The Importance of Insuring Yourself
As a top producing Bristow-Gainesville Real Estate Agent, I get plenty of experiential lessons. In our continuing education, or in office meetings, we get nuggets of information. One that has passed down through the years is to have insurance in place not only when you buy, but for a day or two after you sell. They are both equally important. And without the benefit of experience, you go on what you are told is a best business practice. Heck, our Residential Sales Contract has a paragraph dedicated to insurance and the importance of buyer's having it in place. That paragraph is geared toward a buyer with a loan. It is a disclosure that the lender may require you to have insurance in place when purchasing property. If you are my buyer-client, we are going to sit down and go over every paragraph in the offer, and inevitably, we are going to start a conversation about buying home owner's insurance.
Let me share with you an experience that happened while representing my mother in the sale of her condo in Gainesville. I am thankful it happened in my mom's deal and not another client. That's because my mother didn't have to stress about it. My brother, who acted as Power of Attorney for my mother, did...but he didn't stress much. Why? He's got me, a sister who eats, sleeps and breathes real estate.
Two days after the settlement of mom's condo, on a Sunday morning, my phone rang with the manager of the condo association. She wanted the name and phone numbers for the buyer and the buyer's agent. Sometime after settlement, the buyer had moved a few things into the condo, used the toilet and unknowingly clogged it. Not a big deal, but the toilet the buyer clogged had a propensity to run and run if you didn't jiggle the handle. It was discovered at home inspection that this was an issue,, but had not been requested as a repair. The buyer didn't remember, and may not even have realized he had clogged the toilet. After he left, not to return until his move which was scheduled for a week or more away, the water collected with nowhere to go. The unit where this occurred was on the third floor. The water soaked into the carpet, tile and drywall. As more water collected, eventually gravity pulled it to the units below on the second and first floor. The condo manager reported that water was pouring in through the lower unit's electrical sockets. The damage was extensive. Yikes!
Naturally, the first question asked by the buyer's agent to me as the seller's agent was if the deed had been recorded. Here we go. The scenario that I had been told could happen, but never really experienced. Suddenly, the paragraph in the contract about when the seller's assumption of risk ended 
became very important. It ended when the deed was executed (signed by my brother) and delivered to the buyer's title company. The latter of those events was Friday afternoon. Seller's assumption of risk was over, but mom's condo policy was still in place.
After talking with the head attorney at Long & Foster AND our chief risk officer in the insurance division, I was told it was a great thing we had left mom's policy in effect, but filing a claim when the ownership had been legally deemed to have changed would have been insurance fraud. The chief risk officer told us to leave the policy in place until Tuesday or Wednesday the following week. That way, if a demand letter was presented to pay for damages, the insurance would cover it.
Meanwhile, the cash buyer never purchased insurance. Apparently, no one told him too. It wasn't until after settlement when the agent and buyer were walking into the unit that it was even discussed. The buyer planned to call his insurance company Monday.
The moral for buyers is simple. If you are buying without a loan and aren't required to get insurance, you are asking for trouble if you don't have it in place when you close. For sellers, leave your insurance in place until you receive your funds from closing. Then, you can be sure that the deed has been recorded, in the event some fancy pants attorney considers that recordation and execution are related.
Anything can happen during or after a real estate transaction. When you hire me to represent you, tt is my job to keep your risk at a minimum. And after thirteen years of experiences like these, I am very good at risk management.
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