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Review Your SQE 1 Practice Records

Examination Timing: 00H01M44S

Jane is buying a freehold property and chose it because it included a large detached garage, perfect for storing her collection of five vintage cars. Contracts incorporating the Standard Conditions of Sale (Fifth Edition - 2018 Revision) (SCS), unamended, were exchanged last week. Last night, a fire occurred at the property, destroying the garage, although the house remains unaffected. Jane is unsure if she wants to proceed with the purchase as the garage will take six months to rebuild, incurring additional costs and leaving her without storage for her cars in the interim. 

She seeks advice from her solicitor. What should the solicitor advise Jane?

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Under the Standard Conditions of Sale (Fifth Edition - 2018 Revision) (SCS), the risk in the property passes to the buyer on exchange of contracts, unless the contract states otherwise. This means that Jane is contractually bound to complete the purchase despite the destruction of the garage by fire. There will be no reduction in the purchase price, and Jane bears the risk of any damage occurring after the exchange of contracts. She should have arranged for insurance to cover the property from the date of exchange to completion. 

Key Point: The risk of damage to a property typically passes to the buyer upon exchange of contracts under the Standard Conditions of Sale unless otherwise specified. It is crucial for buyers to obtain appropriate insurance coverage from the date of exchange to protect their interests and cover any potential losses due to unforeseen events.

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