Complicated BTL Insurance question

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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

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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.

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Ok guys - thanks for the heads up - I'll probably be back in 6 months asking "how do I get tenants who aren't paying ME rent out of MY house"

Let's assume that I'm foolishly going ahead with this. What's the legal insurance position?

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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?

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KTF said:

How has he managed to come up with the money in 2 weeks when it was originally 3 months?

He already had the £40k. It's the balance he's waiting for when he sells another house that he owns. [That's a 1-bedroom property on the main road with no parking, mine is a 3 bed cul-de-sac in a much nicer area.)

KTF said:

What work is he doing to 'your' property prior to his tenants moving in?

Chimney breast in kitchen being taken out. This is going to make the kitchen bigger as well as one of the bedrooms.

KTF said:

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?

It's well below stamp duty threshold. The solicitor who is dealing with his other sale is also dealing with this property. He's not mentioned anything. The sale price on the contract will be the actual sale price so I'm not sure what is being avoided?

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Just to add - thanks for all the concern about the "risk" I'm taking - there is no risk (apart from the Tenants going tonto). I'm convinced he would have sorted things out even if the place disappeared in a ball of rubble and flame.

However it was my OH who "suggested" I get insurance which is the basis of my original question i.e. whose name the insurance should be in.

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Justayellowbadge said:

He's knocking down the chimney breast whilst you still own it?

Are you mental?

Yes I am.

I'm selling it to a family friend. Our families have known each other for 60 years. He does property development for a living. I trust him.

My next threads in H,G&D will be titled

"Do chimney breasts act as supporting walls in terraced houses"
and
"There's a suspicious crack in the external wall. However my mate's insurance policy is refusing to pay out because it's not HIS house."

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Red Leader said:

He can get the property insured in his name but its not his property. Please make sure that he tells the insurer this as it is a big factor and may complicate matters if there is a claim.

Thanks - will do.

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elanfan said:

Just like I cannot insure your life as I have no insurabie interest in it he cannot insure something that doesn't belong to him.. You MAY be able to find an insurer who will change the name of the policyholder once legal matters are completed providing you explain to them what is happening first.

It was the "insurable interest" uncertainty which was the reason for the original post. He's actually going to go to an old-fashioned high street broker and make sure they understand what is being required before he takes out the policy. This is where comparison sites aren't always the best port of call

elanfan said:

Still think you're mad! But hope it turns out ok for you!

Cheers

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Just to update - I've had all the cash for the house. We just need to transfer it into his name.

What's the best way for doing this? There is no mortgage, he's not planning on carrying out any surveys, it was a cash purcahse from his point of view. As far as I can see it's just a name change.

The solicitor I normally use charges about £500. Online quotes suggest it could be doable for £250. What are the downsides of using online conveyancing (bearing in mind the house is a known quantity, my Sol did various searches when I purchased it 2 years ago, its got all the safety certificates...)

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TA14 said:

I always understood that as a rule of thumb on line conveyancers are fine for straight forward stuff when you're not in a hurry. Yours sounds less than straight forward and you sound to be in a bit of a hurry. Good luck.

Nope - no rush whatsoever. The buyer is on holiday for the next 4-6 weeks. His tenants are paying him rent. His solicitor paid me the balance of the purchase price (so he is aware of what the sale price was). The only thing left to do (and AFAICS there's no urgency on either of our parts to get this bit done) is to transfer the names over.

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mikees said:

This has got cluster fk written all over it.

This WILL go badly

How?

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desolate said:

In which case get his solicitor to fill in the transfer form and handle any stamp duty disclosure. Pop into said solicitor and sign. Job done.

Shouldn't cost more than a few quid, if anything.

Result!! Never heard of property transfer forms before - cheers