Hi all,
I am new and joined because I am in a bit of trouble.
I bought a house, and I thought I was lucky enough to win the auction.
However, two weeks after the auction, before the settlement date, the owner had an accident in the kitchen and burnt down almost the entire kitchen. All the cabinets, some walls, and some part of the roof. There is basically a hole on the roof and signs of smokes everywhere. Walls between the kitchen and living room is half gone, the window is broken, and water damage from the fire engine is on every part of floorings and walls. The damage so extensive they moved out straight away.
Now, here is my problem starts.
I then called the real estate agent to cancel the deal. They said they will try their best, calling the owner and see what they can do.
The agent said the owner didn't answer their phone and told me to call my solicitor.
I called my solicitor to cancel the deal obviously.
Here is what he said:
Have you got building insurance? I said no of course, because I haven't settled on it.
My lawyer said the once I won an auction, it is my property, and I have to settle on it, no matter what.
I said, what the F, BS is this??? It is obvious to me that the house is not at all in the same condition it was when it is sold to me. My lawyer said he need to discuss with his colleagues for whatever other legal avenue available. Worse come to worse, he said I lost my 10% deposit. However he also said that if the house then sold at lower price (which is 100% definitely), I may have to pay for the difference. I said again all the swear words known to me. This could costs me hundreds of thousands, plus I can't live there, what am I gonna do with this?
I don't know yet if the owner has building insurance, or if their insurance companies can pay me out.
Sorry for all the rambling, but I just can't.
Edit: 11:41am
Seller's solicitor told mine that the owner have insurance. However it is unclear what will. happen after. I'm a little relieved now.
Edit 11:53 AM:
It seems that the seller meant was content insurance, not building insurance, however it still isn't very clear, and they seek clarification.
Edit 12:05 AM:
Apparently police is investigating this because it involves significant material damage.
Idk what this mean to me tbh.
Edit 2:57 PM:
They definitely have building insurance. However I think perhaps it is still best to back out of the sale, let them deal with the payout and sell it to someone else who can rebuild it. Otherwise, it can be messy for me waiting for them to sort their insurance and transfer the payout to me.
Edit 23/03 3:19 PM:
Vendor's solicitor seems to hold on to the 'unconditional' rule. My instruction to the lawyer is clear, do not settle no matter what. I have told the bank's lender too, and they don't seem to know what to do? I don't know what the vendor want, my solicitor thinks it could be that they want to hold on to insurance payout and full payment too. My solicitor thinks it may gone down to court, but i am more likely to win. I hope this doesn't go on too long, I need a place to live…
Sorry for late response, once you exchange contracts (pre-settlement) you now have an insurable 'interest' in the property and therefore can purchase insurance on that property.
This is to protect yourself in situations just as the OP describes.
Usually you would do this for properties where the land itself valuable, i.e. strong potential for capital appreciation, tightly held suburb, re-zoning potential, urban taskforce growth corridors etc. Except you do not want to carry the risk of loss of the building should it go up in flames prior to settlement.