Expert: Dick Dennis - 7/22/2010

Question
QUESTION: Sold home on land contract Aug. 08.  Buyers now have a claim for wind damage.  They do not have insurance for the home.  Am I responsible for paying the deductible and filing the claim on the property? The contract states they will put money in an escrow towards insurance and carry insurance.  I talked to the attorney and was told we have to file the claim and if the payments raise to let him know.  Is is my fault they did not purchase insurance? I find myself always paying for everyones mistakes.

ANSWER: No, Vicky, you are paying for your own mistake this time: you sold that property with a land contract. With a land contract, YOU are the one who is on title on that property, not the buyers. Therefore, YOU have to make sure you are covered for any eventuality. Whoever helped you sell that property did you no favor. If it was a real estate agent, that person just got paid and ran without making sure your interests were protected.

That's why the attorney told you YOU have to file the claim. Further, in the process of selling that property, the land contract should have stipulated that should you have to make any additional payments (like the insurance for example) the buyers would have to reimburse you. Obviously, that clause was not in there. I recommend you get a policy that protects YOUR interests only, not the buyers'. I do wish you well.

Dick Dennis
dixiedee13@aol.com

---------- FOLLOW-UP ----------

QUESTION: Land contract expires on Aug 4, 2010. We were told because the buyers put more than 20% down we can not retake possession. If they can not get a loan and buy the house we have to foreclose and let the bank auction it off. This makes no sense to me. Do you know if this is the OHIO law? If this is going to affect my credit, I would think as long as I can make the payment, I should be able to take posssession.

Answer
In most states, Vicky, should the buyer not make the payments agreed, the seller has to file a foreclosure process if the seller wants to protect his/her rights. And any costs you incur in the process, like the insurance costs or any other costs that were stipulated in the land contract. If you did not put the land contract together the way it should have been -- with an Ohio real estate attorney, you're really asking for trouble. If you want to know what the law is regarding your present situation, you should NOW go find yourself a good Ohio real estate attorney and protect your interests. Otherwise, you will get what you have been asking for. I do not think this should affect your credit as long as you are making the payments, regardless of what the buyer agreed to do. The bank to which you owe the underlying mortgage will certainly file for foreclosure, if you don't. Yes, it is obvious someone did not advise you before you stepped into a land contract situation. I do wish you well.

Dick Dennis
dixiedee13@aol.com