Open Insurance Claim - Not sure what to do

2 Replies

Hey guys - I have run into a problem that I'm not sure how to handle on a property I'm in escrow on in which I'm acting as a co-buyer's agent. Here's the run-down:

We entered escrow on 4/10 on a condo unit in Southern California. The home inspection has been cleared, however after receiving the CLUE report we found there to be an open claim for more than $50k. The claim is on the previous owner of the property, who is now deceased, and the current seller has no information about this. The only information we were able to receive about the claim was the amount, no description

Our client has talked to a few insurance agents who have all offered quotes on contents insurance (studs in), however when I spoke to a insurance broker that I have used in the past and trust, he said he approached three different insurance companies, and they all stated that because it was an open claim for such a large amount, they would not be able to write a policy for this condo. The mortgage broker also informed us that for the last twelve months in California, contents insurance is required from every lender.

Do you guys think it would be safe to release the physical inspection/insurability contingency? We're considering removing the physical inspection contingency and asking for more time to investigate the insurability of the property, but I'm worrying that this might be futile and we only have a few days left to remove all contingencies.

I appreciate your feedback and help on this.


I would not want to release the inspection / insurability contingency personally. I would be asking for more time to investigate for sure. To much risk in my mind preceding without better knowledge of the claim.

If the seller doesn't want to allow more time it seems to me that it might be better to walk and wait.

I agree, the only problem is that I'm dealing with a client who intends on living in the property as their primary residence and not an investor. Investors are usually more sane, cautious and experienced.

After having a couple more detailed conversations with an insurance agent my client feels comfortable moving forward and removing the contingency. They've seen over a hundred homes in their price range and don't want to let this deal go away. They are well-informed of the risks involved and I can not make the decision for them.

I'm keeping my fingers crossed.

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