With fire season upon us, a reminder on the importance of insurance considerations in real estate transactions is timely. The best advice we can provide is to speak with a knowledgeable insurance broker early in the process so that you can have peace of mind as you move ahead with your real estate transaction. In some cases, you may not be able to secure (or bind) coverage more than 30 days prior to the closing date which can make things challenging when condition removal is in advance of that timeline, particularly with closings falling in the normal fire season around the Okanagan. Discussing with your broker whether there are any options available to help mitigate your risk on the insurance front is a wise decision to help the transaction go smoother. Some insurance companies may require a review of the insurance as you approach closing (or even on the closing date) to determine if there are active fires in the area. Ensuring that you understand the security of your coverage can be helpful for you as a buyer to be proactive.
In many cases, if you are purchasing a property and obtaining mortgage financing to do so, the transaction cannot be completed without proof of insurance in place. It is a fundamental piece to completing on a purchase in many situations as the lender, fairly, wants comfort that if something were to happen to the property (fire, etc.), there would be coverage in place to protect their loan. You should also discuss with your insurance agent what type of coverage is necessary to satisfy your mortgage lender’s needs and, when in doubt, ask the questions early to ensure you have an appropriate policy in place that will permit closing to happen. In many cases, the lawyer or notary assisting on the file may not be able to request the insurance confirmation until shortly before closing when they receive mortgage instructions. Putting your insurance broker and lawyer in touch can help avoid hiccups.
Many contracts also now include language that would provide for an extension if a buyer is unable to get insurance for closing because of an active fire. You should discuss this option with your realtor and lawyer to see if it would make sense for you as well. Insurance can be a tricky piece to navigate but with the right proactive steps and professional guidance, you can help mitigate the risk of it causing a problem with your transaction.
Author: Una Kuzio
This information is general in nature only. You should consult a lawyer or appropriately qualified party before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or our lawyers practicing in the area of real estate at the following:
- Una Kuzio: firstname.lastname@example.org