such as risk transfer (which you don't seem to think applies in Ireland).

Or the house burning down due to carelessness on the part of my surveyor or some such. Leaves a window unlocked, gurriers get in.

Given amounts involved and the probable uncertainty as to precisely what could land on your plate, insurance at contract signing (providing the cover will stretch from there to closing) appears the way to go. Relative pennies to cover potential total loss.

Just for some information I am attaching the link to the general conditions of sale 2019

https://www.lawsociety.ie/globalassets/documents/committees/conveyancing/precedents/2019/2019-conditions-of-sale.pdf

You will see general condition 39 explains the role of risk and 40 has some exclusions. Now general private residential sales would keep most of the conditions in but you may have been subject to removal of risk from the sellers side which again makes insurance necessary to take out on signing contracts.

I’m sorry to hear you have general conveyance solicitors who haven’t advised you of insurance. My experience hasn’t been that so maybe it’s more getting the right solicitor rather than commercial/conveyance one. And I say that as I work more in the commercial side of things.

But I’d pay whatever a good solicitor asks for rather than cutting corners and getting a crap one.

antiskeptic · 17-11-2020 10:23pm

Dolbhad wrote: »

Just for some information I am attaching the link to the general conditions of sale 2019

https://www.lawsociety.ie/globalassets/documents/committees/conveyancing/precedents/2019/2019-conditions-of-sale.pdf

You will see general condition 39 explains the role of risk and 40 has some exclusions. Now general private residential sales would keep most of the conditions in but you may have been subject to removal of risk from the sellers side which again makes insurance necessary to take out on signing contracts.

I’m sorry to hear you have general conveyance solicitors who haven’t advised you of insurance. My experience hasn’t been that so maybe it’s more getting the right solicitor rather than commercial/conveyance one. And I say that as I work more in the commercial side of things.

But I’d pay whatever a good solicitor asks for rather than cutting corners and getting a crap one.

Like the on here some time ago who bought a house only to discover the front garden had already been compulsory purchased by the council for road widening. It was actually drawn in on the land registry of the property!

dev_ire · 17-11-2020 10:48pm

Dolbhad wrote: »

But I’d pay whatever a good solicitor asks for rather than cutting corners and getting a crap one.

Oh but you can pay a lot and get a crap one too.

Staring insurance cover from the moment you sign contracts

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