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What happens if a house burns down between exchange and completion?

Property Saviour » Force Majeure » What happens if a house burns down between exchange and completion?

What happens if a house burns down between exchange and completion? This is a question that can keep homebuyers up at night, especially if they are new to the process of buying or selling a home.

In our experience, when selling an inherited property, disagreements with beneficiaries (particularly those left out of the Will) or a disgruntled buyer can set a house on fire.

The good news is that measures are in place to protect both parties involved. Here’s what you need to know.

Table of Contents

The Responsibility Shifts to the Buyer

Once contracts are exchanged, the buyer is contractually obligated to purchase the property, even if it burns down or is severely damaged before completion. This means that the buyer is responsible for the property from the moment of exchange, even though they do not yet own it.

This is why it is essential to have buildings insurance in place from the date of exchange, as it will cover any damage or loss that occurs during this period.

What happens if you have no insurance?

Insurance Requirements

Most mortgage lenders require buyers to have buildings insurance in place from the date of exchange, as it protects their investment in the property.

This insurance will cover the property against damage or loss, including fire, flood, and other risks. Some insurers offer specialized policies that cover the period between exchange and completion, so it’s essential to shop around and find the right policy for your needs.

What Happens if the House Burns Down?

If the house burns down or is severely damaged between exchange and completion, the buyer is still obligated to purchase the property at the agreed-upon price. The buyer can then claim on their insurance policy to cover the cost of repairs or rebuilding.

In some cases, the seller may be liable for any damage caused by their actions or negligence, but this would need to be proven in court.

In our experience, most buyers walk away hoping the seller won’t sue them because litigation is expensive.  You need to know what insurance companies do after a fire.

In any case, you can sell your fire-damaged house to us once your insurance claim has been settled.

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What happens if a house burns down between exchange and completion?
Buyer should be made aware to insure the property at exchange of contracts. Most aren't so don't feel the need to insure leaving the seller at risk.

Who should make a claim?

So who should make a claim?  This table explains insurance responsibility:

StageResponsibilityInsurance
Before ExchangeSellerSeller’s Insurance
Between Exchange and CompletionBuyerBuyer’s Insurance
After CompletionBuyerBuyer’s Insurance

What if the seller doesn't insure the property?

The buyer should ensure that the seller has insurance in place until completion, as they will be responsible for any damage that occurs during this period.

Can the buyer cancel the purchase if the house burns down?

No, the buyer is contractually obligated to purchase the property, even if it burns down or is severely damaged

What if the seller causes damage to the property between exchange and completion?

The buyer may be able to claim against the seller for any damage caused by their actions or negligence.

Can I sell fire damaged home?

Once your insurance claim is settled and you are ready to make a fresh start, why not sell your fire damaged home to us?

We will renovate it and make it a home again while you move on with your life.

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