Insuring Before Property Settlement
Avoid Settling on a Damaged Property.
In this weeks 'The Counsel You Keep' - John Gallagher from Argon Law discusses purchasing insurance before a property settlement.
John outlines the risks involved in signing a contract to purchase a property and not immediately insuring against damage. The risk arises between the periods of signing and settlement. Within this period, a seller isn't necessarily obliged to repair or insure for damage. John highlights the existing Legal options and provisions for a buyer, as well as useful tips to ensure against being forced to settle on a damaged property.
Always ensure you seek professional advice for your specific circumstances, the above is intended to be general in nature.
You’ve signed a contract to purchase a property but haven’t settled yet. You may not even have your finance approved yet but you’re told you should take out insurance!
There are sound legal reasons for this. As soon as you sign a contract to purchase a property you do have a legal risk worth insuring against, regardless of what the contract says.
The risk is of course that the property is damaged between the time you sign the contract and the time for settlement.
The seller isn’t necessarily obliged to repair that damage or to insure for it.
And even if the seller had such an obligation, should you trust them to do it.
The Qld Property Law Act does entitle a buyer to terminate a contract if the property is “destroyed by fire storm or tempest so as to be unfit for occupation” but in less extreme circumstances or where the damage is caused in some other way, you could face the prospect of having to settle on the purchase of a damaged property.
Even if you did have the right to terminate due to the damage, if you have the benefit of insurance, the property may remain a good investment for you and you could still chose to proceed.
So to summarise:
- as soon as you sign the contract, you absolutely do have an insurable risk;
- don’t trust the seller or anyone else to protect you from that risk; and
- take out property insurance immediately to be sure that your investment remains a sound one.
Make sure you have good advisors. Get your structure set up before you sign a contract and be alert to ways in which your costs can be reduced.
If you have any queries about insuring your property before settlement or any other aspect of property law then please contact us on 07 5443 9988 or [email protected].
Argon Law is a Sunshine Coast law firm based in Maroochydore. We are commercial lawyers and property lawyers and are eager to assist you in any way we can.
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