When storms dam­age prop­erty be­fore set­tle­ment

Whitsunday Times - - REAL ESTATE -

IN QUEENS­LAND, ex­treme weather events are a reg­u­lar oc­cur­rence and this raises a se­ri­ous ques­tion around prop­erty sales and trans­fer of risk: “What hap­pens if my house has sold but not yet set­tled and a cy­clone dam­ages or de­mol­ishes my house? Does the sale still go ahead and who pays for the dam­age?”

Ac­cord­ing to the stan­dard terms of the REIQ contract of sale, risk trans­fers to the buyer at 5pm on the next busi­ness day. So, if the contract was signed at 2pm on Mon­day, April 10, the risk trans­fers to the buyer at 5pm on Tues­day, April 11. If the contract is signed on Satur­day, the risk is trans­ferred at 5pm on the fol­low­ing Mon­day (provided Mon­day is not a pub­lic hol­i­day. If it is, then risk trans­fers at 5pm on Tues­day).

This means risk of dam­age to the prop­erty moves from the seller to the buyer, and thus the re­spon­si­bil­ity for re­pairs. Hav­ing said this, the seller still has obli­ga­tion to main­tain the prop­erty up un­til set­tle­ment.

So, as a buyer, when you have been ad­vised that your of­fer has been ac­cepted and signed by the seller it is pru­dent to ar­range your in­sur­ance for the new prop­erty im­me­di­ately. This is a sim­ple process and can usu­ally be han­dled over the phone with your in­sur­ance com­pany.

In ar­eas that are prone to cy­clones it is also pos­si­ble to in­clude storm and cy­clone con­tin­gency clauses into the contract, by ne­go­ti­a­tion.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.