homepage logo

Real Estate Law: Damaged home sold after Ian … who gets insurance payment?

By ERIC P. FEICHTHALER - Real Estate Law | Nov 10, 2022

Dear Mr. Feichthaler:

After dealing with the hurricane and the aftermath, we decided to return to Pennsylvania. This will also bring us closer to a new grandchild, so the timing is good.

Our home sustained damage, and we are in the middle of our insurance claim. How do we deal with that. Will the new owners receive payment when the claim is paid?

— Sam P.

Dear Sam,

I have several clients that feel the same way you do. They were on the fence on where they preferred to live prior to the storm, and the hurricane has led to favoring being closer to family up north.

Your insurance policy is a contract between you and the insurer. I have been handling several title transactions involving homes with damage. Generally, the seller retains the right to any payments to be received from insurance companies, and the buyer pays a lower price to account for the damage. Alternatively, the seller can assign all rights to insurance policies to the new buyer. In that case, the seller would demand a sales price that would take the future payments into account, leading to a market value after repairs.

Keep in mind, while an insurance claim is pending, you will need to disclose this to prospective buyers. You will also disclose the damage to the best of your knowledge. Buyers may have difficulty in obtaining a new insurance policy where there is a pending claim. I have seen several contracts where the parties did not adequately address insurance issues, which has led to disagreement. As always, it is vital to address everything of concern in the contract so the parties know their rights and obligations. Insurance issues must be expressed clearly so there is no doubt which party is entitled to insurance payments.

Regardless of the decision you make, you will want to inform your insurance company of the sale. They may have additional items to allow for the continued claim or transfer to a new buyer.

Just over six weeks after the largest storm to hit Cape Coral in recorded history, we have come a long way to recovery. Before signing anything with an insurance company, be sure what you are agreeing to. If unsure, speak with your insurance agent. If still unsure, you should seek professional legal advice. There is way too much money at stake on a homeowner’s insurance claim to handle informally. I wish you the best on your sale and move.

Eric P. Feichthaler has lived in Cape Coral for over 35 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, Cape Coral Museum of History, and Cape Coral Kiwanis. He has been married to his wife, Mary, for over 20 years, and they have four children together. He earned his board certification in Real Estate Law from the Florida Bar. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator. He can be reached at eric@capecoralattorney.com, or 239-542-4733.

This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.