Late settlement plus burglary- insurance question

[Bluekiwi]

I have a property I am buying and am going to settle late due to finance issues.

So currently both vendor and me have insurance on the property.

Burglary has taken place and some damage, I would prefer to do the insurance claim myself to make sure the fix up is done correctly.

Since we both have it insured, can I go down this route, or does he have to do the insurance claim as he is still the actual owner.

[reepr]

Usually claim forms have a question that asks if the property damaged is insured by any other party. So you could either query your insurance company, or fill in a claim form detailing the other party and let them sort it out.

[skid]

I personally would rather see his insurance premiums go up rather than mine.
If their work is not up to scratch,then negotiate on the property.
Are you sure you can convince your insurance co.to do a better job?
How will things go with your insurance co. if something happens 1yr down the track and they see you have just made a claim a year ago?
Its nice to think that would have no affect but ..well insurance co.s can be unpredictably unfair sometimes.

[howick-kev]

If the property is not in your name yet you cannot put in a claim, the theory that you both insure the same asset is incorrect, pre-settlement you are only insured for your vested or financial interest.

[Xav]

Firstly, it's not illegal for two parties to insure against the same risk. It's not even illegal for the same party to insure against the same risk more than once. You just can't profit from it (the insurers share the cost).

BlueKiwi, this is not a new situation for you (although you may not have realised it). When you have purchased mortgagee sales in the past and insured the property from the date of the agreement, it was probably double insured (assuming the owner was still paying their insurance).

I would be surprised if you did not have an insurable interest in the property, particularly if you have paid a deposit. Again this is analogous to you purchasing at mortgagee sale and needing to insure from the date of the agreement. You do not have to own the property to have an insurable interest in it. Another example would be a mortgagee choosing to insure a property because the owner is not paying their insurance.

Your conveyancing lawyer will no doubt have a view on it, but I think the best way is to have the vendor assign their claim to you (with their insurance company's consent) and then you can control both claims.

You should check the terms of your insurance policy, often there is an exclusion for claims being made for events that occurred within 24 or 48 hours of the policy being taken out and that may prevent you making a claim depending on when the damage was done.

[Bluekiwi]

My insurance does not kick in till next week, I have found out, but the game moves on.

Hi,

Please see below the response from the vendor’s Solicitor re the damage at the property.

They are not correct that they do not have to remedy the defects which happened after the original settlement date.
The Agreement states that “the property and chattels shall remain at the risk of the vendor until possession is given and taken”.

The next question is whether or not the damage has rendered the property untenantable.
Your remedies under the Agreement hinge on this question.
Perhaps you should contact the agent and arrange a visit to the property (maybe over the weekend), so that you can determine whether the property is tenantable or not?

Regards,
My Solicitor

Vendor Solicitor
Dear
Please see the below email from our clients.
We are instructed that our clients will not remedy the defects happened after the original settlement date. If your clients do not settle by 07 November 2013, the agreement will be terminated.


Vendor
Hi,
The agent called me and requested me to not charge any penalty interest as settlement would take place in a day or two.There was no agreement to not charging any penalty interest and it would not be possible for me to waive the penalty interest as I have already lost money by keeping the property vacant for a month as the vendor's property manager advised my property manager not to find any tenant as she said she would find one herself.

The agent also requested me on the 22nd of October to allow the purchaser to advertise for a tenant for the property to which I agreed and therefore was under the impression that everything was taken care of and did not bother to visit the property as a result of which there was a break in and a pipe burst below the house which has resulted in considerable loss of water and Iam expecting a big bill from water care.

As far as the leak is concerned I can assure you that as on the 30th of October when I inspected the property the hot water cylinder was there and there was no leakage inside the property it was only a pipe burst below the property that was causing the flood outside .

I would also like to bring to your notice that ever since the property has been valued by the purchaser the keys have gone missing and I had to call a carpenter to open the door and get the lock fixed.



My Solicitor
Hi
Our client is still working on obtaining finance to complete the purchase, but is confident of being able to do so prior to the expiry of your settlement notice on 7 November 2013.

We are advised by our client that an agreement has been reached with your client that your client will not elect to charge penalty interest during the default period.
Please confirm that is the case in due course.

Our client has also advised that there was a burglary at the property on the weekend in which the hot water cylinder was stolen, water leaked throughout the property as a result, the ranchslider window was cracked and locks were broken. Could you please confirm that these issues will be remedied by your client before settlement?

[Xav]

The wording of clause 4.2 is a bit interesting given the risk passing etc provisions refer to the giving and taking of possession, but the untenantability provisions refer to the settlement date.

I would argue that since the damage was done after the settlement date, the property was tenantable on the settlement date. Clause 4.2(2) would therefore apply (instead of clause 4.2(1)) so you could settle less the cost of repairs then fix it up yourself afterwards, which I believe is what you want.

[sidinz]

But the property hasn't settled, so there hasn't been a 'settlement date.' There was a day that was supposed to be the settlement date, but it came and went with no settlement occurring.

I would therefore imagine that as there is damage there now, it has occurred before settlement and if the property is untenantable (which it sounds like, as I believe there is a rule about water supply in the RTA), then it will be untenantable on the settlement date if not fixed prior.

[Xav]

The settlement date is defined (clause 1.1(20)) as the date specified as the settlement date in the agreement. Whether or not the sale actually settles on that date is irrelevant to the definition.