So Many Lines So Little Time
Buyers need to remember the insurance deadline in the contract.
The Colorado Real Estate contract is probably one of the most detailed contracts in the United States. The dates and deadlines are very specific and we actually find this to be very helpful.
One deadline that is not highlighted as much as it maybe should be is line 25, Section 10.5 of the contract – Property Insurance. With the hail damage that has occurred in Colorado over the years, we are seeing roofs that have suffered damage and not been replaced.
“Insurability. Buyer shall have the right to review and object to the availability, terms and conditions of premium for property insurance (Property Insurance). Buyer shall have the Right to Terminate under § 25.1, on or before Property Insurance Objection Deadline (§ 3), based on any unsatisfactory provision of the Property Insurance, in Buyer’s sole subjective discretion.”
A recent scenario –
The buyer had a roof inspection. Two inspectors said that the roof was acceptable. The buyer had waited to get insurance and the insurance deadline had passed. The chosen insurance company along with 15 other insurance companies declined to insure the home due to the roof.
There was some back and forth between buyer and seller questioning if the buyer get out of the contract as the insurance deadline had passed. Loan conditions had also passed. This created quite a stir that could have been avoided had the buyer looked into obtaining insurance prior to the insurance deadline. The buyer hired an attorney and the attorney said that the buyer could get out of the contract on loan conditions even though the date had passed.
After many hours of work by all parties involved, the transaction did close with a new roof on the property prior to closing. Having insurance lined up in advance would have been a “heads-up” to everyone involved in the transaction that there was a problem and while it may not have been easy, it would have made for an easier situation.
Senior Loan Officer
License #100027008 NMLS#360599
Credit: LIV Sothebys International Realty