(Ontario)
Question:
My clients are closing soon on their property and they have been inquiring about insurance and they are getting rejected. This is an old end row house. There is no firewall between the wall that is attached to the house next door. This is what some insurance companies are having an issue with. What should be done?
Answer:
- Contact the other agent to see which insurer covers the building now, perhaps they will continue. The difficulty is that sometimes, they want out.
- Potentially, this could be a very risky situation. You have to calculate the second requisition date and make sure that the lawyer is aware of the fact that insurance (so far) cannot be obtained. If that date goes by, the Buyer must close no matter what, so at the very least will likely lose his deposit because the mortgage funds cannot be advanced.
Brian Madigan LL.B., Broker
Comments 1
But this begs the question – how can they get a mortgage if they cannot get insurance? Therefore, if one cannot get insurance and hence a mortgage then this property is a stigmatized property, depreciated in market value and can only be rectified after the necessary (and expensive) renovations – but again, how does one close to even do that without a mortgage and even private lenders will shy away from a property that cannot be insured. Interesting dilemma