Buyers must insure their newly acquired properties straight away

If you're thinking about buying property, or have just signed a contract, you need to be aware that the property is at the buyer's risk from 5pm on the first business day after the contract date. This is what's stipulated in Section 8.1 of the Terms of Contract endorsed by the Queensland Law Society.

This means that you must take out insurance on the full replacement value of a house, or to replace internal fittings and fixtures in a unit or townhouse. The Body Corporate insurance would cover the external building. However, fittings such as kitchen cabinets, shower screens, carpets, curtains etc are the responsibility of the buyer.

One unfortunate buyer purchased a Mt Tambourine property for $1.6M at auction recently, and the following night the area had its biggest rain event since 1880; 400mm fell in 6 hours. The property suffered land slips, with the drive way washed out and parts of house and shed full of red mud.

This type of event can put buyers in a difficult situation if insurance has not been arranged. Even though the buyer does not have to take out insurance until 5pm the next business day, they would have to disclose the new damage to any prospective insurance company, thus making insurance more difficult to obtain and no doubt more expensive.

Our advice is DON'T DELAY. Protect yourself, and take out insurance immediately a contract is in place. Don't wait for the next business day.

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