House in foreclosure - Water damage

[Anonymous]

My BK7 was discharged Nov. 2014. We moved out of the house a long time ago, actually April 2014. Our last payment was Feb 2014. But the foreclosure process has barely started. Everything was fine until last month when I got a water bill. It turned out that due to the cold weather we had a broken pipe. I was finally able to hire a plumber to come and turn off the water but I still can't get into the basement to see exactly how much damage there is since the door (outside - only access to basement) is still covered in about a foot of ice. 

Here's the issue. I have multiple friends and family all advising me that I should file a claim with the insurance company for any damages and pocket the money. This seems wrong to me. But the money would really help since I haven't worked in almost 2 years. I'm also, of course, not sure about the legality. It's easy to just forget it if it is illegal. But it's a tougher choice if it just comes down to morality. 

So? Anybody have any semi-legal advice?

[Anonymous]

Hello,   I'm not trying to give legal or moral advise but I work with these issues everyday with customers.   If the house was vacant insurance companies will deny the claim.  

[Anonymous]

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@Anonymous wrote:

Hello,   I'm not trying to give legal or moral advise but I work with these issues everyday with customers.   If the house was vacant insurance companies will deny the claim.  

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Thank you. Though I'm sure my friends and family will urge me to lie about occupancy, I will not do that. So if this is true (not doubting you) this makes my decision very easy.

Much appreciated. 

[DaveInAZ]

Well, since you've been paying for the home insurance you moved out of almost a year ago it's not illegal for you to make a claim & keep the money instead of making the repairs, and I don't think it's morally wrong, and I like to think I have pretty high moral standards. You're paying the insurance, any claims paid are yours. But yeah, you needed to notify your insurance co and get special coverage when a house is vacant for more than 30 days. BTW, "Unoccupied house" = you leave for some time but left all/most of your personal belongsing behind and expect to return at some point. "Vacant House = You have removed all/most of your personal belongings and don't expect to return. And absolutely do not lie about it being vacant, that's pretty easy for the insurance co to find out (besides the lack of furniture & personal belongings) - talk to the neighbors, etc - and get you into trouble.

When I bought my house it was a foreclosure and I spent a couple months fixing things up before I moved in. I insured at close of escrow and the insurance sent an inspector by to look at it at some point, and they sent me a letter saying the property appeared to be vacant and I needed to occupy it within 30 days or they would cancel coverage. A vacant house is considered more at risk for damage - like when a pipe breaks and no one is around to turn the water off.

Perhaps a better question is why are you still paying for insurance & utilities (and taxes?) on a house you vacated almost a year ago? You should have filed BK "Intend to Surrender" the property, handed your keys to the lender at discharge, and at that point everything is their resonsibility.

EDIT: Well one thing: Did you ever tell your insurance agent that you were going to or had vacated the house? If you did then they should be on the hook for coverage, Either way, you might call you agent and explain what happed - when you vacated and the current water damage. If they deny coverage I would think you might be entitled to a refund, as you been paying for insurance for almost a year and not getting any coverage.

[Anonymous]

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@DaveInAZ wrote:

Perhaps a better question is why are you still paying for insurance & utilities (and taxes?) on a house you vacated almost a year ago? You should have filed BK "Intend to Surrender" the property, handed your keys to the lender at discharge, and at that point everything is their resonsibility.

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I never heard about 'intend to surrender', it was never mentioned by my attorney. But to clarify, I am not paying taxes and insurance, it's still being paid by the mortgage company. My attorney advised me to pay the insurance just incase somebody fell or something on property. But since the mortgage company has continued to pay I've ignored it. 

As far as the utilities, gas and electric have been taken off my name. I called to cancel, but I don't think they actually turn it off unless they see excessive usage. But water is a different story. It's not run by a utility, it's run by the city. The only way to get it take out of my name is to officially declare the the property vacant with the city. Since there is a $250 filing fee and tons of regulation regarding what must be done to the property, I will not do that. 

[despritfreya]

Insurance companies are not stupid, especially when it comes to real property.  Payment will either be made directly to the contractor or by the issuing of a two-party check (the lender and you).  I doubt very much you will be pocketing the proceeds but, of course, you won't know until you "try".

Des.

[DaveInAZ]

"I never heard about 'intend to surrender', it was never mentioned by my attorney."

- It shoulld have been. In Ch7 BK7 you must file with a statement of your intentions for any secured debt. You have 3 options:

1- Surrender the property and discharge the underlying debt
2- Keep the property by reaffirming the debt
3- Keep the property by continuing to make the payments ("pay & stay")

Your attorney had to select one of those 3 options, and it was on the BK filing papers you signed.If you told him you wanted to talk away from the property he almost certainly checked the Intend to Surrender, and you responsilbility for maintaining the property ended on your discharge.He was right about advising you to keep liability insurance, as until foreclosure is complete your name is on the title, and for something like personal injury they go after any and everyone connected to the property.

"I am not paying taxes and insurance, it's still being paid by the mortgage company. My attorney advised me to pay the insurance just incase somebody fell or something on property. But since the mortgage company has continued to pay I've ignored it."

- Well then, your question is a moot point, if the mortgage company has been paying for the insurance, they get to make the claim and the payment is made to them.

And understandable why you didn't turn the water off, I imagine as it was vacant the bill was small, until the pipe broke . . .

[despritfreya]

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@DaveInAZ wrote:

"I am not paying. . . insurance, it's still being paid by the mortgage company.. . . But since the mortgage company has continued to pay I've ignored it."

- Well then, your question is a moot point, if the mortgage company has been paying for the insurance, they get to make the claim and the payment is made to them.

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Absolutely.  Forced placed insurance.  OP is not the policy holder and therefore cannot make the claim.

OP. . .  not only that. . . the policy does not protect you from someone getting hurt on the property.  It only protects the lender.

Des.

[Anonymous]

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@despritfreya wrote:

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@DaveInAZ wrote:

"I am not paying. . . insurance, it's still being paid by the mortgage company.. . . But since the mortgage company has continued to pay I've ignored it."

- Well then, your question is a moot point, if the mortgage company has been paying for the insurance, they get to make the claim and the payment is made to them.

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Absolutely.  Forced placed insurance.  OP is not the policy holder and therefore cannot make the claim.

OP. . .  not only that. . . the policy does not protect you from someone getting hurt on the property.  It only protects the lender.

Des.

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Interesting to say the least. Hopefully the umbrella policy I carry with the insurance company will keep me covered. If not, oh well, I have no touchable assetts so hopefully they'll just go after the mortgage company. 

Either way, I'm glad I asked about this. Now I can tell all those people giving me a hard time to STFU.