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Buying a property isn’t always a straightforward process, and one area that can cause confusion is the question of who is responsible for insuring it between the signing of the contract and settlement. There are differences in regulations between states, but the basics are as follows.
When it comes to property insurance, there can be some grey areas, but it’s important to understand your general obligations. Additionally, if both parties are insured throughout the entire process, it saves the headache should anything go wrong.
As the vendor, if there’s substantial damage to the property but the purchaser still wants to go ahead with the sale, you may need to consider a negotiation on price, or you may need to fix the damage before settlement. If you’re still insured, your insurance policy will cover the work needed.
For purchasers, if there’s substantial damage, you have the option to negotiate a price reduction or alternatively get out of the contract.
Importantly, it’s the vendor’s obligation to leave the property in the same condition it was in when contracts were signed, regardless of who holds risk over the property.
This is a complex area that can be hard to navigate without support, so it’s a good idea to talk to your Terry or Gail to gain a clearer understanding of how best to proceed and protect yourself.
For detailed advice about property insurance in your State, contact an experienced property lawyer.