Does insurance cover hidden frame damage in a newly bought house? (agent, construction)
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You bought a house, it passed pre-purchase inspections, and you got it insured. However, it later turned out that the house frame is damaged by rot or termites. Maybe the house even has to be demolished.
From the insurance company's point of view, it's a pre-existing condition. You also can't prove that the seller knew about the problem (and perhaps he didn't).
Will you be solely responsible for the damages, or do you somehow take over the right to make a claim against the previous owner's insurance?
I just think that everyone thinking about buying a house needs to know the answer to this question before they do.
I'm not giving legal advice, nor am I an agent but hopefully I can be more helpful. I agree that all consumers need to think of this stuff when buying a home.
First, normally homeowner's insurance does not cover things like rot or termites. Are you talking about some other kind of insurance or warranty?
As far as any potential non-insurance related recourse, my understanding as just a lay man is that these types of things would need to be assessed (obviously questions are rhetorical as we are speaking hypothetically):
-Should the buyer's inspection have found it? E.g. if there was any evidence anywhere in the home of some kind of rot or some kind of termite damage or existence (usually there is), then further experts, or other actions should have been taken. In other words it's a patent defect. Inspector might have some liability and there is a stronger argument that the seller and/or agent should have disclosed something.
-Was there any evidence of concealment? This could be fraud/misrepresentation on behalf of the seller.
-Did the seller and/or agent know something? I believe that the burden is on the seller to demonstrate and support a position that they did not know about the defect. I don't believe that the buyer needs to prove this. This may vary though and that's one of the many reasons why you need a lawyer if this happens. There is often a trail to follow - what work did they have done on the home or what experts have been in there and what did they do? Were there termite treatments or whatever? There may have been some repairs that the seller had to do where you could argue that they or the repairer should have at least suspected the possibility of latent problems. For example, cracks in walls/ceilings, windows or doors not opening/closing well, moisture or odd stains requiring painting, etc. The seller may argue that they had no idea that these "little things" were insidious. So the buyer may not have known about the scale and nature of the problem but if they've failed to disclose some "little" thing that could be a symptom of the big problem, that could be dangerous for them.
-Was it a latent defect in construction? For example, cement problems are well known in some areas and they can render homes next to worthless (6 figures to repair). Arguments over liability can go on for ages. If it's an engineering, building, or materials defect then that's another strand of potential recourse.
Again, just as a lay man and someone who has bought and sold some homes over the years, I think that taking many detailed photos of a home when you buy it (hopefully empty) - good camera, good light, many angles, close up and broad - is wise as it provides a record of the condition. Doesn't necessarily solve your problems if you have bad luck but it might be important in working it out. Don't just rely on photos taken by your inspector. I'm talking about a high volume of photos all around the home. When you "inspect" HD photos on a big screen in the comfort of your home, it's amazing what you can see that you missed as you were walking around - always rushed and a million things running through your mind. I always do this (to a practical level) before even making an offer.
Last edited by just_because; 02-02-2018 at 04:54 AM..
You bought a house, it passed pre-purchase inspections, and you got it insured. However, it later turned out that the house frame is damaged by rot or termites. Maybe the house even has to be demolished.
From the insurance company's point of view, it's a pre-existing condition. You also can't prove that the seller knew about the problem (and perhaps he didn't).
Will you be solely responsible for the damages, or do you somehow take over the right to make a claim against the previous owner's insurance?
Generally speaking, although someone may be able to cite a specific instance with an odd circumstance, or a special policy rider that includes unusual coverages:
No. Your Hazard Insurance policy will not cover this preexisting condition, whether the seller conceals it, or the seller does not know.
That is not the function of such a policy.
You will be buying the house, and all its characteristics, as it is at time of closing.
Of course, your question would be wisely asked of your local insurance agent for the best response.
But, here are some resources that are easily available on line:
"Damage from unresolved maintenance issues: While your insurance will probably help cover the cost of replacing or repairing a damaged floor if your dishwasher suddenly goes on the fritz, coverage generally will not kick in if the damage results from an unresolved maintenance issue, such as continuous leaking near a faucet or other plumbing fixture."
I'm not giving legal advice, nor am I an agent but hopefully I can be more helpful. I agree that all consumers need to think of this stuff when buying a home.
First, normally homeowner's insurance does not cover things like rot or termites. Are you talking about some other kind of insurance or warranty?
My understanding as just a lay man is that these types of things would need to be assessed (obviously questions are rhetorical as we are speaking hypothetically):
-Should the buyer's inspection have found it? E.g. if there was any evidence anywhere in the home of some kind of rot or some kind of termite damage or existence (usually there is), then further experts, or other actions should have been taken. In other words it's a patent defect. Inspector might have some liability and there is a stronger argument that the seller and/or agent should have disclosed something.
-Was there any evidence of concealment? This could be fraud/misrepresentation on behalf of the seller.
-Did the seller and/or agent know something? I believe that the burden is on the seller to demonstrate and support a position that they did not know about the defect. I don't believe that the buyer needs to prove this. This may vary though and that's one of the many reasons why you need a lawyer if this happens. There is often a trail to follow - what work did they have done on the home or what experts have been in there and what did they do? Were there termite treatments or whatever? There may have been some repairs that the seller had to do where you could argue that they or the repairer should have at least suspected the possibility of latent problems. For example, cracks in walls/ceilings, windows or doors not opening/closing well, moisture or odd stains requiring painting, etc. The seller may argue that they had no idea that these "little things" were insidious. So the buyer may not have known about the scale and nature of the problem but if they've failed to disclose some "little" thing that could be a symptom of the big problem, that could be dangerous for them.
-Was it a latent defect in construction? For example, cement problems are well known in some areas and they can render homes next to worthless (6 figures to repair). Arguments over liability can go on for ages. If it's an engineering, building, or materials defect then that's another strand of potential recourse.
Again, just as a lay man and someone who has bought and sold some homes over the years, I think that taking many detailed photos of a home when you buy it (hopefully empty) - good camera, good light, many angles, close up and broad - is wise as it provides a record of the condition. Doesn't necessarily solve your problems if you have bad luck but it might be important in working it out. Don't just rely on photos taken by your inspector. I'm talking about a high volume of photos all around the home. When you "inspect" HD photos on a big screen in the comfort of your home, it's amazing what you can see that you missed as you were walking around - always rushed and a million things running through your mind. I always do this (to a practical level) before even making an offer.
I'm not an attorney (but I watch Judge Judy). I believe, the one initiating a legal action has the burden of proof. Common sense also puts the burden on the buyer, as it is almost impossible to prove a negative.
There's an old thread on here where a buyer spent six years proving the owner/agent knew about serious defects and concealed them. The poster hung in there to finally get a judgment and was nice enough to keep us all posted along the way and through to the conclusion. //www.city-data.com/forum/real-...disclosed.html
I'm not an attorney (but I watch Judge Judy). I believe, the one initiating a legal action has the burden of proof. Common sense also puts the burden on the buyer, as it is almost impossible to prove a negative.
There's an old thread on here where a buyer spent six years proving the owner/agent knew about serious defects and concealed them. The poster hung in there to finally get a judgment and was nice enough to keep us all posted along the way and through to the conclusion. //www.city-data.com/forum/real-...disclosed.html
It may depend on the basis for the claim. My understanding is that some types of claims like 'innocent misrepresentation' have a lower bar and the plaintiff does not need to prove that the seller knew, just that there was a material representation made, it was false, there was a loss, etc. Fraudulent misrepresentation is different and there is a higher level of proof required on the buyer. Anyway, I don't think this impacts the discussion other than to understand that your lawyer may follow a strategy that may not require proof that the seller knew about the problem.
Happy to be corrected but that's my understanding (which nobody should rely upon as I'm just a lay man).
You bought a house, it passed pre-purchase inspections, and you got it insured. However, it later turned out that the house frame is damaged by rot or termites. Maybe the house even has to be demolished.
From the insurance company's point of view, it's a pre-existing condition. You also can't prove that the seller knew about the problem (and perhaps he didn't).
Will you be solely responsible for the damages, or do you somehow take over the right to make a claim against the previous owner's insurance?
As some have said, rot and termite damage are not typically homeowner's insurance type claims. They are maintenance issues.
Should the inspection have caught it? Did the seller know it was there? How much time is "later"?
Important questions! to ask an attorney.
I have seen one of our frequently recommended inspectors go back and actually pay to repair a relatively minor issue with a house that he felt he had 'missed', as a good will gesture. But read their contracts, generally inspectors have only a limited liability, commonly the amount of their fee, refunded.
Not enough info
Was the house bought new from a builder
Had it been on the market/completed for some length of time or was it contracted by the buyer and closed as soon as done?
If you bought home from another seller--a pre-existing home--your responsibility is to get inspections
One of those should include a termite inspection---
We bought home from builder and moved in--after several years had termite infestation-
Had problem taken care of and paid for warranty service from Orkin every year after that to do inspection and retreat and repair damage-- just the cost of the yearly policy
Supposedly only one other infestation and that was treated w/o any structural damage
Several years after that after we moved out but still owned the first home (and had the termite policy) we did renovation--
Lot of damage was found in master bath/shower in wall 2x4s which had to be completely replaced when guys pulled away the old tile/drywall. We were lucky termites had not gotten into the overhead rafters...
Termites were gone because fire ants had killed the termite mound
They had come in from the ground where the water pipes for the bathtub came up from foundation...that ground should have been sealed with tar by the builder but they were pretty inept we discovered in other ways---
Termite infestations can happen very quickly and depending on where they are located they can be hard to find...
I'm not an attorney (but I watch Judge Judy). I believe, the one initiating a legal action has the burden of proof. Common sense also puts the burden on the buyer, as it is almost impossible to prove a negative.
There's an old thread on here where a buyer spent six years proving the owner/agent knew about serious defects and concealed them. The poster hung in there to finally get a judgment and was nice enough to keep us all posted along the way and through to the conclusion. //www.city-data.com/forum/real-...disclosed.html
Exactly! People who do not get a home inspection when buying a home open themselves to problems.
As far as would insurance pay for this type of issue? Most likely not.
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). I believe, the one initiating a legal action has the burden of proof. Common sense also puts the burden on the buyer, as it is almost impossible to prove a negative. 
