More Questions - Miami Condo Collapse

Personal Belongings. Obviously, those items in the collapsed portion are buried in the ruble. Some, I’m sure, are valuable. Will there be an effort to “sift through” the debris to recover items?

Did the residents in the standing portion have an opportunity to go back in to remove valuables?

After it is imploded, same question. Will it be sorted through?

Will owners with mortgages on their units be liable for thedebt?

From CNN:

According to the same CNN article, no. Too dangerous - last thing they need right now are more victims.

Yes, but between their individual condo owner insurance policies, their share of the proceeds from the master condominium policy, and their share of the remaining value of the land they might be OK. No different than if your house burns down - you still owe the money to the bank.

Not sure how it is in Florida, or with USA banks. Here in Canada, when I bought a house one of the mortgage conditions was keeping sufficient insurance on it that the bank would not lose out if the house became a non-house. IIRC the insurance company had to notify the bank if I cancelled insurance.

Much the same, at least as far as I can tell. Every loan secured by an asset (home, condo, car, boat &c) requires that the borrower provide insurance which guarantees the lender’s interest in said asset in case of loss. If my house burns, the bank gets its money; I may or may not get anything, depending on the coverage limits.

(Some years back my insurance company cancelled my homeowner’s policy because a payment wasn’t made in time. Within a week I got a letter demanding that I provide proof of coverage. The funny thing was that the payment was supposed to have been made by the same bank from the loan’s escrow account.)

Are you saying the bank gets first dibs on the money? Or just that the bank is included as a stakeholder to make sure the money is spent either on rebuilding the property, or on paying off the mortgage if you don’t want to rebuild? I’ve never been in the position of claiming a fire insurance payout, so I don’t know exactly how such payments work.

I had a policy that got cheaper each year as the loan amount reduced.

There were reports of some pets left in the building. (Dogs, cats, parakeet, and guinea pig.) Sucks to be them.

ETA: An example link:

I totaled a car several years ago. When I filed my claim, my lender got paid directly by my insurer first for the outstanding amount of the loan, and then my insurer gave me what was lever over. I presume the same situation would play out in the event of a residence being obliterated.

I think it’s different when a car is totaled, that means that the insurance company has already decided it is going to take the car and pay the owners (you and bank) for it. There is nothing to repair and the car is gone, of course the lienholder is going to get paid first.

If it were a repair job instead, the money would go to you to repair it, or jointly to you and the repair shop of your choice (and maybe approved by insurance). The bank is still the lienholder and you still keep the car as long as you make your payments.

With a house fire, even if the house is destroyed, there is still the value of the land to consider. Where I live may be unusual, but the value of the land under my house greatly exceeds the value of the house itself, and even if the insurance paid for the entire value of the house and contents it wouldn’t cover the mortgage. It just doesn’t make sense to me that the money would just go to the mortgage holder and I would be left swinging in the wind, with no house and no way to rebuild it and still owing money to the bank.

Same here - land is about the same as house building costs.

As I understand - the insurance company will decide if they fix or pay off. Usually this is a simple decision. Is the cost of rebuilding greater or less than the payout for total loss? (Not much different than a car)

I heard of a rental row house fire where the owner wanted to demolish since the fire spread across the roof, water damage in several units. (rental market was crap at the time) but the insurance company said, no, the cost of replacing the roof and fixing water damage was cheaper than paying the value of the building - so they rebuilt.

As I understand, it’s like auto insurance. The owner can find a contractor, the insurance company will then pay the contractor. When repairs are complete, the bank still holds a mortgage on a habitable building.

If the loss is total, the insurance company pays the bank first tot he amount of the mortgage. The owner now has a plot of land owned somewhat free an clear (depends on building value? There may still be a residual mortgage amount on the land) that they can build on and (try to) get another mortgage. I don’t know where “removal of debris” from the fire or flood falls in that list. I assume that’s something the insurance company must also pay for?

2 posts were merged into an existing topic: Grundig Posts

Already answered upthread. They are after the insurance that the HOA hold

The Home Owners Association is governed by a board of directors. They are residents/owners, and the ones who make decisions about the repairs: when to repair, what to repair, whether to repair. Boards typically have corporate status, separate from the individual residents.

A resident who is not a member of the board can assert that those decisions were flawed and therefore the Association is liable to its members for the collapse. That’s not the same as suing themselves. If the resident is successful in the claim, they don’t become personally liable to themselves. It’s the Board which would be liable to the resident.

But the board has to put some things to a general vote? The repairs looked to inducing a $100,000 assessment for each condo. Presumably, some tenants objected and the vote kept getting delayed? The media has published excerpts from a letter from the head of the board basically saying “hey! We need to do these $15M repairs as soon as possible!”

Did the amount it would pay get reduced also? If it did, that was not a good policy.

If the bank has made you pay for mortgage insurance, they get the money. Your debt and the title deeds are transferred to the insurance company. Now the bank is free and clear, the insurance company has title to land and a burned out building, you have a debt and nowhere to live.

If you have fire insurance, either because the bank has required it or because you thought it was a good idea, then the insurance company will decide, according to the terms of the deed, who gets paid how much. My insurance company does not offer cash settlement as part of their policy: if my home is damaged, they will repair or replace it. But, as it happens, I know that if they feel like it, they will offer cash settlement. They do that when they think that it’s not creating ‘moral hazard’ and that repair or replacement will cost more than true value. Which, generally, means wide-spread storm damage or bushfire: they know that it’s not arson, they know that shortages are pushing prices up, they will offer to buy out their responsibility to repair or replace. In these circumstances, the cash settlement would go to me: I’m the customer. My debt and the property title are something between me and the bank.

What was wrong with it? The policy was designed to pay off the debt. The debt reduced year on year, so the potential payout was reduced. I should have said that it was a life policy, so only paid out if one of us (we are joint owners) died so that the survivor gets a mortgage-free home to live in.

The building and contents policies are a different matter and get adjusted regularly to take account of rising costs and values. Here in the UK, it’s normal to insure the building (the bricks and mortar, together with fixtures and fittings like sanitary ware etc) for the cost of a rebuild, and the contents (pretty much anything not screwed down) for the replacement cost.

People who live in flats generally will insure their contents (although many don’t even do that). The building has to be covered by a policy taken out by the equivalent of the HOA in their block.

Is this the case? The purpose of insurance is to make sure the property is repaired/replaced at no additional cost to the owner - no different than car insurance.

If the bank has a mortgage on the property, it is in their interest to ensure the property remains a habitable structure - hence insurance. Repairs will be done.

The question is - what happens if the insurance company decides repairs are too expensive? Your insurance is not unlimited - it is set for a specific amount. Usually the property (land) is worth as much or more than the actual structure (not sure how this works with a condo - I assume each condo owner has a share in the overall land title?).

Your house might be assessed at $500,000 but be insured at say, $350,000; since the cost of removing the ruined structure and rebuilding is estimated to be $350,000. (A common failing with older buildings is that the insurance coverage is not updated to account for higher construction costs).

AFAIK the insurance company may look at things and say “We don’t think you can rebuild that house for $350,000. How’s about you take the money instead?” I don’t think this gives them title to the land, it just gets them out from under the obligation to rebuild, and you own an empty lot (after you use some of the money to pay for legally required clearing of the demolished house.)

But if you owe the bank a mortgage, that money goes to the bank. If your mortgage balance owing was less than $350K you get the amount left over, and own a vacant lot. If the balance was over $350K, say $425K, you own a vacant lot but the bank still has a mortgage on it for the $75K remainder.

Either way, you either sell the lot or rebuild arranging your own finance. If you owe $75K still on the lot, then the bank gets their money from the sale before you get anything more. If you rebuild, then it’s up to you to arrange fresh financing - probably the bank will give you a mortgage on a nice new house built on an established lot. Just make sure it’s insured. Letting the lot sit empty does not help anyone.

(I remember one neighbourhood where I could point to two locations that had house fires years ago. In each case, a neighbour had bought the resulting empty lot and made it part of an extra-large yard. The way assessment worked, an undeveloped lot or a lot with just a garage on it did not increase their property taxes too much.)

“mortgage insurance” is a special kind of insurance that is not “property insurance”. Your bank may require you to pay for one or have the other. Mortgage insurance may be a requirement on low-deposit loans: it protects the bank and it’s one of the things that make loans to poor people more expensive.

It is a fact that people often don’t understand the difference. It’s the kind of thing you understand after your home has burned down and you still have a mortgage and a debt to the insurance company.

Three types of insurance are being discussed here:

  • Property insurance (frequently called “fire insurance” in the US), which covers repair or replacement of a property that is damaged or destroyed by a covered event. In the US there is no way you are going to get a mortgage without this insurance, in many cases the mortgage holder actually collects the fire insurance premium (and property taxes) from the borrower every month, then pays the insurance premium (or tax bill) directly.
  • Mortgage insurance (PMI) pays the mortgage holder a portion of the outstanding loan balance (usually equal to the difference between what your down payment was and 20% of the total purchase price). Only required if you have a low (used to be <20%, not sure what is it now) down payment. You stop paying for this insurance once your equity in the property reaches the 20% threshold. @Melbourne mentioned this type of insurance.
  • @bob_2 described a type of life insurance that pays off the mortgage balance if one of the borrowers dies. No lender in the US required this insurance (AFAIK), but once you get a mortgage you will get approximately a zillion people trying to sell it to you.

For the purposes of this thread the relevant insurance is property insurance, which for a condo consists of two parts: the unit owner’s policy, which covers stuff inside the unit (personal belongings as well as internal walls, utilities, and fixtures) and the condo association’s master policy which covers stuff outside the unit (the overall structure and the common areas).