Imagine you picked up the keys to your property (on completion) only to find someone had broken in, trashed the place and stolen the radiators, copper piping, etc. causing a leak!
You do not legally own a property until completion (this is when the rights of ownership are formally transferred or conveyed to you the purchaser). When contracts are exchanged, the parties are legally committed and the completion date is fixed.
It should be noted though that responsibility for the property is typically transferred to the buyer from the date of exchange of contracts, since this is presumed to be a binding commitment to proceed to completion. It is for this reason that the purchaser is best advised to make certain that buildings insurance cover starts from the date of exchange of contracts.
However, for new build properties it is usual for the developer to maintain the insurance up to the date of completion; so in this instant you only need to insure the property from the completion date.
Should the situation above arise the purchaser would still be expected to complete and would have to progress a claim with their insurance company. In practice though, the seller is unlikely to have cancelled their buildings insurance and so all parties would likely need to submit joint claims and it's probable that the insurers would settle the liability between them.
Unfortunately, if you do not arrange buildings insurance cover effective as from exchange of contracts and the damage to the property occurred after exchange, subject to checking the seller's buildings insurance cover, the purchaser may well have no option but to dig into their pocket to pay for works needed to rectify the damage.
Please note The Will Centre does not offer a conveyancing service but we can recommend someone who does.
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