Home' API Magazine : May 2014 Contents 105
API MAY 2014
MAY 2014 API
again. We estimated the repairs would
be between $2000 and $3000 maximum,”
the seller says.
The insurance assessor’s report
reached the same conclusion and quoted
a similar figure.
“Based on this, we instructed our lawyer
to let the seller know that we wouldn’t
be granting a $20,000 discount and that
the damages hadn’t made the house
‘uninhabitable’, as they were claiming.
“We found out that the buyer of this
couple’s property had asked them
for a similar discount, which he had
reluctantly agreed to, so we think he saw
this as an opportunity to recoup that
money from us.
“Right up until settlement day our
lawyers were exchanging letters, as
the buyers were now threatening to
sue us even after settlement. Our legal
advice was that they didn’t have a case
against us and not to worry, but it was
still stressful to have these threatening
“We really didn’t want to have to fork
out more money to style and market the
home again if this deal fell over. The
only condition over settlement was the
settlement of their house, so we knew it
wasn’t a 100 per cent done deal yet.
“Our last legal letter went back to the
buyers just 15 minutes before settlement,
with us holding our ground. Fortunately,
settlement went through and we
didn’t hear any more about it, although
interestingly we received a call from
the insurance company the day after
settlement advising us that they had
sought legal advice themselves and been
instructed that the responsibility for the
insurance claim actually fell to the buyer
and not us, so we were off the hook!
“It turns out the original advice given
to both sides about the claim being our
responsibility had come from a New
South Wales call centre, where the laws
are different. It didn’t even occur to us
that our calls to the insurer were being
fielded by interstate operators.” API
It was all going so well. The tenants had
vacated the property, a home staging
company was hired and the renovated
house was listed for sale. With the market
on the Gold Coast picking up, the owners
acted on their agent’s advice and listed
their investment property for auction.
Just two weeks into the marketing
campaign multiple offers had been
received and the owners signed a
contract on the house. The buyers didn’t
want to purchase the property under
auction conditions, so they kept the
contract clean to win the sellers over – no
building and pest clause, no subject to
finance clause and a price higher than
their initial offer.
Their own house had just gone under
contract, so they intended to settle both
transactions on the same day. Everybody
Then, just one week before settlement
day, a wild storm hit the Gold Coast,
causing damage to the property for sale.
The sellers lived out of town and were
oblivious to what had occurred.
Through their lawyers, they had
granted the buyers early access to the
house so they could start moving their
furniture in, and it was while the buyers
were at the house that they discovered
the water damage from the storm.
Part of the ceiling in the kitchen had
been affected, the dining room carpet
was waterlogged and one of the air
conditioners had stopped working.
Understandably, the buyers weren’t
happy and alerted the agent, who in turn
notified the sellers.
In Queensland it’s standard practice for
buyers to take out an insurance policy
over the property they’re buying as soon
as they’ve signed a contract, as the
property is at the buyer’s risk from 5pm
on the first business day after contract
date. Fortunately the buyers had done
this, so effectively the property had
two policies covering it – one from the
buyers and one from the owners. There
was some confusion, however, over who
was responsible for making the claim.
“Both our agent and solicitor believed the
property was at the buyer’s risk, but the
buyer contacted his insurance company
and was told that we were responsible,”
the seller, who wishes to remain
anonymous, tells API.
“It turns out we were both insured
with the same company, which was an
ideal outcome in this scenario because it
meant that regardless of who the claim
came from, the insurer would take care of
it. The only issue was whose policy the
claim came under.
“When we contacted the insurance
company, we were told the same thing –
that it was up to us to make the claim
under our policy. Our agent and lawyer
disagreed, but we weren’t going to
squabble over it as we felt bad about
what had happened and just wanted to
see it resolved quickly.”
This wasn’t where the drama ended,
though. The buyer tried to use the storm
damage to negotiate the price down.
“We were doing everything we could to
get the insurance company to come out
as soon as possible and arrange repairs
immediately so that the seller could take
over the house in good condition.
“We were on the phone to the insurance
company for up to an hour at a time
more than once a day, trying to speed
things up. But before the assessor had
completed his report, we received a
letter from the buyer’s lawyer stating
that the house was ‘uninhabitable’
and demanding $20,000 off the
“We drove to the property to see the
damage for ourselves and found their
claims to be a huge exaggeration.
The air conditioner was now working,
the walls just needed a wipe and the
carpet needed a professional clean and
treatment, which we organised straight
away at our own cost.
“The only issue was the ceiling damage
in the kitchen and some repairs to the
guttering to ensure it wouldn’t happen
IT’S NOT OVER
UNTIL IT’S SETTLED
Buying property can be a nerve-wracking experience, but selling
brings its own anxieties, as one couple recently discovered.
\\ MY PROPERTY NIGHTMARE
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