Complicated BTL Insurance question
Discussion
Long story short -
I bought a house and carried out a fair amount of repairs to make it habitable again. The original intention was to put it on rent however, due to a change in circumstances and somebody making me a reasonable offer, I've decided to sell.
The sale is going to be cash only but the buyer is waiting for one of his other properties to sell before he can give me the cash. However he wants mine straight away as he has tenants lined up. He's offered me £40k cash with the balance paid when his sale completes (max 3 months).
I'm happy for him to put tenants in and to wait 3 months for the cash. However I think it makes sense for the property to be insured. This is where it gets complicated.
They'll be HIS tenants and he'll be collecting the rent but it will be MY property. He's happy to pay the insurance but I'm not sure whether the insurance policy should be in my name or his.
If it was in my name could the insurers could argue that any damage caused by tenants wasn't covered because they weren't my tenants? If it was in HIS name could they argue that he didn't have an insurable interest as it wasn't HIS property
TL:DR - whose name should the insurance policy be in?
Thanks in advance
I bought a house and carried out a fair amount of repairs to make it habitable again. The original intention was to put it on rent however, due to a change in circumstances and somebody making me a reasonable offer, I've decided to sell.
The sale is going to be cash only but the buyer is waiting for one of his other properties to sell before he can give me the cash. However he wants mine straight away as he has tenants lined up. He's offered me £40k cash with the balance paid when his sale completes (max 3 months).
I'm happy for him to put tenants in and to wait 3 months for the cash. However I think it makes sense for the property to be insured. This is where it gets complicated.
They'll be HIS tenants and he'll be collecting the rent but it will be MY property. He's happy to pay the insurance but I'm not sure whether the insurance policy should be in my name or his.
If it was in my name could the insurers could argue that any damage caused by tenants wasn't covered because they weren't my tenants? If it was in HIS name could they argue that he didn't have an insurable interest as it wasn't HIS property
TL:DR - whose name should the insurance policy be in?
Thanks in advance
Justayellowbadge said:
I wouldn't touch that with a bargepole.
Minimum, I'd take the 40k as a holding deposit and put the tenants in under my name and earn the rent until he can pay up.
He's almost family (my dad has known his dad for over 60 years)so I doubt there will be any issues. The insurance is just in case things go tits up for either of us.Minimum, I'd take the 40k as a holding deposit and put the tenants in under my name and earn the rent until he can pay up.
You need to insure it unless he is contractually obligated to buy the property off you.
I'd be thinking along the lines of exchanging with a 40K deposit giving X months to complete and allowing him to occupy in the meantime.
If he doesn't complete with the agreed timescale he forfeits deposit and you evict tenants or take them on yourself.
In this scenario he insures the property.
I'd be thinking along the lines of exchanging with a 40K deposit giving X months to complete and allowing him to occupy in the meantime.
If he doesn't complete with the agreed timescale he forfeits deposit and you evict tenants or take them on yourself.
In this scenario he insures the property.
Your buyer has no insurabie interest in the property until contracts are exchanged.
Imagine it burns down and he just pockets the money.
Exchange contracts with the large deposit and have a contract with the tenants that can transfer to him on completion. Why should he get the rent on a property that isn't even his?
This could end badly - you know what they say about lending money to friends or family don't you? this is 10x worse.
Imagine it burns down and he just pockets the money.
Exchange contracts with the large deposit and have a contract with the tenants that can transfer to him on completion. Why should he get the rent on a property that isn't even his?
This could end badly - you know what they say about lending money to friends or family don't you? this is 10x worse.
elanfan said:
Your buyer has no insurabie interest in the property until contracts are exchanged.
Imagine it burns down and he just pockets the money.
Exchange contracts with the large deposit and have a contract with the tenants that can transfer to him on completion. Why should he get the rent on a property that isn't even his?
This could end badly - you know what they say about lending money to friends or family don't you? this is 10x worse.
What they said. Imagine it burns down and he just pockets the money.
Exchange contracts with the large deposit and have a contract with the tenants that can transfer to him on completion. Why should he get the rent on a property that isn't even his?
This could end badly - you know what they say about lending money to friends or family don't you? this is 10x worse.
This all seems far too complicated, you were planning on renting it anyway why not keep it simple and just move 'his' tenants in and collect the rent with everything in your name and then agree with him that in 3 months (or when the completion occurs but I'd set a deadline of say 6 months) that you'll happily let him buy the place for the price that you've agreed with the sitting tenants. If you're feeling really generous then you could knock the rent that you've collected (minus tax!) off the purchase price.
Obviously do all the checks on the tenants that you would do for any other tenant...
Obviously do all the checks on the tenants that you would do for any other tenant...
Your house. Your choice of tenants. Your rent, and a forty k deposit in your bank account towards an eventual sale. So your insurance. Or no deal.
I wouldn't risk anything other than that - if you wanted to give him some interest on the forty k while you wait then fair enough, but even proving that to the taxman would be tricky.
I wouldn't risk anything other than that - if you wanted to give him some interest on the forty k while you wait then fair enough, but even proving that to the taxman would be tricky.
Surely this can be solved with one solution
You rent the house out to his tenants and they pay you and you insure it etc. Then once he completes you sell it through the proper channels and he transfer the agreement in place.
Your idea is stupid close family or not how many family breaks up have been caused by money. Your solicitor should be advising my idea
You rent the house out to his tenants and they pay you and you insure it etc. Then once he completes you sell it through the proper channels and he transfer the agreement in place.
Your idea is stupid close family or not how many family breaks up have been caused by money. Your solicitor should be advising my idea
Only son that protects you is
1/ Carry on selling house to him and accept £40K deposit on exchange
2/ You insure it
3/ You put his tenants in as your tenants. You reference them. You collect, and keep, the rent. You take tenants deposit and protect it under your name.
4/ When you exchange set a completion date with a stop gap of six months.
1/ Carry on selling house to him and accept £40K deposit on exchange
2/ You insure it
3/ You put his tenants in as your tenants. You reference them. You collect, and keep, the rent. You take tenants deposit and protect it under your name.
4/ When you exchange set a completion date with a stop gap of six months.
The BTL insurers that I deal with will only insure the property if the tenancy agreement is between the owner and the tenant or the Letting Agent (on behalf on the owner) and the tenant.
I agree with the advice, your property, your tenant, your rent, your insurance until sale goes through.
I agree with the advice, your property, your tenant, your rent, your insurance until sale goes through.
All - Thanks for advice.
He's going to get the property insured in his name. He's sent the £40k into my account via FPS and he's confident that I will get the balance within 2 weeks.
Just for info - the £40k is part of a deposit for ANOTHER property I'm going to buy which is why I wanted the cash (rather than just taking the rent money whilst it all came through). From what I understand his tenants aren't actually moving in for a month anyway (he wants to carry out some last minute building works).
Anyway thanks for all comments.
Incidentally how easy is it squatters out of one's property?
He's going to get the property insured in his name. He's sent the £40k into my account via FPS and he's confident that I will get the balance within 2 weeks.
Just for info - the £40k is part of a deposit for ANOTHER property I'm going to buy which is why I wanted the cash (rather than just taking the rent money whilst it all came through). From what I understand his tenants aren't actually moving in for a month anyway (he wants to carry out some last minute building works).
Anyway thanks for all comments.
Incidentally how easy is it squatters out of one's property?
Countdown said:
All - Thanks for advice.
He's going to get the property insured in his name. He's sent the £40k into my account via FPS and he's confident that I will get the balance within 2 weeks.
How has he managed to come up with the money in 2 weeks when it was originally 3 months?He's going to get the property insured in his name. He's sent the £40k into my account via FPS and he's confident that I will get the balance within 2 weeks.
What work is he doing to 'your' property prior to his tenants moving in?
Has any of this been run past a solicitor/conveyancer or is he just expecting to BACS you the rest to avoid the stamp duty, etc?
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