Keeping Vacant Homes Properly Insured in a Probate or Trust Estate.
Hi, I’m Dan Collins – a Sacramento, California licensed real estate broker with expertise in real property matters involving Probates and Trusts. I am also a California licensed general contractor and court appointed receiver for the Superior Court. If you have found yourself tasked with being an Executor administering a Probate or a Trustee of a Trust estate, I can help you effectively execute your duties that attorneys do not help you with. To learn more, please visit my website: probate-realtor.biz
The title of today’s video is “Nobody’s Home” because our subject is about insuring real property in an estate when the property is vacant. Properly insuring a vacant home or income property is the one of riskiest areas of fiduciary responsibility where an estate Executor of Probate or a trustee of a Trust has fiduciary liability. If you serve as a Probate Administrator/Trustee you have a fiduciary duty to properly insure that high value asset – real property.
Your insurance carrier for the home or building that is vacant must be told within 30-days of a property becoming vacant that it is not occupied, or you risk not having otherwise insurable losses covered if you submit a claim. A phone call to your insurance agent informing them the property is or will be vacant is all that is required.
Is it more expensive to insure a home that’s vacant? Actually, yes, it can be because fire, vandalism and, burglaries, among other bad things, are more likely to happen when nobody’s home. If no one lives in the property and a water pipe breaks it may be days or longer before it is discovered. Whereas, if a pipe breaks in a property that is occupied it may be hours before it is discovered but it will usually be discovered quickly.
So, remember, if a home or an income property is vacant, you must have proper insurance coverage in place. It is critical to inform the insurance carrier that the home or income property is vacant. That includes a vacancy between tenants for income properties.
I recently served as a Fiduciary Broker in an Estate that included a vacant single-family home in San Francisco where the decedent had lived. The Trustee hired me in my capacity as a Fiduciary Broker to market the property for sale and to assist her in properly covering all the necessary matters of responsibility required from a person who administers an estate. The first piece of advice I gave the new Trustee was to call the insurance broker to inform him or her that the home was vacant. The Trustee looked through all the files in the home and she could not find any evidence in the decedents records that the property was insured. In fact, it turned out the property was not insured at all!
Believe it or not, this is not uncommon. The decedent had no mortgage on the property. She had owned it free & clear of debt. Retired people often own their homes outright, free of debt. And, it is not uncommon that over time insurance policies may lapse and older people forget to replace insurance policies to protect their homes. I had the property appraised which is a good idea for many reasons when administering an estate, and its value exceeded $1.5M. If there had been a catastrophic loss such as a fire and the home burned down, there would have been no insurance policy in place to replace that valuable asset.
I made certain the new insurance policy covered the home as a vacant structure because if that information had not been provided to the insurance broker the new insurance policy would not have covered the home if it burned down.
My name is Dan Collins, I act as a “fiduciary broker” in probates and trusts that involve real property assets. To learn more, please visit my website: probate-realtor.biz
Thank you for joining me today.