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Risky Business - Obtaining Insurance when Buying



One of the most common questions I am asked as a Conveyancer is “why do I need insurance over a property that is not mine?”


In accordance with Clause 8.1, of the Standard Terms of the Contract for the Sale, the property is at the Buyer/s risk from 5:00pm on the first business day after the Contract Date.


What does that mean?


This means that the Buyer is required to obtain suitable insurance cover over the property, to protect themselves, should a natural, accidental or man-made disaster occur, such as an inclement of weather. If this was to occur, you would be required to complete the Contract, and make the necessary claims through the Insurer.


An example would be in the event of a fire. If the property was to suffer significant interior damage, the Buyer/s would need to liaise with the insurer to have the repairs conducted.


Can this be negotiated? The simple answer is yes.


If you have concerns with this Clause, you can negotiate, prior to the Contract’s execution, to have the clause struck out or alternatively the insertion of a Special Condition which states that the property is to remain at the Seller/s risk until settlement has occurred.


Contact us now for a suitable Special Condition to be drafted.


Are there any exceptions?


The Seller has a responsibility, in accordance with Clause 8.3(1), as follows:

“use the property reasonably until settlement. The Seller must not do anything regarding the property or Tenancies that may significantly alter them or result in later expense for the Buyer”.

This means that the Seller cannot remove a door or install a pool, without the Buyers express permission. This also applies if the Buyer/s find that a stove, for example, was working on their initial inspection but has now ceased working.


If you find that there is damage or that included Chattels have ceased working, at the final inspection, you MUST contact our office to negotiate any repairs, prior to settlement. Sadly, if you do not, there will be no recourse once settlement has completed.


To ensure this does not happen:


  1. On your first inspection test all appliances and Chattels. Make note of all working appliances; and

  2. At the Building and Pest Inspection look for any damage or and ensure all Chattels are working. If damage is found, clarify with the Agent immediately; and

  3. On your final inspection, on the morning of settlement, thoroughly inspect the property and Chattels. This includes turning all Chattels on, for example the air-conditioner or stove; and ensure that it is in good working order.


Disclaimer: This publication is not intended to be comprehensive, nor does it constitute legal advice. We are unable to ensure the information is current and there is no guarantee in relation to accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this publication.


© Richard Hoare & Co Solicitors

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