What to do when the seller doesn’t have insurance

Member since 2023 · 43 posts · 10 votes

this is one of my clauses I put in my contract that I have sent to the seller. She comes back and tells me that she doesn’t have her home insured. She’s tried many times to get it but the home just needs too much work.

What do I do in this situation??????

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Chris SeveneyBusiness Member

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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

@Ismail Sogbaike

Your mixing two different insurances

She appears to be saying the property is not insured from damage.

Your contract is in regards to title insurance which is clear title

The title company will determine that and typically the seller pays for the title policy and if you get a loan you pay for the lenders policy. Some states it may also be split.

But to reiterate your talking apples and oranges

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
@Ismail Sogbaike
Your mixing two different insurances
She appears to be saying the property is not insured from damage.
Your contract is in regards to title insurance which is clear title
The title company will determine that and typically the seller pays for the title policy and if you get a loan you pay for the lenders policy. Some states it may also be split.
But to reiterate your talking apples and oranges
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Ismail Sogbaike
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Member since 2023 · 43 posts · 10 votes
3y
Quote from @Chris Seveney:

@Ismail Sogbaike
Your mixing two different insurances
She appears to be saying the property is not insured from damage.
Your contract is in regards to title insurance which is clear title
The title company will determine that and typically the seller pays for the title policy and if you get a loan you pay for the lenders policy. Some states it may also be split.
But to reiterate your talking apples and oranges
I just confirmed with the seller and she says she doesn’t have homeowner insurance, does that affect me?
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Liron Cohen
Insurance Agent · Woodland Hills, CA · Member since 2018 · 31 posts · 9 votes
3y
Quote from @Ismail Sogbaike:

Quote from @Chris Seveney:

@Ismail Sogbaike
Your mixing two different insurances
She appears to be saying the property is not insured from damage.
Your contract is in regards to title insurance which is clear title
The title company will determine that and typically the seller pays for the title policy and if you get a loan you pay for the lenders policy. Some states it may also be split.
But to reiterate your talking apples and oranges
I just confirmed with the seller and she says she doesn’t have homeowner insurance, does that affect me?

Hi Ismail. Her having no insurance on the home has no effect on you, so I wouldn't worry about it. Are you planning to renovate the home? If so, to what extent, as you might want to get a builder's risk/renovation policy to close with.
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Account Closed
Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
3y
Quote from @Ismail Sogbaike:

this is one of my clauses I put in my contract that I have sent to the seller. She comes back and tells me that she doesn’t have her home insured. She’s tried many times to get it but the home just needs too much work.
What do I do in this situation??????
She raises a point you should look into. While the two of you are talking about completely different things, if she doesn't have insurance on the home, you should call an insurance agent that does Homeowner's Insrance and ask how much a policy will cost you. If she lost insurance due to a previous claim or risk, you want to know how much it will cost to correct the risk and how much your Homeowner's insurance will cost you.

Regarding the clause you posted, call the title company, order a title report and ask if the property has clear title. If it does not, ask what needs to be done to get clear title then you can make a decision on whether you want to continue with the purchase.

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Karen MargraveBusiness Member
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Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
3y
@Ismail Sogbaike In northern CA, title and escrow are usually handled by one company. It's customary for both parties to split. It's paid at closing. When escrow is opened and title insurance is ordered, which triggers a preliminary title report showing liens and encumbrances. You'll need to determine the process where you are.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
Quote from @Ismail Sogbaike:

Quote from @Chris Seveney:

@Ismail Sogbaike
Your mixing two different insurances
She appears to be saying the property is not insured from damage.
Your contract is in regards to title insurance which is clear title
The title company will determine that and typically the seller pays for the title policy and if you get a loan you pay for the lenders policy. Some states it may also be split.
But to reiterate your talking apples and oranges
I just confirmed with the seller and she says she doesn’t have homeowner insurance, does that affect me?

Do you have an agent representing you on this deal? I strongly recommmend working with an agent to guide you through this purchase and the process as there are a lot of things you need to be aware of in every transaction. The answer is yes it matters that there is no insurance on the property.
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