A Fire

[Unregistered]

What happens if you purchase a home at auction that has recently (within a week or two before) that has burned down? Would you just be out that money or would the bank and/or buyer be resposible. If the seller was responsible and he had not been paying his homeowners insurance would you be out the cost of the house?

[George Roddy, Jr.]

Todd,


(BEST QUESTION OF THE WEEK)*

*best question gets a FREE online class or a one-on-one personal consult with a Roddy.com represenative.


First, there will be a insurance policy in place until the auction. Whether or not the borrower is making the payments, the lender will pay for insurance coverage regarardless.

Case in point: I lent a homeowner $30,000 a few years ago. He stopped making payments and the insurance was about to expire, therefore I (lender position) went ahead a bought a policy to protect my investment. When the borrower tried to repay the arreages, he also had to pay me back for the insurance I had purchased.

Second, need some legal assistance before I answer. I will post the answer tomorrow.


George

[George Roddy, Jr.]

Todd,

Sorry for the delay. I have spoken with 2 people: a real estate attorney and a trustee at a major lawfirm that handles foreclosures.

RE Attorney: the borrowers insurance would cover the loss and the investor would just their money back. (sale is voided)
Foreclosure Trustee: Investor bought a burn-out. No recourse.

I don't like the answer I received from the foreclosure trustee. I will research this further and post my findings.