Do You Need to Insure a Vacant House in Probate?

Absolutely!  It's really that simple, being protected against the unexpected is vitally important.  Under New Jersey Probate Law, the executor/administrator of a will can be held financially responsiblefor incidents that occur on a vacant property.  Just imagine the costof being sued because a child tripped on while playing in the unkeptyard, of the vacant home, and broke a wrist.  It can happen andinsurance is the only way to protect yourself while the house is stillunder your control as executor.

Vacant Home insurance isdifferent then the normal Homeowners Insurance you might have for yourcurrent house.  It is a unique protection placed on vacantbuildings/homes that are expected to be unoccupied for more then 90days.  The first thing that needs to be done is the cancellation of theexisting home insurance and then the vacant home policy can be put intoplace.  This vacant policy will be more expensive for a variety ofreasons, let me give you an example of why…

John and hisfamily recently moved out of there 2 bedroom, 1 bath house to a largerhome in order to better suit his growing family.  Unfortunately he hadyet to sell the old house and it has been sitting vacant for the past 2months.  As time went on John was unable to check on the house as oftenas he would have liked.  One day, about 3 weeks since he last to a lookat the old place, he was driving in the neighborhood and decided tocheck up on the unsold house.  As he walked into the front door he sawa large wet spot on the floor, noticed a terrible mildew smell and thewallpaper was pealing right off the walls because of all the moisture. What had happened?

The washer hose sprung a leak and had beendripping water for 3 weeks.  If John had still lived in the house, atworst, he would have come home from work 8 hours later to find a smallwet spot by the leaking hose and would have avoided massive damage. The claim would have been small, about $10,000 of water damage, butsince the house was vacant and there was nobody to discover the leakfor 3 weeks the water caused over $100,000 worth of damage. WOW!

Ifthe normal homeowners policy was somehow still in affect, the insurerwould probably only cover the first $10,000 of any claim in thissituation, that is why you must get a VACANT homeowners policy in placeas quick as possible.  You want to be protected.

Even though avacant homeowners policy is more expensive, that cost can be mitigatedby raising the deductible amount that you are willing to pay.  Adeductible of $5000 would save you a ton of money compared to one of$500.  

Liability Insurance Coverage is also extremelyimportant. Being away from the house can create a situation where youmay be found negligent or liable for damages in a court of law andsituations you did not foresee. The most common example of this, issomeone comes onto your property to deliver something, or for someother legal reason, and they are injured because you have not cut thegrass, shoveled the snow, or another reason related to the home beingunoccupied. A child wandering on your property and being hurt isanother common example. Liability coverage is very important andwithout it, as the executor of the estate, you are risking yourfamilies savings.

Yet another coverage option to look into iscontents coverage.  If there is anything valuable left behind in thehouse, that won't necessarily be covered by the vacant homeownersinsurance.  This depends on the policy so you must ask.

Also askif the policy covers for vandalism, many vacant homeower's policies donot. Vandalism is the most common claim for a home that is not beingoccupied by the primary family members.

Important Notes, If ahouse becomes vacant for a period of 90 days or greater the originalhomeowners policy may be dropped by the insurer at any time.  They get very nervous when a house is vacant.   

Ifyou have no plans on living in the house, you should attempt to sell itas quickly as possible to avoid problems.  If the house is in badcondition or you have attempted to sell it and failed you still haveoptions.  Contact Scott at www.ScottyBuys.com/Probate and he canpossibly help.  There is no risk or obligation.

A typical Vacant Homeowners policy over at www.vacanthomeinsurancenow.com looks like this…

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Coverage Offered:
H03 policy wording (all risk coverage on the dwelling / replacement cost coverage at the time of claim)
Named Perils coverage on the contents if any items are left behind in the home.

Liability Insurance included at $100,000 with legal defense costs:
Additional liability coverage of up to $1,000,000 available on the vacant dwelling.
Legal defense costs included in the liability coverage

Deductible: Minimum deductible amount of USD 1,000 per occurrence.

Dwelling limits: Coverage limit of up to $1,250,000 per dwelling if requested.

Other structures coverage: Coverage equal to 10% of the dwelling limit.

ContentsLimits: 10% of the dwelling limit up to $25,000. More contents coverageavailable upon request if items are remaining in the unoccupied home.

Earthquake:
Coverage limit of $1,000,000 per event.
Aggregate annual limit of $2,000,000 per master policy.
(Not available in all locations)

Flood:
Coverage limit of $1,000,000 per event.
Aggregate annual limit of $5,000,000 per master policy.
(Not available in all locations)

Windstorm or Hail:
Subject to a deductible equal to 2% of the dwelling coverage limit.
Dwellings located in high risk counties or cities are subject to a deductible equal to 5% of the dwelling coverage limit.

Territorial Limits: Home can be insured in the U.S., Canada, U.K. EU, Australia and in 50 other countries if approved insurers.

Alarm system: May be required by some insurance companies

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*As always articles on this site are informational only, any legalmatters must be brought to an attorney who specializes in the field*

 

The assets in a New Jersey Probate case is usually broken up into two classes, real and personal property.  Real property consistes of mainly real estate, or houses, vacant land or commercial property.  While personal property is pretty much everything else, such as bank accounts, the family car or collection of rare stamps.  The distribution of the assets can be a contentious ordeal and can drag on for years if someone contests.  

The last will and testimate would normally contain the guidelines for what happens to the estate's personal property.  It is very common for those benefiting under the will to inherit items of particular sentimental or real value, while the remaining items be sold at auction or to a third party such as a consignment shop or an investor.  Any contents not sold and are of little value can be disposed of.

A house that passes through probate in New Jersey can be sold with the approval of the court before the probate process has been completed.  Sometimes this is needed in order to pay off taxes or liens on the property.  The house can also be sold if nobody is interested in taking care of the house and would rather divide the proceeds up between the beneficiaries.   Some situations can arise where there are multiple heirs inline to inherit the house.  If one of them wants to stay and live in the house and the other(s) would prefer to sell off the property a conflict can occur.  This however can be avoided with a properly written will the specifically dictates what should happen with the house and directs the beneficiaries how to handle the situation.  

To complicate the matter, sometimes the house will not have to go through the probate property.  If the house was jointly owned by a couple, in most circumstances, the surviving spous will become the sole owner.  This is called a tenancy by the Entirety.  Another type of ownership can supersede a will and that is a Joint Tenancy with rights of survivorship.  Sometimes an elderly parent will create a joint tenancy with a child of their family home.  This is done to avoid the probate process and allow ownership of the house to pass immediately to the child upon death.

In most cases the best course of action is to sell the house.  It helps avoid family battles and can be an easy way to put thousands of dollars into your pocket.  If you are looking to sell a house that has been through probate or is currently in probate please contact Scott at Scottybuys.com/probate

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Paul’s mother passed away recently and the will stipulates that he will inherit his mom’s house.  This is great news for Paul as he is in need of money, so he immediately puts the house up for sale and quickly finds a buyer.  Everything goes smoothly until it’s time to close on the property and the title search shows a cloud (a lien or claim against the house).

Why was there an encumbrance?  The reason is that in order for Paul to sell the house, the house and all other assets must pass through probate before it is devised and Paul gets put on title, becoming the official owner.  Not only can he not sell the house, but it could cost him a lot of money and jail time! Here’s how,a contract between a homeowner and a broker says that if the broker brings a buyer who is willing, able and financible, the broker is due a commission. That alone could cost Paul thousands of dollars.

Thatis not the worst of Paul’s situation however.  He can be sued for fraud, and that is a crime.  Paul does not own the home, so he may not try and sell it.

Selling the house is possible but getting money out of the estatebefore it’s probated is unlikely.  If Paul was the Executor of the Estate, he would be able to get a release from the court in order tosell the house.  In this situation though, the money recieved from the sale would go back into the estate until the estate has been settled.  Only at that time, can the money be distributed to the beneficiaries.

The one chance Paul would have is if the estate’s assets total value was smaller then $20,000.  In New Jersey probate,estate’s valuing less then $20,000 are not required to pass through probate. After the required procedures are followed and the heir has transferred title to himself/herself, the property can be sold.  This however is highly unlikely in New Jersey probate as having a house in an estate will surely have the value of the estate well over $20,000.

Insummary, the executor can sell a house out of theestate by getting the courts consent.  This is a good idea if you arein need of money to pay off the decedent’s outstanding taxes or liens.

Sometimes money is needed fast, if you need to sell quickly visit ScottyBuys.com.

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