In a rent back situation for two months will my owner insurance and requiring the seller to get renters insurance protect us from liability?

Asked by Miriam Fuentes, Santa Clara, CA Fri Nov 22, 2013

Will the seller or their guest be able to sue us if they are injured?

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Terri Vellios, Agent, Campbell, CA
Fri Nov 22, 2013
When the buyer closes escrow with a loan on the home, their lender is going to require them to have home owners insurance on the property. Usually, both seller and buyer will maintain insurance during the course of a rent back to minimize cost in the event of a loss. What is covered in the insurance is best answered by the insurance carrier.

Also, people can sue people for absolutely no reason. The issue is if there is merit. That is where your instance policy comes into place and a good attorney should a loss occur.
1 vote
John Juarez, Agent, Fremont, CA
Fri Nov 22, 2013
Of course you could be sued if your tenant – former owner – or guests are injured. That is why you have insurance in the first place.

The best person to talk to about insurance coverage is your agent/broker and not a bunch of real estate agents – including me. Insurance is not our area of expertise.
1 vote
Juliana Lee, Agent, Palo Alto, CA
Fri Nov 22, 2013
Two months is the length of time where some lenders start to consider the property no longer owner occupied but rather a rental property. Be careful about any extensions.

Normally when someone sues an owner it is because the property was not maintained in a safe condition or there was a hazard that was not taken care of. Yes the original owners could sue you but if they contributed to the hazard/unsafe conditions that would normally be taken into account.

As others have said, renters insurance generally just covers the possessions of the renter. You want to have fire and liability insurance for any property you own. If you don't have insurance your lender may purchase it and charge you what is generally a very high rate.

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http://julianalee.com/santa-clara/santa-clara-statistics.htm
Detailed home values for zip code 95050 can be viewed at
http://julianalee.com/zip-code/95050-statistics.htm

Juliana Lee
Top 2 agent nationwide at Keller Williams Realty, the nations largest
Cell 650.857.1000
juliana@silicon-valley-homes-for-sale.com

Over 20 years experience
Over 1,000 homes sold in Santa Clara County and San Mateo County
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1 vote
Grace Hanamo…, Agent, Cupertino, CA
Fri Nov 22, 2013
Hi Miriam:

There is virtually no way to prevent anyone from suing you. That's a risk that is "mitigated" by holding proper insurance, but it's excellent that you're considering this risk more carefully as you buy the home.

Your best bet will be to contact a qualified real estate attorney for assistance. I might suggest giving my best litigation attorney, David Marks, a call at GCA Law at 650-237-7280. David is a tip flight litigator and a real estate attorney. He'll be able to create a contract between you and the sellers that will help close any gaps between your insurance, the renter's insurance, and your risk.

Good luck!
Grace Morioka
Allison James Estates & Homes
1 vote
Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Fri Nov 22, 2013
They can sue you without being injured. As for the insurance part of the question, might be a better idea to check with your insurance agent, you may not have insurance if it is supposed to be owner occupied and you rent it out. Close doesn't get it these days.

If you are borrowing some of the purchase price make sure your lender is okay with a lease back, some loans don’t allow it for a day much less 2 months. Non default foreclosures are not myths. Good luck,

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
Web Reference:  http://jamessimms.com/
1 vote
David Allen…, Agent, Sunnyvale, CA
Fri Nov 22, 2013
You should have the fire and liability insurance policy as the new owner. The owners who are getting the rent back could buy renters insurance but that only covers their items that are in the home, it's not for fire insurance.
Anyone can sue anyone for any reason almost. I am not an attorney but if someone gets hurt on your property, yes they could sue you and for that reason is why you NEED fire and liability insurance on your home.
Good luck
Best wishes
http://www.servingsantaclaracounty.com
born, raised, live and work right here in the bay.
1 vote
Robert Spino…, Mortgage Broker Or Lender, Mill Valley, CA
Mon Nov 25, 2013
Hi Miriam,

I hope that by now you were able to contact your insurance agent and ask this very astute question and get it answered to your satisfaction. Personally, I don't think I'd get an attorney involved at this point, but I would certainly make sure your insurance agent understood your specifics and provided coverage consistent with your risks.

A two-month rent back will not be a surprise to them. These things happen all the time and they will have an answer and solution for you.

Rob Spinosa
rspinosa@rpm-mtg.com
0 votes
Elena Talis, Broker, Palo Alto, CA
Fri Nov 22, 2013
First of all, what is required from the seller, now renter, in terms of insurance is determined by the type of the contract you signed with them. There is a number of common Occupancy After Sale contracts and the terms of the contracts are quite different. You should consult a qualified California real estate attorney about the proper contract/insurance coverage/etc. to properly protect yourself from potential lawsuits.
Web Reference:  http://talisrealestate.com
0 votes
John Juarez, Agent, Fremont, CA
Fri Nov 22, 2013
Of course you could be sued if your tenant – former owner – or guests are injured. That is why you have insurance in the first place.

The best person to talk to about insurance coverage is your agent/broker and not a bunch of real estate agents – including me. Insurance is not our area of expertise.
0 votes
Chirs Fanara, Agent, Santa Clara, CA
Fri Nov 22, 2013
Hey Miriam,

Great question. Liability is always a issue for homeowners. There really is no way to avoid it. Even if you did not rent it out and was actually living in it, if someone came up to you door and tripped on your sidewalk, you would have liability issues.

As the other agents mentioned, talk to an attorney about more specific questions about the limitations of insurance and liabilities.

Best of Luck!

Chris Fanara
Raised in Santa Clara
Live in Santa Clara
Raising my kids in Santa Clara
Helping my neighbors in Santa clara
0 votes
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