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.
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.
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.
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 again. As I said earlier, even I was amazed when I did the calculations!
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