Full question:
I have a spec house in clear lake ca.,from feb to june 2008 there was a water leak in the attic that ran continuously doing 70,000 in damages. After a year the insurance company refused to pay. The house is now in foreclosure, can the lender demand I pay for repairs?
- Category: Real Property
- Subcategory: Foreclosure
- Date:
- State: California
Answer:
A mortgage lender, or mortgagee, has a duty to make repairs if they take possession of the property or receive rental income. The obligations regarding repairs and funding them are typically outlined in the mortgage agreement.
For instance, if the property is damaged, any insurance proceeds may be used for repairs if it is economically feasible and does not reduce the lender’s security. The lender can hold these proceeds until they inspect the property to ensure repairs are satisfactory. They may disburse funds for repairs in one payment or in installments as work progresses.
If repairs are not feasible or would lessen the lender’s security, the proceeds will be applied to the outstanding mortgage balance. In cases of total loss, proceeds are also applied to the mortgage. If there is a partial loss, the treatment of proceeds depends on the property’s value relative to the mortgage balance.
It’s important to review your mortgage documents carefully to understand your rights and obligations regarding property damage. Consulting a local attorney can provide clarity on your specific situation. Additionally, some foreclosed properties are sold as-is, without repairs.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.