# Storm season and a sale contract: who carries the risk before settlement
From the day after signing, a Queensland home is at the buyer's risk. How insurance, the right to rescind and the rules for a storm on settlement day fit together.
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A Queensland home sale typically takes 30, 60 or 90 days to settle, and for more than half the year that gap falls in storm season. The Queensland Government opened Get Ready Queensland Week on 6 October with a reminder from the Bureau of Meteorology that October to April is the peak period for storms, tropical cyclones and floods across the state, and that severe thunderstorms are most likely on the east coast between October and December.
A storm that hits a house under contract raises a question that neither party tends to think about when they sign: whose loss is it? The answer in Queensland is different from what many buyers expect, and different from the rule in some other states. This guide sets out when the risk moves, what insurance does and does not do in the first days, when a buyer can walk away, and what happens if the weather stops settlement itself. It describes the general rules; how they apply to one contract depends on its terms and on the facts, which is a matter for the solicitor acting in the sale.
5pmnext business day: the risk passes to the buyer
72 hoursstorm exclusion in many new home policies
5 to 10business days to reset a storm-hit settlement
Sources: clause 8.1 of the standard Queensland residential sale contract; insurers' published policy explanations; section 81 of the Property Law Act 2023 (Qld).
## When the risk moves to the buyer
The standard contract used for most Queensland house sales, published by the Real Estate Institute of Queensland with the Queensland Law Society, deals with risk in one short clause. Under clause 8.1, the property is at the buyer's risk from 5pm on the first business day after the contract date.
That is weeks before the buyer owns the home, holds the keys or has paid more than the deposit. Take a contract dated Friday 9 October 2026, used here as a worked example. The first business day after it is Monday 12 October, so from 5pm that Monday the house is at the buyer's risk, even though settlement might not be due until November or December.
The clause does not depend on the contract being unconditional. A buyer whose purchase is still subject to finance, or to a building and pest inspection, carries the risk through those periods too. If the contract later ends under one of those conditions, the risk ends with it. If it does not, any damage in the meantime has been the buyer's to bear.
The REIQ spells out the consequence in the disaster guidance it publishes for sales agents: the buyer is still generally required to pay the balance of the price at settlement, even if the property has been damaged. Damage does not, by itself, give the buyer a right to a lower price. A reduction is something the two sides may agree in writing, not something the contract provides.
## Why the buyer insures a home they do not yet own
Because the loss falls on the buyer, the buyer needs insurance from the moment the risk passes. A person who has signed a contract to buy a property has an interest in it that an insurer will cover, and conveyancing solicitors routinely advise buyers to arrange building cover to start no later than 5pm on the business day after the contract date.
Three practical reasons sit behind that advice.
The first is that the seller's policy cannot be relied on. The REIQ's guidance notes that sellers may cancel or reduce their cover once a property is under contract. Even where a seller keeps the policy going, it protects the seller's interest, and whether any payout would reach the buyer depends on the policy and on what the two sides agree.
The second is the lender. A bank lending against the property will want to see building insurance in place by settlement at the latest, and an uninsured loss in the meantime can undo the loan. The Queensland law firm Kelly Legal, writing on storm damage and sales, observes that a financier may withdraw its offer because of uninsured damage, leaving the buyer bound to settle without the funds to do it.
The third is timing. Insurance arranged in the last week before settlement leaves the buyer exposed for the whole of the period in which the risk was already theirs.
Before signing
Have the insurance ready to start on the risk date, not on settlement day
The risk date is fixed by the contract date, which is the day the last party signs. A buyer who does not know exactly when that happened should ask their solicitor, because the clock on clause 8.1 starts from it.
## The 72-hour gap in a new policy
Buying cover on the right day is not always enough. Many home insurance policies exclude certain events during the first hours of a new policy. Suncorp, for example, explains that loss or damage from a bushfire, storm, storm surge, flood or tsunami is not covered during the first 72 hours of a new policy, and AAMI publishes the same exclusion. The purpose is to stop people insuring a house as the cyclone approaches.
The exceptions matter to a buyer. On Suncorp's explanation, the exclusion does not apply where the policy began on the same day that the customer became the owner of the home, or on the same day that another policy covering the home expired or was cancelled, in which case cover is limited to the sums insured under the old policy.
A buyer under contract is not yet the owner. Whether an insurer treats the risk date under a Queensland contract as falling within its exception is a question for that insurer, and the answer should be obtained in writing before the contract is signed. A buyer who waits until a storm is forecast may find a further obstacle: insurers can stop writing new policies for an area while a named event is approaching.
The practical lesson is to arrange the policy as soon as the contract is signed, to tell the insurer plainly that the property is being bought under a contract and that the risk passes on a stated date, and to ask what is and is not covered in the first three days.
## What the seller still owes
Passing the risk does not free the seller from all responsibility for the house. Under clause 8.3 of the standard contract, the seller must use the property reasonably until settlement and must not do anything that significantly alters it or causes the buyer later expense.
The REIQ's guidance goes a step further for the case of a flood. A seller who failed to take reasonable steps to protect the property, it says, may face an arguable claim from the buyer outside the contract. What is reasonable will depend on the circumstances, but leaving a house open to the weather that could have been secured is the kind of conduct the warning has in mind.
There is also the matter of telling the buyer. Kelly Legal's advice to sellers is to notify the buyer as soon as they know that a storm or other natural disaster has damaged the property, because late notice complicates everything that follows as settlement approaches. And although the seller is not obliged to keep the building insured once the risk has passed, the same firm describes keeping the policy until settlement as the prudent course. If the sale falls over for an unrelated reason, the house is the seller's risk again.
## When the home is no longer fit to live in
The contract's rule that the buyer bears the risk has one large statutory exception, and it cannot be signed away. Section 77 of the Property Law Act 2023, which has applied since the Act commenced on 1 August 2025, lets a buyer rescind a contract for land that contains a residential dwelling if, before settlement or before the buyer takes possession, the dwelling is damaged or destroyed so that it is unfit for occupation as a residential dwelling.
How the right to rescind works under section 77
The dwelling becomes unfitDamage or destruction leaves it unfit to live in, before settlement and before the buyer takes possession.
The buyer gives noticeWritten notice of rescission goes to the seller before settlement, possession or restoration, whichever comes first.
Money is refundedAny amount the buyer has paid under the contract must be returned, including the deposit.
Two features of the section deserve attention.
The first is the seller's right to restore. Under the 2023 Act the seller may restore the dwelling to its earlier condition, and once that is done the buyer's right to rescind ends. The seller must tell the buyer as soon as practicable, and the buyer may then inspect. The law firm Clayton Utz, in a note published on 24 July 2025, points to this as the main change from the previous law: the seller now has the option of repairing and holding the buyer to the contract. For a buyer who wants out, that makes speed important. The notice must be given before the seller has finished the repair.
The second is the meaning of "unfit for occupation". The Act does not define it by a dollar figure or a list of defects. The REIQ's guidance describes the test as turning on whether the damage is significant or lasting and not merely cosmetic, with each property assessed on its own facts. It also tells agents that it is not their role to decide the question. In a disputed case the evidence is likely to come from a builder or engineer, and the decision from the parties' solicitors or a court.
The section applies despite any agreement to the contrary, so a special condition cannot remove it. It covers a house, and also a unit in a community titles scheme. It does not cover vacant land, and it does not cover temporary accommodation.
## Damage that falls short of unfit
Most storm damage is not of that order. A fence comes down, a tree goes through the carport, water gets under the roof and stains a ceiling. The home can still be lived in, and section 77 does not apply.
In that case the contract's rule governs. The buyer must complete on the settlement date and pay the full price, and the repair is the buyer's cost, or the buyer's insurer's. Kelly Legal puts it bluntly: however extensive the damage, if the home is not unfit for occupation the buyer cannot avoid the contract.
Three kinds of damage, three outcomesGeneral position under the standard contract and the Property Law Act 2023
What happened
Can the buyer end the contract?
Who pays for the repair?
Minor or cosmetic damage
No. Settlement proceeds at the full price.
The buyer, usually through the buyer's insurer.
Serious damage, home still habitable
No, unless the seller agrees in writing to a change.
The buyer, subject to any claim against a seller who did not act reasonably.
Dwelling unfit for occupation
Yes, by notice before settlement, possession or restoration.
The seller, who keeps the property and may restore it.
Where the damage is real but the buyer still wants the house, the two sides often negotiate: a price reduction, a later settlement date to let an insurance claim proceed, or an arrangement for the seller's insurer to carry out the repair. None of this happens automatically. It needs both parties to agree, and the agreement should be recorded in writing through the solicitors.
## When the storm stops settlement itself
Sometimes the house is untouched and the problem is that settlement cannot physically happen: offices are closed, roads are cut, a party or a bank cannot act. Queensland contracts make time "of the essence", meaning that a party who is not ready at the appointed time is in default. Two mechanisms soften that rule when the weather is to blame.
The first is in the Act. Section 81 of the Property Law Act 2023 applies where a party cannot complete settlement on the scheduled day because of an adverse event, a term that covers cyclones, floods, storms, storm tides, fires and similar events that seriously disrupt a community. In that case time stops being of the essence. The party who could not attend must take reasonable steps to lessen the effect of the event and, provided it does, is not in breach merely for failing to settle that day. It must tell the other side as soon as practicable what happened. When the event no longer stands in the way, it gives a notice setting a new settlement day at least five and at most ten business days later, and from then time is again of the essence.
The second is in the contract. The REIQ's guidance refers to a clause in the standard contract that lets a buyer or seller suspend the time for settlement when a natural disaster such as a flood prevents them from performing, for as long as the obstacle lasts. The guidance adds an important limit: that clause is about being unable to settle, and it does not apply simply because the property has been damaged or destroyed.
The standard contract also gives each party a right to extend the settlement date by notice, by up to five business days in total. It needs no reason, so it is available in bad weather as at any other time, but it is short.
Two different problems
A damaged house and a blocked settlement are dealt with by different rules
Sections 77 and 81 answer separate questions. One asks whether the home can still be lived in. The other asks whether the parties can physically complete on the day. A storm can trigger either, both or neither.
## Units, land and buildings under construction
The rules shift a little with the kind of property.
For a unit or townhouse in a community titles scheme, the building is insured by the body corporate, which the body corporate legislation requires to insure the scheme's buildings. A buyer of a unit still carries the risk of the lot from the risk date, and should ask their solicitor what the body corporate's policy covers and whether cover for the contents and the interior of the lot is needed as well. The body corporate certificate that a seller provides includes details of the scheme's insurance.
For vacant land there is no dwelling, so section 77 has nothing to apply to. The risk clause still operates, though there is less to damage.
For a home being built under a separate building contract, the house under construction is the builder's responsibility until it is handed over, and the builder's contract works insurance, not the buyer's home policy, responds to storm damage on site. A house and land package therefore involves two different risk regimes, one for the land and one for the build.
## What each side can do before the season starts
The law in this area rewards preparation more than argument. The steps are ordinary ones.
A buyer can ask their solicitor to confirm the contract date and the risk date in writing, arrange building insurance to start by that date, and ask the insurer about any exclusion in the first 72 hours. A buyer should also visit the property before settlement. The standard contract allows one pre-settlement inspection after reasonable notice, and after a storm it is the moment to find out what has changed.
A seller can keep the existing policy until settlement, secure the property before forecast weather, and tell the buyer promptly if anything is damaged. A seller who intends to repair a badly damaged home and hold the buyer to the contract should say so early, since the buyer's right to rescind runs only until the restoration is done.
Both sides can agree in advance, through their solicitors, on what will happen if a named event strikes near settlement. Most contracts never need it. In a Queensland summer, the ones that do are glad of it.