Does a Seller have to have Insurance on the Property?
Here’s the provision as set forth in the Standard Form OREA Agreement of Purchase and Sale.
14. INSURANCE: All buildings on the property and all other things being purchased shall be and remain until completion at the risk of Seller.
Pending completion, Seller shall hold all insurance policies, if any, and the proceeds thereof in trust for the parties as their interests may appear and in the event of substantial damage, Buyer may either terminate this Agreement and have all monies paid returned without interest or deduction or else take the proceeds of any insurance and complete the purchase.
No insurance shall be transferred on completion. If Seller is taking back a Charge/ Mortgage, or Buyer is assuming a Charge/Mortgage, Buyer shall supply Seller with reasonable evidence of adequate insurance to protect Seller’s or other mortgagee’s interest on completion.
You saw the ” IF ANY” reference in second line above. They might have insurance, and , if so, that would trigger the clause. But, nothing says that they have to!
Brian Madigan LL.B., Broker