Important to check insurance during occupation

If you’ve sold your home and agreed that the buyer can take occupation before transfer is registered, it is important to make sure that the property will remain properly insured during the occupation period.

“Accidents and natural disasters can happen at any time,” notes Berry Everitt, CEO of the Chas Everitt International property group, “and you must be covered against damage due to wind, fire or water, for example, for as long as you still own the property – even if you are not living there anymore.”

Fortunately, he says, most sale agreements provide for this, with a clause that stipulates exactly when the risk in the property will pass from the seller to the buyer.

“And in general, it is a good idea to allow that to happen only on transfer of the property, and not on occupation.”

Writing in the Property Signposts newsletter, he says such an arrangement usually means the careful seller can simply keep up his homeowner’s insurance until transfer, and that there will be no need for him to take out special insurance.

It also avoids the confusion that can arise over the fact that there is usually risk insurance associated with the buyer's new home loan, but that this does not become effective until transfer has taken place.”

“If, on the other hand, the sale agreement stipulates that the risk in the property will pass to the buyer on occupation, he will have to make special arrangements to insure the property from that date - or he could find himself having to pay for rebuilding or repairs to a house that he doesn't even own yet.”

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