As a Realtor who specializes in trust and probate sales, I often help families sell homes after a loved one passes away.
At first, the family focuses on the big decisions.
What should we do with the home?
Who will handle the estate?
What repairs should we make?
When should we put the house on the market?
However, there is another important issue that families often overlook.
Is the home still properly insured?
An Empty Home Can Create an Insurance Problem
Most homeowners insurance policies assume that someone lives in the home.
However, many policies contain a vacancy clause. This clause can limit or exclude certain coverage when a home remains vacant for a specific period.
The time period varies by insurance company and policy. Some policies may use 30 days. Others may use 60 days.
Therefore, don’t assume your existing policy will continue to provide the same coverage after a home becomes vacant.
This Matters With Trust and Probate Homes
I see this situation often.
A parent passes away. The children inherit the home. Then, the family spends several months deciding what to do.
Meanwhile, nobody lives in the house.
The family may need to clean it out. They may need to make repairs. They may also need to work with an attorney before they can sell.
During this time, the insurance clock may be running.
Unfortunately, many families don’t think about the vacancy clause until something goes wrong.
Vacant and Unoccupied Can Mean Different Things
Insurance companies may distinguish between an unoccupied home and a vacant home.
For example, a furnished home may qualify as unoccupied if the owner temporarily leaves.
On the other hand, a home that nobody lives in and that has been emptied of furniture may qualify as vacant.
Most importantly, your insurance company decides how your policy defines these terms.
Don’t guess.
What Should a Trustee or Executor Do?
If you become responsible for an inherited home, contact the insurance company right away.
Then, ask a few important questions.
Does my current policy cover a vacant home?
How long can the home remain vacant?
Do I need a vacancy endorsement or a vacant dwelling policy?
What steps do I need to take to protect the property?
The additional insurance may cost more.
Nevertheless, that cost is small compared with discovering that a major claim isn’t covered.
Protect the Property While It Sits Empty
In addition to reviewing the insurance, take steps to protect the home.
First, inspect the property regularly.
Have someone check the house on a regular schedule. Look for leaks, broken windows and other problems.
Next, keep good records.
Take dated photographs. Keep records of inspections and maintenance.
Also, protect the plumbing.
Ask your insurance professional whether you should shut off the main water supply. Follow the insurer’s requirements for heat and utilities.
Finally, make the property look cared for.
An overflowing mailbox and an empty-looking house can attract unwanted attention.
Don’t Wait Until the House Is Ready to Sell
As a trust and probate Realtor, I recommend addressing insurance at the beginning of the process.
A vacant home still costs money.
You may pay property taxes, utilities, landscaping, maintenance and insurance. At the same time, the property remains exposed to potential damage.
Therefore, families should create a plan early.
Decide who will maintain the property.
Confirm the insurance coverage.
Secure the home.
Then, determine whether the family should sell, rent or keep it.
A Few Minutes Could Prevent a Costly Surprise
When I help families with trust and probate sales, I work with many different professionals.
The attorney handles the legal aspects.
The accountant handles the tax questions.
The insurance professional handles the coverage.
My role is to guide the family through the real estate process.
However, I always encourage trustees and executors to ask about insurance before they leave an inherited home vacant.
Don’t assume the policy you had for your parent’s home automatically works after the home becomes vacant.
Call the insurance company. Ask the questions. Get the coverage confirmed in writing.
It is much better to address the issue before a loss occurs.
If you have inherited a home in La Cañada, La Crescenta, Glendale, Pasadena or the surrounding foothill communities, I can help you understand the real estate steps involved in selling a trust or probate property.
Insurance policies vary, so always consult your insurance professional about your specific coverage.
