Insure during redemption period?

[Becky Orth]

I acquired a property at a sheriff's sale, but the owner has a history of coming up with the money or selling her redemption rights during the redemption period. Do I need to get title insurance and property insurance during the redemption period? Do most investors use the same insurer as their primary residence?

[John Mocker]

Becky,

Although I am not familiar with the Sheriffs Auctions I thought of a couple of things that may be helpful from an Insurance perspective.

If your name appears anywhere in relation to this property I would suggest you get Liability Insurance.   Even if you are not Liable, you may get named in a suit and have to defend it and incur legal costs.   Your current homeowners may be able to exend liability to this property.

Regarding whether or not you should seek coverage for the actual property (building, contents, etc.) at this parcel, you should analyze what would occur if a loss happens during the redemption period:

- if damage happens to the building, do you still have to go through with the purchase?

- if you still must purchase the property, will the price you pay go down or is it the same?

- if damage happens, would the current owner have any right to the insurance proceeds?

Depending on what you determine from the above, you may have an insurable interest and if so, you need to insure the property.  I would discuss this with your attorney and agent to see how your state laws would impact it.  Good Luck.