Home Insurance Forum

Dec. 21, 2007

In the process of purchasing a home, it was discovered through a home inspection that there was roof and siding damage due to hail. The sellers are now saying, oh yeah, we have a check from the insurance company made payable to us and our mortgage company, you can buy the home "as is" with the damage or we will have the damage repaired but its going to take us six months to do it (the insurance company has said that they must stay in the house in order for them to keep the claim) and at that time we might have to renegotiate the price.

Can't the claim check be assigned? Do they have to be the owners of the property in order to have the damage repaired and the insurance company to pay for it?

Marie, Virginia

Dear Marie,

The claim check does belong to the existing homeowner, because it is their policy, their claim, and, right now, their house. Their insurance company can not assign that check to you. That leaves you with three choices.

You can go ahead and buy the home "as is." Obviously there are costs associated with this. Your own insurance won't pay for repairs for existing damage. In addition, your insurer may require you to make those repairs in order to receive insurance.

You could wait for the repairs to be completed before signing the final sale contract. At the very least, there could be several months of delay. You could also, potentially, lose the house in the renegotiating process.

A third solution would be to take the middle path. Ask your real estate agent to negotiate a deal with the sellers that reimburses you for damage-repair costs, and be sure to get the details in writing as part of your contract. You will need to consider how much the repairs will cost and how much you are willing to accept as compensation. You should also factor in your personal motivations: How much do you want this house? You may still have to foot some of the bill for the repairs yourself, but you will also get into the home more quickly.

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