My husband and I had a house for sale "as is" and our realtor found a buyer.The house had been rented out and appeared to be in good condition, but needed some minor repairs. (Painting of wood trim and replacing some screens and cleaning carpets. A contract was signed on June 20, 2013. Then our realtor wanted us to have the roof and other outbuildings assessed for hail damage by our insurance company. There was hail damage to the roof, guttering, screens, and two outbuildings and some rot and peeling paint on the wooden trim. The new owners had already taken partial possession on July 3rd to do some of the repairs in order to qualify for their FHA rural development financing. The insurance claim was not filed till around the 20th of July. After taking full possession on Aug. 1st, the new owners had the septic system checked and they found the tank needs a repair and it was recommended to extend the laterals. They also discovered the electric stove was unusable due to arcing when plugged in. Are we legally bound to turn over any or all of the check to the new owners or to pay for these repairs that we were not aware were needed? The insurance company did not specify if the roof MUST be replaced, or we return the money, or what. Do we have to do repairs or return the money, and since they have already done the painting and replaced the screens themselves, and since they bought the property "as is", can we keep that portion? I don't think we should just hand over the check to them for all of it because of the "as is " clause in the contract. We finally closed on Sept.5th. and still don't have the check for repairs, but want to know what to do when it comes. Our realtor thinks we should give them the full amount and we agreed to part of it for the roof repair, but not money for repairs they did themselves, or for replacing a current storage outbuilding, and roof repairs on another outbuilding. PLEASE HELP!
1 Answer from Attorneys
If the hail damage occurred after the sale your realtor would be correct and the buyer would be entitled to the proceeds. As I read it though, the actual loss occurred some time before you sold the home and you sold the home "as is." If that is the case, I don't see that the buyer has a claim to the insurance proceeds. You should confirm this with an attorney who practices real estate law, which I do not. The Oklahoma Bar Association has a "Find a Lawyer" service that should be able to help you with that. Be aware, your insurance company will want to put your mortgage company (if any) on the check. Your mortgage company will only release the funds to you if you either use the money to make the repairs (which you obviously don't want to do) or if you pay off the mortgage balance. Good luck.
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