If you’re in the middle of buying a new home. Plus if you’re worried about any repairs after exchange of contracts. Or worse still you’ve already exchange contracts and something terrible has happened to your new home.
Who is responsible for repairs after exchange of contracts? It’s normally written into the sales contract that the buyer is responsible for repairs to the property after exchange of contracts. If any damage is incurred the seller must inform the buyer when it happens. So long as the buyer has insurance cover in place they’ll be able to claim on their policy.
It’s important to understand the buying process and the point at which the responsibly of repairs transfers from the seller to the buyer. To better understand the answer to this question, you need to know what actually happens when you exchange contracts.
What actually happens when you exchange contracts?
What actually happens when you exchange contracts is your signed sales contract is exchanged with the sellers solicitor. Your deposit is also transferred to their solicitor at the same time.
Which means that even though the seller owns the house between exchange and completion, it is from this point on when you become legally obliged to purchase the property. Which means you must complete, no matter what state the property is in
What type of damage can occur after exchange of contracts?
To better understand the problem, it’s probably easier to understand what can go wrong between exchange and completion by way of damage to a house.
Damage to property after exchange of contracts can include:
- The house could develop a water leak after exchange of contracts.
- The property could suffer from subsidence after contracts have been exchanged.
- There could be a house fire and the house burns down.
- The house could get flooded.
- Storm damage can happen between exchange and completion.
- A tree could fall on the house on on the fences after contracts are exchange.
Let’s take a look at each of these in more detail.
1. The house could develop a water leak after exchange of contracts
If a house develops a water leak after exchange of contracts you will be responsible as the buyer for any damage caused. The seller is responsible for letting you know as soon as this happens. The water leak could be as a result of defective plumbing or due to frozen pipes in the winter.
However, most responsible sellers will probably be good enough to fix the problem before the situation gets worse. Plus sellers are responsible for making sure the house is maintained in the same condition as it was on the day of exchange.
Be careful if you are buying an empty house. Check whether your insurance policy covers if this occurs in an empty house. Notify the insurance company the home is empty, as there won’t be anyone in the house to notice the water leak.
A water leak after exchange of contracts can be from mains pipes, low pressure pipes or from the heating system. But it could also be as a result of damage to the exterior of the house too and the water leak is from rain water ingress.
2. The property could suffer from subsidence after contracts have been exchanged
The mortgage surveyor should check whether the house you’re buying has subsidence before you buy. But this could happen after the survey and after you’ve exchanged contracts.
Make sure the insurance policy provides cover after exchange of contracts for subsidence. Repairs to subsidence can be expensive to fix.
3. There could be a house fire after exchange of contracts and the house burns down
If your new home burns down from a house fire between exchange and completion this could be a complete disaster for you and your family. Not only will you no longer have a home to move to, but you are now responsible for repairing the damaged caused by the fire.
Fires can happen for any number of reasons. The most common cause of house fires is down to electrical appliances like TVs, fridges, dishwashers, washing machines and dryers. But electrical fires can also start due to faulty wiring in a house too.
So long as you have insured the property on the date of exchange, this should cover any fire damage caused. Plus the insurance cover should also cover for the cost of re-housing you in a hotel or otherwise whilst the house is made habitable.
4. The house could be flooded after contracts are exchanged
If a house is flooded after contracts are exchanged you will be responsible as the buyer for any damaged caused by the flood. This is another reason why homeowners insurance is important to have at the date of exchange.
Your insurance should also cover for the cost of re-housing you in a hotel or otherwise whilst the house is made habitable after the flood.
5. Storm damage can happen between exchange and completion
Storm damage isn’t uncommon and can cause significant damage to a house. If this happens between exchange and completion you are responsible as a buyer for any damaged caused.
But having insurance in place will cover for this eventuality too.
6. A tree could fall on the house or on the fences after contracts are exchange
Trees can fall down either due to a storm or if they have rotted and died. But most tress fall as a result of high winds. But even without wind if a tree is dead it can fall down anyway.
The tree could fall on the house, on an outbuilding, garage or on fencing. All of which may be costly to repair.
Having insurance cover between exchange and completion will cover you for any damaged caused. This could be from a tree falling on the property or any other structures around the house.
What about damage to property before exchange of contracts?
If there’s damage to the property before exchange of contracts it will be the sellers responsibility to repair this damage. If however, you didn’t become aware of the problem until after exchange or after completion you will need to speak with your solicitor and insurance company to see what to do.
Whilst it’s not that common, you might be advised to carry out further checks on the house before contracts are exchanged. This could involve a simple drive-by to make sure everything is in order.
Otherwise it may be a challenge to prove when the damage happened. Was it before or after contracts were exchanged? The seller might be reluctant to claim on their insurance to avoid a hike in premiums.
If there’s been a storm leading up to exchange, this is when a drive-by might be worthwhile.
What about home defects discovered after purchasing a house?
Home defects after purchase are generally down to the buyer to fix. This is unless you can prove it was something that should have been disclosed but wasn’t. However, it’s your responsibility to have the property checked either by a surveyor or a builder for any defects before you buy.
Generally sellers are good natured and will fix most problems before they sell. But any costly items like boilers may be left. You should always have a boiler checked before you buy, especially if you are moving in the winter months.
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