Who Pays? - Posted by Dimpil

Posted by Dimpil on October 15, 2003 at 17:13:43:

Aren’t sellers supposed to inform buyers of all existing issues?

Who Pays? - Posted by Dimpil

Posted by Dimpil on October 15, 2003 at 05:58:05:

Recently a memeber posted about a home whos foundation was sinking.

My question is, who would pay the mortgage if the home would be considered unsafe to live in? The home owners? The home owners insurance?

And if you, as an investor, were to purchase a house like that would you go for a short pay from the mortgage company citing the unsafe condition.

I was just curious as I’ve never dealt with anything like that.

The Homeowner pays… - Posted by Randy (SD)

Posted by Randy (SD) on October 15, 2003 at 10:31:40:

It depends largely on the age of the home and the cause of the deficiency. The homeowner is responsible regardless. The homeowners insurance will most likely cancel them and report the ?Potential Claim? to all other insurance carriers via a ?Clue Report?. The property will uninsurable until the deficiency is remedied.

I had an older home with a retaining wall that was an extension of the foundation, poured at the same time. The retaining wall was being pushed out of alignment by roots of a large nearby tree. My insurance carrier apparently did a drive by inspection in the third year of the policy renewal, the drive by reported the retaining wall damage and my carrier refused to renew the policy or pay for the repair (act of god exclusion).As for the short sale, it?s definitely a determining factor.

Re: Who Pays? - Posted by DaniB

Posted by DaniB on October 15, 2003 at 09:06:12:

Our house caught fire a few years ago. Although this is a little
different than your scenario, the insurance company paid to move
us to an apartment while the house was rebuilt, paid for our
losses, and paid for the repairs, but we were still responsible for
making the mortgage payments. Technically, our home was
unsafe and of course, fire damage was a covered loss.

Re: Who Pays? - Posted by Betty-fL

Posted by Betty-fL on October 15, 2003 at 08:05:19:

In most cases the Ins company will pay for the repair or if the house repair cost more then the house is worth,they will pay the house off.It happens all the time here in Fl.

Happened near me - Posted by Eric - GA

Posted by Eric - GA on October 15, 2003 at 07:38:52:

Based on my case history of one, the homeowner remains responsible and neither the insurance or the mortgage company are willing to help. A house near me had a value of about $110K, with about $90K borrowed on it, but had a large crack in the foundation and the house was splitting in two. When the house foreclosed, the people left lots of notes in the house to the new buyer showing where the problems were and indicating that they had the money to pay, but didn’t want to continue to pay for the a house that was falling apart. They also indicated that the mortgage company and insurance said what was happening at the house was “normal”. After the foreclosure, the house went back to the bank and I looked at it while it was an REO. I even had a company come in and give me a quote on a foundation repair with piers and jacks. I was surprised that that would only cost $11,000. SO, the mortgage company, instead of putting in a little money to protect the investment, ended up selling the house that they were owed over $90K on for $59K. Amazing, huh? I guess maybe they just didn’t want to start a precedent of paying for homeowner’s repairs, because I know what the better business decision was…pay to have the house repaired and let the people pay off their loan over as scheduled, or have the house in saleable condition so the house can be sold and the loan can be paid off.

Incidentally, the investor that bought it is working hard to give us all a bad name. This house that he got a great deal on, but needed major foundation repair, he decides to do the cheapest, crappiest looking paint and carpet treatment I’ve ever seen. He maybe spent $2500 total on new carpet and paint, inside and out…that’s how bad it is. And he fully intends to sell the house to someone at full market value and to lie to them about the foundation…I know, I called posing as a buyer.

Eric - GA

Re: Who Pays? - Posted by chris-atl

Posted by chris-atl on October 15, 2003 at 06:06:10:

I’m not sure on that. My guess would be that the home owner is still responsible, unless there is a specific provision in the policy that covers that. But as far as trying to short it, I definately would attempt it.