{"id":2254,"date":"2013-11-14T06:13:11","date_gmt":"2013-11-14T13:13:11","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=2254"},"modified":"2013-11-12T11:13:46","modified_gmt":"2013-11-12T18:13:46","slug":"recovering-replacement-cost-selling-unrepaired-property","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/recovering-replacement-cost-selling-unrepaired-property\/","title":{"rendered":"Recovering Replacement Cost After Selling Unrepaired Property"},"content":{"rendered":"<p>Ashley Smith &#8211; November 7, 2013<\/p>\n<p>The last several months I&#8217;ve spent the majority of my time on the New Jersey Shore. Among the reconstruction, empty lots, and damaged homes I also see a growing number of \u201cfor sale\u201d signs lining the sidewalks. In fact, this was a topic of conversation Tuesday night over dinner with a new client.<\/p>\n<p>The increase in property sales following a natural disaster is a common phenomenon, whether it\u2019s a massive hurricane or your typical Midwest hailstorm. I can only guess the reasons behind the \u201cfor sale\u201d signs. I presume the drastic increase in property sales stems from an inability to afford repairs, an inability to afford the mortgage, an unwillingness to continue to fight with the insurer, a broken heart that can\u2019t bear looking at the devastation that used to be the place of family memories, or\u00a0maybe it\u2019s just a business deal. Whatever the rationale behind the sale, the important question in our line of work is \u201chow does selling the property impact the insurance claim?\u201d<\/p>\n<p>Last month the Seventh Circuit Court of Appeal issued an opinion that gives hope to the policyholder seller. The Court found that selling the property in its unrepaired state does not foreclose the seller from recovering the \u201creplacement cost\u201d down the road.<\/p>\n<p>In Edgewood Manor Apartment Homes v. RSUI Indemnity Company,1 the insured owned an apartment complex and recovered the \u201cactual cash value\u201d for the Hurricane Katrina damage from the insurance company and then sold the property in its unrepaired state with an assignment of the insurance claim to the buyer. The Court ultimately found that the assignment was invalid, but the insured seller retained rights to the insurance claim and had a valid claim for \u201creplacement cost\u201d once the repairs were performed by the buyer.<\/p>\n<p>The first hurdle for the policyholder seller is establishing an \u201cinsurable interest\u201d in the property. The Court pointed out no state requires an insured to continue to maintain an \u201cinsurable interest\u201d while the claim is being litigated. Whether an \u201cinsurable interest\u201d exists is determined either at the time of policy formation or at the time of loss.<\/p>\n<p>The second hurdle is recovering the \u201creplacement cost\u201d proceeds. In Edgewood Manor, the insurer argued that it didn\u2019t have to pay \u201creplacement cost\u201d because the insured sold the property in its unrepaired state. However, the court pointed out that nowhere in the policy does it require the insured to repair the property itself. Thus, the insured could sell the property and if the buyer performs the repairs within a reasonable time, as required by the policy, the seller can recover the \u201creplacement cost\u201d proceeds.<\/p>\n<p>After a major catastrophe property values plummet and sales are often made at pennies on the dollar. The opportunity to recover the \u201creplacement cost\u201d after the sale can make all the difference for policyholder sellers.<\/p>\n<p>1 Edgewood Manor Apartment Homes, LLC v. RSUI Indem. Co., No. 12-1480, 2013 WL 5764664 (7th Cir. Oct. 25, 2013).<\/p>\n<p>via <a href=\"http:\/\/www.propertyinsurancecoveragelaw.com\/2013\/11\/articles\/hurricane-sandy-1\/recovering-replacement-cost-after-selling-unrepaired-property\/index.html\">Recovering Replacement Cost After Selling Unrepaired Property : Property Insurance Coverage Law Blog<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Ashley Smith &#8211; November 7, 2013 The last several months I&#8217;ve spent the majority of my time on the New Jersey Shore. Among the reconstruction, empty lots, and damaged homes I also see a growing number of \u201cfor sale\u201d signs lining the sidewalks. In fact, this was a topic of conversation Tuesday night over dinner&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/recovering-replacement-cost-selling-unrepaired-property\/\">Continue reading <span class=\"screen-reader-text\">Recovering Replacement Cost After Selling Unrepaired Property<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[14,3],"tags":[3,454],"class_list":["post-2254","post","type-post","status-publish","format-standard","hentry","category-construction-2","category-insurance-claims","tag-insurance-claims","tag-replacement-cost","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Recovering Replacement Cost After Selling Unrepaired Property - Advise &amp; Consult, Inc.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/recovering-replacement-cost-selling-unrepaired-property\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Recovering Replacement Cost After Selling Unrepaired Property - Advise &amp; Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"Ashley Smith &#8211; November 7, 2013 The last several months I&#8217;ve spent the majority of my time on the New Jersey Shore. 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