Motivated seller wants to give me insurance money

[Dethorn Graham]

Good morning bigger pockets community. I haven’t posted in a while and I will do better. Hopefully someone can give me a little advice on this potential deal. I have a motivated seller who was renting out a three bedroom two and a half bathroom home to section 8 tenants. The House recently caught on fire and its been burned pretty bad. I introduced myself to the seller and she is pretty much motivated to get rid off the house. Even offered to give me the insurance money to get the house fixed. This is new to me. So could anybody offer any advice on my next move? Thank you, Dethorn

[John Mocker]

Most Insurance policies that are written with "Replacement Cost Coverage" (RC) for the Building will pay only the "Actual Cash Value" (RC - depreciation) until the work is done to repair/rebuild.   Once the work is done they will issue a second payment for the difference.  

I think you need to seek an attorney experienced in this area before proceeding.  You will have no standing in her claim since at the time of loss, you were not a party to the policy.   The attorney can advise you how to handle this.   She may be able to assign you the proceeds of the claim.  (Insurance departments in several states have put some restrictions on that process due to abuses by contractors in that area).

You should have the contactor(s) you will use review the property and the insurance companies proposed payout to make sure they can do the work for that amount.  Also, check with the attorney & the insurance co. for the current owner to see what happens if your contractors find additional damage that was not seen in the initial claim settlement.

Good Luck