Home Selling in Kentucky>Question Details

J, Home Seller in 41091

Tree fell on our house just 36 hours before closing!! NOW WHAT!!??

Asked by J, 41091 Sat Jun 7, 2008

We were set to close on our home yesterday, and just 36 hours prior to that.....a TREE FELL ON OUR HOUSE!! (Good grief) Obviously, the closing has been postponed. We do have homeowners insurance, and are covered fully. Our problem is that the buyer still wants to close on the house (that's not really a problem, now is it?) but wants to do so by the 24th so his rate does not go up. Obviously working with an insurance company, that time frame is completely impossible to accomplish. (We couldn't even get anyone to respond to us for 3 days!)
Our repairs will be well over 5,000 dollars, which will require the check from the insurance company to be endorsed by both us and our current lender. If we close, how would that be possible? Is there any way that we can still close early on the house, before the repairs are complete and paid for in full? Will we have a difficult time getting the money from the insurance company if we no longer occupy the home?

Thanks in advance! :-)

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Let me tell you what happened to a client of mine, then you can determine if the same circumstances are similar, and if you have the same option in your locale. 1 day (yes, just 1 day) prior to close the roofer who was suppose to have given us an all clear on the roof, calls to tell us he sent over the inspection to the wrong house. Turned out the house my client was buying had hail damage and needed a completely new roof. The sellers were pretty upset that this wasn't revealed earlier, but they agreed in an amendment, to submit an insurance claim, and to sign over ALL proceeds to the damage claim to my client when the check was issued. My clients wanted to close for the exact same reason your buyer wanted to close, AND because the movers were already on the way to the house with their goods!

I talked to the sellers insurance agency and they said that since the house was covered by the existing policy when the damage occurred, they were liable. They also said that they could not make the check out to my client because my client didn't own the home when the damage occurred. They never indicated that the seller's mortgage company had to endorse the check, and I'm not really sure that the insurance company has the right to make that stipulation. But in my situation, the roof was still functioning in its intended capacity, that is, it wasn't full of holes and leaking all over the place, it just needed to be replaced.

In your situation, regardless of what the buyer would like, you have a home that is damaged, severely. Since the buyer is having to get a loan to purchase the property, then I'm pretty sure it would be fraudulent for the buyer to attempt to close the loan and not disclose to the new lender that the home has been damaged. If the new lender knew of the current situation, it is very unlikely that they are going to allow the loan to close until the damage is repaired.

I think the issue is outside of the buyer's (or your) ability to control at this point. Likely because the buyer's lender is going to require the repairs to be completed, the closing isn't going to occur on the 24th. However, I would bet that the buyer can simply explain the current circumstances to the lender and ask the lender for a rate extension. If the lender isn't a total nut case, they'll grant the extension, and charge only a modest fee, or maybe no fee given the unique circumstances.

I think trying to force the closing to occur without full disclosure to the new lender is a can of worms you don't want to open, nor do you want to be a part of.

Keep me updated,

0 votes Thank Flag Link Sat Jun 7, 2008
Thanks again Jeffrey!

I agree and thought the same regarding the buyer and his lending company. I can't imagine any lending company to allow a closing on a house that is now damaged. I know that the buyer told them about the situation, because the 24th is actually the date they extended the closing to. Not sure if they would extend it once again or if they told the buyer that a closing wasn't possible until repaired.

We are going to hit the insurance company with a barrage of questions on Monday. We really have to find out about the stipulation of both the lender and us endorsing the check. One of my biggest concerns is the amount of time it will take for authorization and repair. Depending and waiting on the insurance company doesn't give me a warm and fuzzy feeling. ;-)

Thanks again!
0 votes Thank Flag Link Sun Jun 8, 2008
that is why you have homeowner's insurance.
As long as the insurance company is going to pay to have ti fixed, you are good to go.
The buyer many opt out...which would be in their rigfhts (in most cases...this is not legal advice).
ASk an attorney.
Also have your Realtor ask the buyer's agent...aside from the tree damage, are your buyers okay with the purchase?
Then talk with your insurance company....
0 votes Thank Flag Link Sat Jun 7, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
Hi Jeffrey,

Thanks for your assistance! Sorry, I am not being completely clear on my question. Mostly because it is such an "untraveled" territory from any previous experiences I have had with closings. I will try to explain as best I can.... Mostly, the owner REALLY wants to close on the house by the 24th of June, (maybe not take possession just yet, don't know) so that his locked in interest rate won't be lost. When speaking with the insurance adjuster today who assessed the damage, it will be well over 5,000 dollars. Because of that amount, Liberty Mutual requires that the payment check be endorsed by both the homeowner (us) and our mortgage holder (Countrywide). We were also told that we will not hear anything back from the company to start repairs for another 7-10 business days.

If we close prior to even receiving any payment, how will those requirements be met? (Having the mortgage company, who no longer has the property, sign the check). Also, what are our legal rights to ensure the work is done to the satisfaction of the buyer if we no longer own or occupy the property? The owner is most concerned about the interest rate; we are most concerned that closing before the work is done may cause some confusion and liabilities.

We just want to know if it is "legal" or even wise to close before any work has taken place or any check is "not" in the mail. :-) Don't know if that is clearer or perhaps worse than before? ;-)

Thanks again!
0 votes Thank Flag Link Sat Jun 7, 2008

It all depends on what your buyer has agreed to. If you're saying your buyer has agreed to purchase the home and accept the insurance companies repair estimate as full compensation for the damage, then I'm not sure what you are asking for. If instead, the buyer wants the home repaired to as before condition, then I think that's pretty unlikely. Your insurance company is liable for the coverage based on the date the damage occurred, so irrespective of when you close, the insurance company is still on the hook.

Again, unsure of what you're asking for. Not sure why you need your lender to sign off on the insurance damage payment. What are the details about what you and the buyer have agreed to with respect to the damage?


0 votes Thank Flag Link Sat Jun 7, 2008
It's up to the seller to provide the home in same condition at closing as it was when you signed the contract. You may want to delay closing until it gets repaired.
Web Reference: http://getprequalified.com
0 votes Thank Flag Link Sat Jun 7, 2008
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