What to Do If a Property is Flood-Damaged Before Settlement in QLD
When Does the Risk Transfer to the Buyer?
We recently discussed the issue of risk transfer in property contracts. In Queensland, the risk of damage to the property typically transfers to the buyer at 5:00 pm on the fifth business day after the contract date. To protect against unforeseen incidents, we generally advise clients to purchase property insurance immediately after signing the contract. But what should you do if the property suffers flood damage or other natural disasters before settlement?
Steps for Buyers to Take
If you have insurance:
- Obtain evidence of the damage, such as photos or videos
- Review the terms and obligations of your insurance policy, including any requirements to notify the insurer about the damage or inform them that the property is under contract
If you do not have insurance, consider:
- Evaluating any rights under the contract, such as cooling-off periods, building and pest inspections, or other relevant provisions
- Making a claim against the seller’s insurance, if applicable
- Consulting with your lawyer to explore the possibility of terminating the contract if the property is no longer fit for habitation
Steps for Sellers to Take
- Obtain evidence of the damage, such as photos or videos
- Review the terms of your insurance policy and assess any responsibilities, including notifying the insurer about the damage and informing them that the property is under contract
Important Notice
The information provided in this article is current as of 4 March 2022. It is intended for general informational purposes only and should not be considered or relied upon as legal advice. Each case is unique, and if you have any questions or concerns, please contact Stephen Kwok @Ensure Legal for professional legal advice.
