Home Buying in Guilford>Question Details

Carl, Home Buyer in

Buying an old home, all I need is insurance, but it's uninsurable (old wiring).Seller won't fix. What to do?

Asked by Carl, Tue Dec 4, 2012

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This question was asked from this property: http://www.trulia.com/property/1067657407-7-Park-St-Guilford…

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Carl’s answer
Ok, I was finally able to get insurance through a local branch of Liberty Mutual (the main 800 number denied me, but suggested that a local branch had more leeway) . The price was good and they gave me the grace period to remove the wiring. It was nice to talk to someone reasonable.
1 vote Thank Flag Link Sat Dec 8, 2012
In the past many insurance companies would give you a 3 month period to correct. If you don't have the money to fix it and the seller wont fix it walk away. You have no other options.
0 votes Thank Flag Link Sat Nov 30, 2013
Yes, A local branch of Liberty mutual gave me some time to fix it after the purchase. I spent $2500 for about half the job: new fuse boxes and no fault breakers, and all the outlets were done with romex on the first floor. I had him disconnect the 2nd floor and ceiling lights for the time being (I used lamps) This summer I will run the romex myself and just have the lectrician do the final connections to complete everything.
Flag Sat Nov 30, 2013
Carl was able to work with a lender and insurance company that gave him the time to fix things... he did purchase the home. We'll see if he updates us on the outcome.
Flag Sat Nov 30, 2013
Local agencies have more leeway, but many underwriters will not touch knob and tube wiring
0 votes Thank Flag Link Fri Sep 13, 2013
Update: A local Liberty Mutual office was much more reasonable and helpful. I was able to get the insurance and mortgage; I bought the house and got the wiring fixed. It all worked out.
0 votes Thank Flag Link Thu May 9, 2013
Switch insurance companies if the agent is not giving you other options.
0 votes Thank Flag Link Mon Mar 25, 2013
you can get vacant property insurance, or a policy that just lasts during construction, i do that all the time it is far more costly than regular insurance but if you take it out short term and get the work done fast it becomes reasonable, at the same time you can repair other things that may adversely affect your insurance

from mike silver m silver company
amesbury ma
0 votes Thank Flag Link Mon Mar 25, 2013
sorry carl, this reply never got sent to me so I missed it. I am glad you were able to find someone to help. Ryan Madore from Quirion Insurance was my first thought... (207) 622-6784 rmadore@quirioninsurance.com

ive seen extensions as recently as this summer.

we just looked at a property for Charlene that has a lot of knt so she could certainly testify...
0 votes Thank Flag Link Sat Dec 8, 2012
I will echo Jeff's comments that many insurance companies will give you 30/60/90 days grace to have the work done after closing. If your company will not do that, then look for someone who will.

Check with Liberty or State Farm - unless they have changed their policies recenty, both of those companies allowed this in the past.

Knob and tube isn't inherently dangerous, but it wasn't built for today's requirements. $2,000 sounds like a fix to just replace visible knob and tube - not all knob and tube, so you will still have it in the walls.
0 votes Thank Flag Link Tue Dec 4, 2012
How recently have you guys seen policies with 30/60/90 day grace periods?
Flag Tue Dec 4, 2012
That estimate was to disconnect all K&T int he house, and replace only the outlets on the 1st floor and no overhead lights. Basically, the bare minimum.

I will keep trying with insurance companies but they were pretty negative. Thanks.
Flag Tue Dec 4, 2012
Carl,

There is a it of a misconception... KnT is not necessarily a bad thing until you talk to insurance agents. KnT is definitely an older form of wiring, meets code (as built), but in good condition (as with any wiring) it is fine... it is brittle and can easily damaged... with that being said, you are better off replacing all of it (visible or not).

You might want to talk to several insurance agents and get other opinions... we've seen 30/60/90 day policies periods for clients to get their wiring upgraded. This allows you to close, THEN get the repairs. Talk to an agent that represents more than one company... that will be your best bet.

There are hundreds if not thousands of homes in maine with knob n tube wiring... so I think with some calling around, you can find someone that will at least give you a period of time to upgrade.

For your piece of mind though, KnT in good condition is not Dangerous...it is not law, code or anything else driving its' replacement... it is purely the Insurance industry.

Good Luck
(let me know and I can give you name of an agent that might be able to help)

Jeff Campell
0 votes Thank Flag Link Tue Dec 4, 2012
sorry carl, this reply never got sent to me so I missed it. I am glad you were able to find someone to help. Ryan Madore from Quirion Insurance was my first thought... (207) 622-6784 rmadore@quirioninsurance.com
Flag Sat Dec 8, 2012
Yes, please, if you know any insurance agent that can do it, I'd be interested. I talked to 2 insurance brokers in the area. At first they thought they might be able to give me 30 days, but then they came back and said the policy now was no K&T extensions at all, and no time buffer, and that nobody would take it. So if you know otherwise that would be great news.
Flag Tue Dec 4, 2012
More info: I love the house and it's affordable. I've been approved for a mortgage contingent on one last thing:insurance binder.

The house has "knob and tube wiring" which is very old and dangerous, and no insurance company will insure it, even on condition of it being fixed after closing. I have the option, before closing, of paying a minimum of $2,000 to get the basics rewired, but there is always the chance that the insurance or the sale will not go through, in which case I'm out $2k.

Is there any way around this catch-22?

There's a good chance that the house will not sell anytime soon since anyone else using a mortgage to buy it will have the same problem.

Should I...?

1. Walk away for now, avoid April property taxes, heating bill etc, save more money, and come back in the spring? I would risk house being sold (unlikely) or not getting mortgage approval second time around.

2. Risk $2k and get it over with?

IS it common or ever done at all that a buyer would fix something on a home before owning it?
0 votes Thank Flag Link Tue Dec 4, 2012
You've correctly identified the "Catch 22." Any alternatives will not be without risk and measuring those risks are difficult. I would caution against counting on the house not selling until spring. While the market and circumstance might imply that, things can change very quickly... a cash buyer can appear or the seller can change the price or decide to make the repairs so the property will sell. "The one thing you can be sure of is that you can't be sure of anything."

To your last question, it's not common in my experience. A more common practice is to put the repair cost into escrow so there's confidence the money is available to make the repairs, close the transaction, make the repairs. Not all loan programs allow this, by the way. And this won't necessarily satisfy the insurance company. In short, there are a number of landmines in every transaction until it closes... I would be hesitant to recommend risking $2k unless you are VERY certain you can close.
Flag Tue Dec 4, 2012
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