Is your Rental Property Insurance Void if the property is vacant over 30 days

Compliments of www.cameronpaine.com

A recent case demonstrates the importance of carefully reading an insurance policy and ensuring that the insurance policy remains in force. Failing to do so cost Paul Wu and Wendy Wu dearly.

Background

The Wus purchased a house in Windsor, Ontario to serve as an investment for their future and to produce rental income. In 2002, they rented the house to a tenant. This tenancy was uneventful until the tenant began to date a certain man. At this point, garbage, including junk cars and tires, began to accumulate in the yard and neighbours complained of blight and rats. The Wus were given repeated notices by the City of Windsor to clean up their property. Eventually, the Wus gave their tenant notice to vacate the property. The tenant agreed to move out on August 1, 2006; however, the tenant and her boyfriend failed to leave that day. The Wus permitted them to stay until August 5, with the tenant agreeing to clean up the property before leaving. On August 4, the tenant and her boyfriend moved out of the house and gave Mrs. Wu keys to the property. As it turned out, those keys were for the front door only.

The property as left by the tenants was in a serious state of disrepair and the house had a very foul odour. The Wus, along with some friends, spent considerable time cleaning up the house and the property and, six weeks later, made the property available for renting.

During this time, and in advance of a new tenancy that was to begin on November 1, 2006, the Wus visited the property nearly every day to clean up the property and to empty the mailbox. In mid-October of 2006, a fire caused major damage to the property.

On October 11, Mr. Wu visited the house and discovered that the interior was burned and that the water pipes had burst, resulting in significant damage. There was no sign of forced entry to the house, and the presence of gas cans suggested that the fire had been lit deliberately. A representative of the Windsor Fire Department opined that the fire had been intentional. There were also beer cans inside the house that had not been there the last time Mr. Wu had entered the house.
Insurance Claim

The Wus sought to claim under their insurance policy, which they believed covered fire damage and loss of rental income. Gore Mutual Insurance Company ("Gore") denied coverage under two grounds: first, that the Wus allegedly had knowledge that the house was vacant for more than thirty consecutive days, in violation of the policy; and second, that there was a material change in risk of which the Wus allegedly were aware, but to which they did not alert Gore.

While Mr. Wu agreed that the insurance policy had a 30-day vacancy clause, he claimed that he did not know about this clause and it was never pointed out to him. In addition, he claimed that either he or his wife visited the house nearly every day and so, in his mind, the house was never truly vacant.

Unfortunately for the Wus, the term "vacant" was explicitly defined in the insurance policy, as the policy was specific to rental property. The definition provided in the policy stated that a property is to be considered "vacant" when, regardless of the presence or absence of furnishings, (i) all occupants of the dwelling have moved out with no intention to return and no new occupant has yet to take up residence, or (ii) no occupant has taken up residence in a newly-constructed dwelling. This definition makes clear that vacancy is established when there is no resident in a property. Under the terms of the insurance policy, maintaining property such as furniture in the home or frequent visitations to the home do not qualify to make the property no longer vacant.

For the Wus to have been able to demonstrate that their property was not vacant, they would have had to show that someone slept or cooked at the property and that it was someone's "habitual abode".
Court's Reasoning

The court noted that case law relating to non-rental property, or to seasonal property such as summer homes which are not expected to be occupied during the winter months, provides for a different result.

These divergent outcomes are based largely on the difference in wording in rental property insurance policies as compared with non-rental property insurance policies . Insurance policies relating to rental properties tend to define expressly the term "vacant," as the occupancy status of the property relates directly to the risk of the property.

The court also found that there was a "material change in risk" under the insurance policy, and that this material change began in February 2006, upon the initial neighbour and city complaints about junk cars and garbage spread around the property. The court found that, at this point, the Wus should have told their insurer about the situation and their proposal to address the matter. The three elements of material change requiring notification to the insurer – (i) a material change in risk that is (ii) within the control of the insured and (iii) of which the insured had knowledge – were all present. The Wus' failure to disclose a change in material risk had the effect of terminating their insurance policy.
An additional material change in risk was created when the Wus determined that the previous tenant had kept a copy of the keys to the property, but nevertheless neglected to change the locks on the doors . The Wus had decided not to change the locks upon realizing that not all prior keys had been returned as they wanted to change the locks only immediately in advance of future tenants taking up residence.

Decision
While expressing sympathy for the Wus, the court found that the property lacked insurance coverage and that the fire damage to the property was therefore not an insured risk. The Wus would need to spend nearly $130,000 to repair the house – or approximately $9,000 to demolish it.

Some Final Comments
Insureds are well advised to:
• consider their needs when entering into insurance contracts, including the type of insurance coverage required and the use of the property to be insured;
• review carefully their insurance policies and discuss their current or prospective needs with their insurance brokers;
• notify their insurance broker of material changes in risk, including such things as property vacancies or major disputes with tenants; and
• discuss their insurance needs with a lawyer if in doubt about their rights.
Ed.: A version of this article was previously published in "International Law Office" and was among their most frequently-read recent articles.
This article appeared in the Lang Michener LLP InBrief Fall 2010 .

Mortgage Pre Approval Windsor Real Estate

By Dan Lanhardt - Scotia Bank

Compliments of www.cameronpaine.com

Two often confused terms in the home buying process are a mortgage loan pre-qualification and a home loan pre-approval. Even some loan officers and real estate agents will use the terms incorrectly, so here's what you really need to know about each one.

Pre-Qualification

A mortgage loan pre-qualification is simply an estimate of how much house you can afford and how much money a lender would be willing to loan you. The best time to get a pre-qualification is right at the beginning of your home buying process, before you even start looking at houses. This involves either sitting down with a lender or talking with one on the phone, and providing information on your income, assets, debts, and a potential down payment amount. The lender would then provide you with a ballpark figure in writing of how much he thinks you could afford to pay for a monthly mortgage. There is no cost involved and there is no commitment on either side. This estimate is just helpful in helping you figure out if buying a home is a viable option, and if so, what your price range would probably be.

Pre-approval

Getting pre-approved means that you have a tentative commitment from a specific lender for mortgage funding. In this case, you provide a home loan lender with actual documentation of your income, assets, and debts. This process typically requires an application fee as well, since the bank will run a credit check and work to verify all your employment and financial information. Once you are approved, the lender will give you a letter of commitment, stating how much money her bank is willing to loan you for a home purchase. With a pre-approval in hand you can start your shopping - real estate agents and sellers will take you much more seriously when they see you have your mortgage funding in place.

It is important to understand, however, that even a pre-approval is not a guarantee that you will be approved for a mortgage loan.  The funding will only be given when the property appraisal, title search, and other verifications check out on the home you have chosen to buy.  Neither is the pre-approval binding; you can still obtain a mortgage from a different lender. If you do stick with the same company that pre-approved you though, the application process will be much shorter once you find the right house.
Call Dan for your pre-approval !

Scotiabank

Dan Lenhardt, AMP
Mortgage Manager
Windsor and Area
off: 519-974-4632
cell: 519-919-2779

Mold and Water Damage in Homes - Windsor Essex Real Estate

Compliments of www.cameronpaine.com

Homebuyers often have concerns about mould, but are their fears justified?

Although thousands of types of mould exist, only a few are actually harmful to people. Toxic varieties, such as moulds from the genus Stachybotrys, can produce chemicals linked to various health problems including sinus infections, asthma and certain respiratory infections. However, mould must generally be present in large quantities to have a noticeable effect on most people.

Mould eats wood cellulose and can potentially affect the structural integrity of wood. Some insurance companies have excluded mould damage from both first party and third party coverage. Property owners may be able to obtain costly site-specific environmental insurance that specifically includes mould coverage.

Mould is caused by water damage or excessive humidity, poor ventilation systems, wet construction materials or poor construction or design. Mould travels on air currents and is all around us, and so it is difficult to find a house that is completely mould-free.

The smell should be the first red flag. Just because a house is nicely renovated and freshly painted doesn’t make it mold free, if there’s a musty, mouldy smell, and lots of plug-ins and potpourri, you should investigate further.

The best advse is use common sense. During a home inspection, the inspector cannot open walls. Therefore, you may need to rely on your sense of smell. If moisture damage has built up in the basement over the years, the smell will reveal it right away, regardless of how nice it looks

If there’s mould in their home, it can be a minor issue involving lack of circulation in the basement, or it could be a serious case of black mould coming through the drywall or baseboard, which probably needs to be ripped out. You can’t just wipe it off.  Either way, the issue causing the mould must be solved and the area has to dry out.

Whether inspecting a home you should always look for signs of water damage.

You should hire a home inspector or other mold professional  if there is a concern

Be sure to inspect moisture-prone areas such as basements, bathrooms and kitchen cupboards. Mould behind a wall will not be visible to you, but signs of mould include:

• discolouration on finishes
• staining
• spotty patterns revealing visible mould growth (which may indicate a larger, unseen problem)
• musty smells.

Mould issues can usually be resolved. The moisture or water source needs to be located and stopped, and then the mould needs to be removed. If the problem turns out to be widespread and remediation is necessary, it’s important to ensure that the entire problem area is remediated, otherwise the mould infestation could return.

A proper home inspection may uncover indications of mould or structural deficiency issues, although there is no guarantee that it will. However, an inspector cannot speak to chemical contamination or health risks. The inspector may recommend that the homeowner enlist the services of a mould investigator.

Source Edge Newsletter

Do Your Homework When Choosing a Mover - Windsor Essex Real Estate

Compliments of www.cameronpaine.com

Do your homework when choosing a mover

For some consumers, the most daunting aspect of the buying or selling process is the move itself.
Moving is not only labour-intensive, but it can also unleash a range of emotions at a difficult time. If the catalyst for the move is a family death, divorce or other major lifestyle change, a bad moving experience can rub salt in the wound, aggravating an already challenging situation.

Many resources are available to determine whether a mover is reputable. The Canadian Association of Movers (CAM), the Better Business Bureau, and any of the major national van lines (such as Allied, Atlas, Mayflower, North American or United) are all good sources. Also check out the Consumer Beware page through the Ontario Ministry of Consumer Services for movers to avoid.
One of the best tips is to place more weight on reputation than price, says John Levi, president of CAM. With about 350 members across the country, CAM represents Canada’s largest moving companies, many small to mid-sized movers, national van lines, suppliers and many international movers. It also works with government agencies to represent member issues and with consumers to provide referrals and assist with complaints.
"Many people don't realize that their prime concern should be a having a good moving experience, not getting the cheapest price,” says Levi, who has been with CAM for 16 years.

"The lowest quoted price does not actually guarantee the lowest cost or a good-quality job, he advises.

Consider the value of your possessions as well as the potential cost of loss, damage, tardiness or claims, he says. All of those factors should be weighed to determine the move’s total price tag, and doing some homework before selecting a mover is well worth the time.

Because the moving industry is largely unregulated, Levi warns that choosing a reputable mover is vital in avoiding problems. His organization receives about 150 complaints a year about movers. The most common complaints pertain to overcharging, lateness, damage or loss, but issues also arise with inexperienced crews, poor communication, and failed promises.
To join CAM, a mover must be in business for more than a year, be reputable, and undergo a due diligence and verification process. The association checks out companies through the Better Business Bureau and asks other members to offer a fair opinion on potential members.
Loss or damage claims can end up being drawn out for years, says Levi. Consumers who take steps to do some preliminary research usually avoid claims, he adds.
Many problems are preventable. A good mover should be prepared to answer questions and provide clear expectations about the move for the individual or family. Consumers can spare themselves grief simply by asking potential movers questions such as:
What is your experience with moves like mine? How experienced is your crew? What is the bottom-line price? What is the not-to-exceed price, including all charges and taxes? What happens if loss or damages occur, and how will we be protected?
The most important step, often overlooked, is getting an in-home estimate. “Consumers can get sweet-talked over the phone by a company that claims it can do the job,” says Levi. “Unfortunately, that’s an invitation to disaster. If movers are willing to give you an estimate by phone, don’t hire them. If they can’t see your place or belongings, they have no idea how the move will go.”
An experienced mover will visit the consumer at home and examine furnishings and possessions, give a more reliable estimate, and outline difficulties that might occur during the move, he adds.
Remind your clients that damages sometimes can’t be helped, adds Levi. “There isn’t a mover around who hasn’t scratched, nicked or lost something – it happens,” says Levi. “Moving big objects through small openings means these things sometimes occur, but the crux of the matter is how the mover deals with the issue. A good mover gets the repair done quickly or pays the consumer for loss or damage if the claim is valid.”
Written estimates are vital, he adds. “Make sure that you get the company’s promises in writing,” warns Levi. “If they won’t put it in writing, don’t move with them. It’s as simple as that.”
Sharing these insights (and the tips below) with your clients before they pick a mover can make a world of difference to the outcome. It’s an extra step with the best possible reward – a happy ending.
Do research when choosing a moverJohn Levi, president of the Canadian Association of Movers, says these steps will help consumers to have a positive moving experience.
Pick three – Choose at least three companies and then check them out. Ask questions and check their reputation through available resources (see below) before settling on one.
Match them to the job - Choose a mover with the resources and crew to suit your situation. A large family move across the country and a one-bedroom condo move across town are completely different. Verify the company’s capabilities with CAM, or you may end up paying more than you thought -- or learning that your mover can’t do the job and has handed it off to someone else.
Invite them over - Refuse to accept an estimate delivered by phone, fax, text or email from a mover who has not assessed the space in person. An on-site estimate is essential.
Get it in writing - Get every promise made in the moving estimate in writing, along with dates of the move and specifics on what will and won’t be moved, and who will be doing the packing. If you promise to de-clutter and pack, you must follow through or else extra charges may be added.
Book well in advance – After you’ve chosen a reputable company, ensure that the mover has lots of time to meet your expectations.
Schedule with care – Avoid booking a move the same day as a property closing or a popular moving date. Closing dates have their own problems. There may be a deadline to vacate on one side of the move, while keys or titles are not ready on the other. Such delays can mean movers sit and wait at a site, creating extra costs and stress. Avoid the first and last days of the summer months like the plague. These are a mover’s busiest times, and steering clear of those dates will boost your chances of getting an experienced crew.
Be realistic – Damage and loss can happen, although good movers will do their best to prevent or minimize them. Ask questions about company policies on loss and damage and discuss concerns about particular items with them.
For more information - Before hiring or recommending a mover, you can contact the following organizations:

• Consumer Beware page, Ontario Ministry of Consumer Services website
• Better Business Bureau
• Canadian Association of Movers - 1-866-860-0065

Source: Edge News Letter