Early Access Clause

[Popoi]

Good Afternoon

How does the early access clause work? I'm guessing its after a deal has gone unconditional but before settlement?

When doing this, there must be a need for the new buyer to get insurance over the place irrespective of whether the vendor has insurance. Are there any risks involved with early access to make alterations?

Cheers

[xris]

Good Afternoon

How does the early access clause work? I'm guessing its after a deal has gone unconditional but before settlement?

When doing this, there must be a need for the new buyer to get insurance over the place irrespective of whether the vendor has insurance. Are there any risks involved with early access to make alterations?

Cheers

This was discussed recently at length with an occompaying horror story.
In simple terms...

Buyer cannot insure the property until settlement.

Vendor has insurance till settlement so carries the risk.

By allowing other people in prior to settlement vendor cannot claim successfully for any damage caused because he allowed the buyer on site.

Vendor is still liable for damage which he must put right before settlement or he cannot settle.

If you are buying, perhaps try your luck with this clause.

If you are selling never allow prior access.

Any agent of the vendor who does not clearly advise against this clause should be liable for negligence/incompetence.

Similarly for the vendor's lawyer.

Try finding that earlier thread - it's a good one.

xris

[JohnL]

For a investor buying to do up, it helps reduce your holding costs. I have never done it but know some have even managed to arrange contemporaneous settlements ie do the work, find the buyer and settle on the same day. Its a pretty standard and common technique and if you are the purchaser, well worth the try (assume xris is right on the vendors perspective?).

John

[cantthinkofanickname]

We have done this before. We arranged through Tower to cover us for any damaged caused on a contents insurance policy.

[Dean@Massiveaction]

Providing you cover the insurance issue this is a simple strategy used by many reno traders. You go in and do the reno then settle contemporaneously.

[xris]

Hello popoi,

Here’s that thread I mentioned. Please read it and make your own mind up.

http://www.propertytalk.com/forum/showthread.php?t=8381&highlight=insurance+access

As I said, try your luck if you are buying.

As you can see, taking out third party insurance for yourself does not always work. I wonder how watertight can’t think’s policy was?

Of greater concern is the position the vendor puts himself in when letting people in prior to settlement and the high risk he is running.

Dean/pooombah says it is a simple strategy. It may be, but that doesn’t make it right.

Also remember, that despite the type of language people use, you do not decide to go in; the vendor decides to let you go in.

This is where I am urging vendors to refuse point blank to allow prior access, or at the very least to be very wary.

A vendor could for example obtain a large deposit and link it to any damage caused by the buyer during the reno process.

If things go wrong nobody wins, but the vendor is likely to come off worse, as in the above story.

xris

[Popoi]

WOW, very sobering story, one of those that makes you glad it was someone else and not you. Cheers Xris

[revdev]

A vendor could for example obtain a large deposit and link it to any damage caused by the buyer during the reno process.

Now thats an interesting point Xris, and ultimately a fair one I would say. It would spread the risk evenly between parties, without being a deal breaker (i.e. no access = no deal)

G

[toby]

I have done prior access countless times and have (up till now) never heard of such a story that Fay Belly recalls.
I carry 1 mil of liability insurance to cover me.
Personally I think is very isolated and it brings into question the ongoings prior to a contract being entered into.
Hell I've done up houses with the Vendor still living in it!!!
Frankly Xris I think you're talking through a hole in your hat, especially the statement that an Agent would be negligent.
If a Vendor has a Plumber do a personal job it is no different to a purchaser doing work prior.

[xris]

Well, better through a hole in my hat than at the othe end I suppose.

Let's have a look.

I have done prior access countless times and have (up till now) never heard of such a story that Fay Belly recalls.

Isn't there a first time for anything. Better to ask Fay if the story is true if in doubt.

I carry 1 mil of liability insurance to cover me.

That may work, but may not. I am not an insurance expert and cannot see your policy anyway.

Personally I think is very isolated and it brings into question the ongoings prior to a contract being entered into.

Sorry toby, don't understand.

Hell I've done up houses with the Vendor still living in it!!!

Fine, but that does not address the point being discussed.

Frankly Xris I think you're talking through a hole in your hat, especially the statement that an Agent would be negligent.

Could you try explaining why you think that, or why it is not true?

If a Vendor has a Plumber do a personal job it is no different to a purchaser doing work prior

How about...

In most cases the plumber will be contracted to the vendor to undertake repair work: in most cases the buyer and any subbies will be invited guests.

I accept though that a properly worded and operated clause may overcome this problem, but in the vast majority of cases this does not seem to be happening.

Finally, I believe it is important not to forget that my comments were directed mainly to the vendor. The vendor does not know that you are insured, by how much, and in what respects. By letting the buyer in the vendor is taking a risk that may not be worth it because to negative consequences may be too great. So your competance and your insurance does not really come into it.

xris

[toby]

I pay more for prior access as I don't have holding costs. Paying a little more can be less than mortgage payments, plus most vendors are price proud.

Correct me if I misread the post but Fat Belly's post related to him/her doing work and then the Vendor or another party trashing the house and he/she didn't have cover for that.
I have never heard of this before and whilst it did happen I don't believe one should now not do prior access.
This did not undermine the Vendors insurance or position because they hadn't spent any money themselves - the problem was Fat Belly's because he/she had.
What we don't know is, what likely led a person to enter into the property and trash it - who was this party?

The job of an Agent is to market a property and present offers not to give advice of that nature in doing so an agent would hold themselves liable, good, bad or indifferent.
Having completed my sales cert. I can assure you that a wise agent only responds to questions asked and does not offer unsolicited advice, legal, financial or otherwise as this can back fire.
To state that an agent would be negligent to present a prior access offer is crazy.
Please indicate circumstances where a vendor has suffered due to a purchaser doing work poorly and not settling. The vendor could sue for specific performance the same as in any failed settlement.

Any Vendor can agree or disagree to anything.
eg. agree to access on the grounds that the purchaser and it's tradespeople carry liability insurance - problem solved.

[Ivanhoe]

Bravo Toby!
Fantastic post - this is what this site needs - qualified advice from people actively doing real estate investing of all sorts rather than people high on opinions, low on practical hands on knowledge.
So you did Salesperson's certificate too? cool!

[Josko]

Bravo Toby!
Fantastic post - this is what this site needs - qualified advice from people actively doing real estate investing of all sorts rather than people high on opinions, low on practical hands on knowledge.
So you did Salesperson's certificate too? cool!

This site definitely doesn't need your post commentaries Ivanhoe, after all it is only your opinion. This has been building up with all your bleating about whether (again) in YOUR OPINION a post is worth while or not or if it is turining into custard or not.

We are all doing real-estate investing, I thought you are part of a paid site where you can get your fix of super investing advice, save it for that, your idea that you need to be some sort of super investor to be in a position to comment on the topics being discussed is naive.


Do you realise you are indirectly discouraging people with no experience to discuss property investing.

Get a better perspective mate.

[Niall]

Get a better perspective mate

Dont let your temper get the better of you ivi.

xris posted her thoughts on perceived access problems. Toby has countered with his own experience.

No need really to abuse another poster. Its been done before by others and its not really healthy for your "mental state".

Ivan and xris take their fair share of flack on this forum for their differing views. They are able to handle it and fire a bit back just as well.

If you take other posters comments too close to heart and you may end up in a little white room with a little white jacket with long sleeves on. And you usually cant check out of that kind of hotel too easily!

All the best,

Niall

[Josko]

Are you speaking from your personal experience of the little white room Niall or is this just your OPINION based on what you hear and see.

xris posted her thoughts...

And how do you know that xris is a 'she'?