Buyers Rights after Exchange

[MollyHoney]

Hello,
We are in the middle of purchasing a property. The exchange has happened early Jan and the completion was supposed to happen 9 days later as suggested by our solicitor.
However, 2 days before completion we got an email saying that there has been a pipe burst in the property and some damage as a result. We checked it out and the ceilings had come down in a few rooms, wet flooring carpets, and bubbles in the wall. As a first we were told since it's after exchange the seller isn't liable for insurance so we had to contact ours. When we contacted our insurance they said since we haven't lived in the property we cannot claim anything. However, after a bit of pestering they said the sellers insurance will need to put in a claim request with them and then they would pay for 30percent for the claim.
In the meanwhile the sellers offered to pay 10k for the damages to go ahead with completion . We agreed. However , we had to inform our lenders about this damage. They said we cannot just take money from the sellers and it could be related to money fraud. The lenders have now asked for the seller to repair the damage and then they will make a decision on if they want to proceed.
We thought of checking if the sellers would just do the work instead of giving us the money and they seemed to hav been on the same page. However, we understood from the agent today that they have decided to seek advice from a barrister. We don't understand why. We are the ones at risk with the possibility of the lender not giving us a mortgage and us loosing our entire deposit.
Our contract states that the seller is not liable for insurance after exchange. But also that the house has to be in the same physical state that it was at exchange for completion to take place. We had been to the house before exchange and it was fine.
We are under a lot of stress now as we don't know how to proceed. Don't think we can pull out but the seller can just take their time.in the meanwhile the house we will ultimately need to buy is sitting in wet condition. It just seems so unfair that we have to bear all the pain to a house that we don't even have keys to.

Has anyone been in this scenario between exchange and completion? How has it resolved?

Was the house occupied at the time? I would expect both insurers to liaise over it and your solicitor should advise.

You should insure for buildings insurance in the new property from exchange of contracts. Your existing home insurer would have added it to the policy for a month or so if you asked them to.

Did you not do that? Your solicitor should have advised you too.

We have had almost the same scenario. We exchanged 10 Jan. However we had a Key Undertaking to do some work before exchange as the sellers have left the country.

Our solicitors told us it was our responsibility to insure the house after exchange and they are now dealing with the claim. Did you take out buildings insurance? The liability after exchange lies with you.

Hello..yes we do have building insurance on exchange. But they say we do not live in the house and so cannot claim it. The only way we can get some support through our insurance is if we get the sellers insurance to contact our insurance to make a claim .

@Paddingtonscaresme did your insurance help? As ours keep saying since we haven't lived there they can't do anything

I think I would be challenging your Insurance Company.

If you declared it was a new property that you were insuring at the point of Exchange and would not be living in until Completion, they don’t have a leg to stand on.

Even if you didn’t make that declaration I understood that most Policies allow a house to be left empty for a period of 30 or 60 days.

They did eventually. We had a document which confirmed we'd take out a full policy after completion but they would cover us for free between exchange and completion. (We did ot though the mortgage co which is why they offered it free).

However when we called to claim they said we weren't covered until after completion despite the policy clearly stating it included cover between the two. It was mentioned 3 times, once as a page headline.

It took DH FOUR hours on the phone and only after did he threaten legal action did they confirm we were covered. And it's now being dealt with.

Saying you're not covered because you're not living there makes no sense as long as you took out specific "between exchange and completion" cover because no one moves in after exchange.

Go back to your insurance and look through your policy. Many people have buildings insurance for properties they aren’t living in.

Only way to know what you were covered for is to look at your policy.

@Paddingtonscaresme @Trolllol
So our insurance doesn't specify anything about what happens between exchange and completion so this could be something we can't argue about with insurance

They don't have a particular line saying we have to live in the house however the definition of home is our main residence which is still not the property we are supposed to buy.

So you didn't take out specific insurance? That might make a difference unfortunately.

@Paddingtonscaresme no...we were advised to have buildings insurance on exchange which we did. We called them up as we needed to make a note of the lender..we may have mentioned that we are taking the insurance from exchange then but honestly am not sure now .

Were the vendors living in the property at the time or is it unoccupied/probate?

@LIZS it was probate and unoccupied from what we gathered.

Which may be the issue if insurers were not aware.

@LIZS that may be the case. But we did tell our insurance we weren't sure as the property is still the sellers.

“There are specialist policies that offer short-term buildings insurance between exchange and completion. Make sure you tell the insurance provider whether the property is vacant or still occupied by the seller, plus the planned completion date.

A temporary policy can have some advantages. It could make it easier to have a combined buildings and contents policy starting on the same date. You might also avoid the issue of altering your home insurance policy to include contents on completion – or paying for contents insurance that’s not needed.

If you opt for a standard policy, you’ll need to make it clear to the provider that you’re not living in the property yet. ”

A quick grab off google. I think you probably need legal advice one this one!

@Paddingtonscaresme we are speaking with our insurance again to.undrstand if there is anything they can help with.
Can I ask if this has caused any issues with the lenders? As, if the insurance doesn't agree we will need to pay for the repair work but only want to do this after completion so that we have access to the property. But completion can't happen until the lender agrees and this has been paused till repairs are done.
Just trying to understand how lenders can proceed if we show the quotes of repair and proof of funds.
TIA

@MollyHoney
Our solicitors have had to let the lender know in case it affects the value of the property. This doesn't. It's a mess and a pain but doesn't affect the actual structure so we're OK. We had to provide a quote and a report though.

@Paddingtonscaresme thank for getting back. This is very helpful.
Our lender has asked for a report and quotes as well. Would this be the ones that a normal contractor provides? As this was our plan.

Also was this sufficient for the lender to release the funds? Or are they awaiting the repair work to be completed?

There is no structural damage as per the one contractor who had a look at the place. Mainly flooring and ceilings.

Sorry just seen this. Yes, we provided a report from our plumber and a quote from the builder. Unfortunately we're still waiting for the lender to approve it. It looks likely we'll have to delay completion which was supposed to happen 17 Feb. We have to give our buyers 10 days notice for completion which would mean tomorrow and we still haven't heard that the lender will agree. In our case this was 100% caused by the sellers who left the country turning off the heating in Sep and the recent sub zero temperatures causing the pipe burst. It was so avoidable and has caused so much stress. If the lenders say no, I don't know what happens.

@Paddingtonscaresme thank you for updating this. I completely understand the stress as it's the same in our house as well. The only good thing is we are first time buyers so no chain involved.

Our sellers said they would help with some fixing costs but haven't confirmed much so still waiting to get quotes. But we probably would need to put in the money to fix and wanted to complete before doing any work. But again the lenders need to agree which looks like will take a while.

Again, not sure if lenders will agree to go ahead without fixing the damage? Are just reports and quotes enough?

@MollyHoney They haven't said (yet) that they need anything more so we hope those reports are enough.

Just me that would be suspicious that this happened after exchange? I guess it doesn’t really matter as hard to prove.

Really hope you can get this sorted out soon.

We sold a property that was empty and had to have specialist insurance even as the owner. We were able to insure for a certain amount of time with the existing insurer and then we had to change at great expense to a specialist.

@Paddingtonscaresme thanks..we will try the same and see what happens. Just awaiting the sellers to see how they want to proceed.

Hope things turn out fine for you and the lenders get back soon.

@Tulipvase thank you. We are just awaiting the sellers to get back for now as they had proposed helping with the repairs but seem to have gone to a barrister for advice at the moment. So not sure what they wish to do.