What Happens If A House Burns Down Between Exchange And Completion?

What happens if a house burns down between exchange and completion

You may be wondering who owns a house between exchange and completion. Plus what happens if a house burns down between exchange and completion? Who is responsible for the repair of the fire damage?

So what happens if a house burns down between exchange and completion? If a house burns down between exchange and completion you are still legally bound to complete. That’s why you must protect yourself by taking out insurance when you exchange contracts. But mortgage finance won’t be available as a result of the destruction. Who’s responsible for the damage is down to the Sales Contract.

Having said that, the seller is legally bound to look after the house and repair any damage. They are obliged to keep the property in the same condition it was when contracts were exchanged.

Which would mean that if there is significant property damage, for example a fire between exchange and completion, the vendor could still be liable.

Please also read this article to discover how you could save £71,475 on your next mortgage if you sell your house and rent before buying againEven I was amazed when I did the calculations!

Who owns a house between exchange and completion?

At the point of exchange of contracts and you pay your 10% deposit, the contract of purchase becomes legally binding. So whilst the property is still registered at Land Registry in the name of the seller or vendor, you are technically the owner.

At this point you are committed to buy it.

There appears to be a bit of a grey area on this when it comes to who’s responsible. The vendor (or seller) is responsible for delivering their house to you in the same condition is was sold to you. Or in particular on exchange of contracts.

If they damage it, they are responsible for repairing it between exchange and completion. Otherwise you could sue them for the costs for the repair to bring it to the same condition it was on exchange of contracts.

However, if there’s a fire, flood or a storm that damages the home, you still have to go ahead and buy it. But then who’s insurance would have to pay for the damage is down to what’s in the Sales Contract.

In the article below it’s recommended that you take out insurance on the day of exchange. This is to fully protect you should something like this go wrong.

More Reading: Do you need home insurance from exchange or completion?

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

Imagine the worst case scenario, the house you’ve just exchanged on and are going to complete the purchase in 30 days time burns down! You are obliged to complete. But you don’t have a home to move to.

To make matters worse, you are also obliged to honour the sale of the house you’re currently living in too. The exchange of contracts on this house means you have to complete this sale.

More Reading: Why is there a gap between exchange and completion? (Is a gap needed?)

You’d end up in limbo. That’s why having insurance is so important. Your insurance company would cover the cost of housing you until your new house is repaired from the fire damage.

It would probably be up to the insurance companies to sort out who is ultimately responsible for the fire damage repairs. It’s likely that your insurance company would seek compensation from the insurance company of the seller. Assuming they have home insurance cover.

However, if there’s any doubt if you find yourself in this situation, speak with your solicitor for advice.

More Reading: How to deal with the stress of selling your house (How to avoid the stress)

Please don’t forget to read this before you leave…

Please don’t forget to also read this article to discover how you could save £71,475 on your next mortgage if you sell your house and rent before buying againAs I said earlier, even I was amazed when I did the calculations!

I hope you’ve got something from reading this article on what happens if a house burns down between exchange and completion

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Also, if you have any questions, please feel free to comment below too. Alternatively, if you need more help, please feel free to contact us on our contact us page here. Or join the discussion and ask your question in the property forum.

What Happens If A House Burns Down Between Exchange And Completion?

Article written by Russell Bowyer who has been investing in property since purchasing his first commercial property in the 1990's for his own Chartered Accountancy business. But his first property investment project was to turn an old dilapidated restaurant into a large 5-bed home, which he purchased for £117,500 and sold for £450,000 (to see an "after" photo of the house before it was sold see here: About). Russell owns a number of investment properties, which includes houses, flats and HMO's. More recently he has turned his creative side to investing in property using lease options. His largest lease option deal to date was to acquire 12 properties worth over £2 million for just £12, which means he paid just £1 to acquire each property!

7 thoughts on “What Happens If A House Burns Down Between Exchange And Completion?

  1. what if the property you are exchanging on is tenanted, and the tenants moving out decide because they were forced out, that they leave all the taps running and flood the property or they set fire to the house, or they do internal damage to the property, then what happens, and what happens if the tenants refuse to move. especially under the current circumstances of corona virus lockdown the government has said no tenants can be evicted while the lock down is in place. How does this legally leave you if you have already exchanged contracts

    1. Hello Mark,

      Is this a real situation or is it hypothetical? If it’s a real situation I’m assuming you are selling a property that was previously (or currently) tenanted. On the basis that you are selling, and during which questions would have been asked by your solicitors and the buyer’s solicitors about any occupants to the property, this situation should be covered in the conveyancing process. On this point both sides need to speak with their respective solicitors to resolve the problem. I would have thought notice has already been served during the conveyancing process and before exchanged happened? I would assume, but don’t know as we are living in unprecedented times, that the prior notice to vacate should come before the Covid-19 virus and no evictions on the basis that the new law was not made for different reasons to the one you describe I’d say.

      On the point of flood, fire and internal damage, check your insurance on the property. But now I re-read what you ask and write my answer, I think you’ve just thrown the kitchen sink type question here. Let me know if I can help further.

  2. It is a real situation, and the property i currently live in already has a buyer, the property im intending on buying is tenanted, my concerns are as follows to simplify the situation….
    1) Im trying to avoid buying the property with any potential damage the current tenants may do
    in order to do this im saying to my solicitor im not exchanging contracts until the tennnts have moved out and the locks have been changed , to avoid the tenants potentially havinga spare set of keys and entering the property after they leave and causing damage.
    2) Im trying to find out the how i would deal with the situation if i exchanged contracts before the tenants moved out with a completion date after their official move out date and then on completion date arrive at the property and find it still occupied by them. As Im currently not working and would not have the money to store my items in the removal van or afford to pay to live somewhere else eg: rent myself.
    3) my conveyancer states that i cant put clauses in a contract to state that the current owner would pay for all damages and repairs the tenants might cause and that they would do this before my completion date.
    4) the alternative is to exchange and complete on the same day which might avoid some of the above, but would not solve the issue if the tenants refused to move, as you would need a court order which would take 6 to 8 weeks, and the government has stopped any court proceedings for 3 months currently (to be reviewed it could be even longer)
    5) Im in a difficult position as i have a bridging loan that needs to be paid back so i have to buy a cheaper property soon and i have a time limit to do this. currently about 8 months and im only looking at chain free, note this property was advertised as chain free when in fact it is not totally.

    Hope this makes it clearer

    1. Hello Mark, okay and thank you for clarifying the situation. My observations are as follows:

      1. If you don’t have to move at present, I suggest you don’t and leave the move until we are all on the other side of the Coronavirus and Covid-19. This way you create certainty over this piece of anxiety.
      2. If for whatever reason you have to move, then the only thoughts on this are to make sure you put as much of the risk regarding the tenants onto the vendor (i.e. the person selling this house to you). What I mean by that is that I agree with your thought to exchange and complete on the same day, this works. But you need to make sure the tenants have already moved out. Speak with your solicitor to obtain an undertaking from the vendors solicitor that this has happened and will have happened prior to the exchange and completion on the same day.
      3. I am a bit unclear about where the bridging finance sits with this property deal. I wasn’t sure whether you had already taken on bridging or whether you were using bridging to complete this transaction. If it’s the latter, then on the basis you don’t proceed until after the Coronavirus pandemic passes, then this problem goes away too. Please clarify this point to be clear if this doesn’t answer you question. But if on the other hand you already have bridging in place on your existing property and it’s this that needs to be paid off within eight months and this will be achieved as a result of this transaction, then that’s a difference matter – please see the next point.
      4. If and on the basis you have current bridging, you may need to speak with a broker on this about where you stand on getting this changed to another product. If that’s not possible, then you need to go back to my suggestions at point 2 above. You need to get clarity from your solicitor who needs to speak with the vendors solicitor. Failing security from the vendor of vacant possession of this property, you may need to find another one to buy, or worst case sell your current property to pay of the bridging and rent for a while.

      I hope this helps, but if you have any other questions, please feel free to ask. But I would say, please speak with your solicitor on this matter too, as they know the particular details and the full legal ramifications of your situation.

  3. Hi,
    My husband and I have exchanged contracts on a retirement flat .
    With permission from the owner and a written contract drawn up between solicitors of both parties to allow access, to allow new flooring to be laid and a new kitchen installed ( permission also given from the managing agents)
    Due to covid 19 the house manager has denied access – there is low risk as we would wear gloves and masks. The building is entered with a key fob- no contact, we would walk past 4 closed doors to our flat enter with the key and stay inside for 8 hours to work.
    At present we have no kitchen sink or running water and there is no cooker connected . So at present there is no useable kitchen kitchen to prepare food in. We are expected to complete on the property and we are being pressurised for dates. We can get the essentials done within two day but the Manager still denies access , saying the works can be completed after completion.
    The flat is so tiny it would be virtually impossible for the flooring to be laid after furniture and boxes etc arrive, much to heavy for us to move safely and without personal injury.
    We have looked at other options but due to covid we cannot book a hotel or kennels for our dog and removal company does not want to store goods over night ; we would have had to sleep on a blow up mattress on a dirty floor( we are in our 70s )
    On our last attempt to access the property , The manager threatened to call the police and physical stood in front of us . I asked her to allow access so I could pick up medication and a file of working papers that I needed but she refused.She told me to take the key back to the agent! The agent who still has a key told me to keep it.
    Please can you advise me if it is illegal to deny access or is it just unreasonable behaviour? There are no goods or chattels in the property as agreed in the contract .
    With thanks

    I have never posted this comment

    1. Hello Carolynn,

      Thank you for your question. If you have a written contract it seems to me you have the right to access as you describe. Have you tried to contact the managing agent or the freeholder, as they may be Abel to help. The managing agent will represent and work on behalf of the freeholder and would likely employ the manager. I suggest you email them with a copy of the contract to see if this may help to progress what you are entitled to do.

      I assume you have spoken with your solicitor get his input or advice on the matter?

      I’m sorry that you’ve been put in this position, as it seems entirely unreasonable and adds to the stress of moving.

      I hope this helps in some way, but please report back to let me know what happens and if you are able to resolve the problem.

      Cheers, Russell

    2. Hello again Carolynn, another thought is that you could go back with a copy of the contract to show the manager. Because what are they going to do once you’ve completed and the flat is yours, they can’t stop you then to go into your own property. If they threaten to call the police, it seems to me the that whilst the police don’t normally like to get involved in domestic situations, if you have the contract that states you’re entitled to entry, they will probably try to get the manager to see sense. I had a situation with the police once, and whilst it was slightly different to your situation, because I was in the right, they advised the person who was behaving unreasonably to change their stance, so they had to! Just a thought, but the truth is the police probably have better things to do than get involved in domestic situations. But I hope this helps in some way.

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