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Real Property Sales With Open Insurance Claim: Avoiding Closing Delays, Assignment of Claims, Replacement Costs

Recording of a 90-minute premium CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Thursday, April 14, 2022

Recorded event now available

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This CLE webinar will advise real estate counsel on how to proceed with closing during the pendency of an open insurance claim. The panel will guide counsel on the right to retain insurance benefits under the policy, assign them to the new buyer, and document both options properly. The panel will discuss best practices on proceeding with a claim and how an insured seller who has already collected the actual cash value under the policy can file a depreciation claim.


Selling property during the pendency of an open insurance claim can raise many legal questions. The owner must determine whether it intends to retain the right to receive insurance benefits under the policy or assign them to the new buyer. Documentation of damages and necessary disclosures are part of the process counsel must assist to close the deal.

First and foremost, counsel needs to complete a seller's disclosure form to document unrepaired damage to the property to the buyer. Also, counsel must notify the buyer of open insurance claims, although this may affect the ability to get new insurance and affect the closing.

Once a buyer is ready to proceed, both parties must consider the options. Sellers have the right to assign insurance claims to the new buyer, but counsel will need to provide that documentation. Failure by the parties to convey their intent to transfer the right to receive benefits could render the assignment unenforceable and take away the buyer's standing to obtain the benefits owed in court.

Alternatively, the seller can maintain the insurance claim and sell the property for a reduced amount. Again, counsel must document in the sales documents the amount of price reduction that is allocated to the unrepaired damage. This will help establish a more exact estimate of the repair cost and substantiate the basis for the price reduction. Once again, a seller's disclosure form can show (1) the buyer was on notice of the damages at the time of the sale and (2) that the cost to repair was contemplated in the reduced sale price.

Listen as our expert panel addresses the best practices for closing a purchase with a pending insurance claim with expediency and clarity. The panel will discuss the most common issues and solutions when an available property is attached to a damage claim.



  1. Sale of property
    1. Due diligence
      1. Pending insurance claims
        1. Notice
        2. Seller's disclosures
    2. Options
      1. Assignment of insurance claims
      2. Retention of insurance by seller
  2. Best practices


The panel will address these and other key issues:

  • How does a pending insurance claim affect the sale of real estate?
  • When assigning an insurance claim as part of a property sale, what are the buyer and seller concerns?
  • If a seller maintains the insurance claim in a deal, what documentation is necessary and why?


Thompson, Gary
Gary Thompson

Thompson Hammerman Davis

Mr. Thompson has been practicing law for 31 years. He is a top-rated specialist in the field of policyholder-side...  |  Read More

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