Do you have to declare a property be listed.......

[happyscooter]

as a rental property on your insurance policy? We are trying to sell my parents house and someone is wanting to rent it until we do. I do not want to do this, neither do my siblings. We are waiting on someone to give us a final answer on buying it. It could be for a few months, just not sure. Since we are not in business to rent/not a corp./landlords, I think this would be a headache. We would not fix it up, draw up a contract, etc... BIG MISTAKE! But the person keeps calling my sibling. I say let it sit empty. But if we do decide to rent it out, would it have to be declared 'rental property' on the homeowners policy? As always on YM, thanks.

[8 Bit WWBG]

Whether it is required to be or not, I'd certainly list it as such. Insurance companies love exploiting loopholes to screw you out of money. If you do not say it is being rented, and one of your tenants sues, it wouldn't surprise me if insurance tried to avoid paying on those grounds.

[Savoir Faire-Demogague in NJ]

Whether it is required to be or not, I'd certainly list it as such. Insurance companies love exploiting loopholes to screw you out of money. If you do not say it is being rented, and one of your tenants sues, it wouldn't surprise me if insurance tried to avoid paying on those grounds.

Well that is not really a loop hole. Homeowners hazard insurance is not the same as having the property insured as a rental.

[happyscooter]

I will tell my sibling who is the executor your replies.

[Savoir Faire-Demogague in NJ]

As I always note here...best to get professional advice. If you have an attorney in the mix to represent you in the sale of this house, I would run the question by them.

[phil5185]

Additionally, the insurance for a rental is cheaper than the insurance for a home. That is because you insure only the structure and the liability but not the personal belongings. (Your tenant insures his furniture and belongings if he desires). So, you want to notify the insurance company to assure that the liability is covered, and to get the price break.

[Deleted]

I think there are two questions here.

1) Insurance question. Yes you MUST declare the property as a rental for liability reasons. I asked the same question from my insurance agent. What's trickier is letting the house stay vacant for a while. We left ours as owner occupied until we found a renter. It's a little tricky as insurance companies will often cancel a policy if a property remains vacant for a while. They fear vandalism and systems failing if the property is left vacant.

2) Is it a good idea to rent out the property while you are waiting to sell it. Generally not unless your tenant has really nice furniture and is willing to show the property on very short notice (say an hour). I definitely wouldn't put a new tenant in the house but I have arranged deals (in writing!) where I have reduced rent in exchange for the short notice. It's worked for me twice (single women who always kept the place immaculate) but I wouldn't chance messing up the sale trying to squeeze a thousand or two dollars of rent.

[happyscooter]

I had always heard that you could not insure a vacant house. Vacant for whatever reason. My parents house has been vacant for 6 months as we clean it out. Homeowners Ins. knows it is vacant.

[happyscooter]

Bonnap, the person who wants to rent it is coming to the area for a short time. I am not sure that they would have any furniture so to speak. So probably wouldn't have renters insurance.

[zibazinski]

Sure you can insure a vacant house but if you are wanting to sell the place, DO NOT let a tenant in there. Tenants do not want to move and buyers do not want to be messed with over tenant schedules. I have walked away from houses because of scheduling issues with tenants. There's a ton of houses out there for sale. Market yours well and that includes no tenants.

[happyscooter]

I have been telling siblings/executor that we should not rent. The house is paid for and we have the money to let it sit empty for a few months. But the person wanting to rent keeps calling. I have told them there is a house for rent 1 mile down the road. So far, no go.

[zibazinski]

That would make me even more suspicious. Do you know how much damage a tenant can do and how hard it is to get them out? DON'T DO IT!!!!

[happyscooter]

Yes, I know. I am just a be-otch I guess. Or so they say. Or a pushover. Or an untrusting soul. Probably more the first one.

[cronewitch]

Jan 15, 2011 14:44:14 GMT -5 zibazinski said:

That would make me even more suspicious. Do you know how much damage a tenant can do and how hard it is to get them out? DON'T DO IT!!!!

Nobody you would want would be that desparate, they think you aren't good landlords who will check criminal backgroud, credit and more than one prior landlord. When the stop paying rent and won't move you won't know the ropes to get the eviction so it will take longer.

Don't do them any favors, if you decide to be a landlord you pick the tenant not them pick you.

[tiredturkey]

As someone who had to use a very expensive and lengthy eviction process to remove the tenant from our first, and definitely last, rental (FIL's house after he passed away), and then repair all the damage they caused before we could sell - DON'T!

As for insurance, I can only speak to Texas where the usage of the insured property has to match the coverage - homeowner occupied, vacant (max 90 days) or rental. Failure to declare the current usage is cause for policy cancellation. We skated on scary, thin ice after we evicted the tenant because we were unable to sell the property for a period of time and it couldn't be insured after 90 days of vacancy. We were forced to buy a very expensive short-term umbrella liability policy to be protected from the possibility of lawsuit related to the property.

[8 Bit WWBG]

...:::"Well that is not really a loop hole. Homeowners hazard insurance is not the same as having the property insured as a rental. ":::...

All the more reason then. No need to GIVE insurance a reason not to pay you.

[happyscooter]

What is 'homeowners hazard insurance?'

[suzwantstobefree]

I have a rental home and when I was first contemplating renting it, I called the insurance company. (note - I am in FL) They told me they would maintain the insurance if it was vacant while I was selling it, but wouldn't insure a rental home. My insurance for the vacant home was over $1200 per year bur the insurance on my rental was a little less than $600 per month. If you decide to rent it, make sure you insure it as a rental home.

However, I agree with almost everyone else - don't rent it if you don't have to.

I hope you are able to sell it quickly

[happyscooter]

I am contemplating signing over my share (maybe $15k) just to get my name off of the title. The others can do as they wish and I can't be held liable.

[AgeOfEnlightenmentSCP]

the short answer is YES. For it to be properly insured, the appropriate policy has to be in place. Non-owner occupied is a different, and usually more expensive policy.

[Deleted]

That's strange. For some reason my last post didn't take.

Happy, isn't title to the property still in the estate's name rather than your own? If so, and there's a problem you're not liable if you didn't cause the problem. The estate would be sued not you. Don't give up your share so easily.

As to the short term renter issue; it is true that it can be hard to find a house as a short term rental vs one of those nasty short term apartments. I did have a local family approach me when I was trying to rent out a large family house in February to do a short term rental (5 months). After checking them out (great credit and the tidiest tenants I've ever had). They paid me a rental premium and two months in advance and agreed to show the property. It worked out well because I knew I would have a better selection of family tenants once school let out.

If I were in your shoes I would only consider the deal if it made sense to wait to put the property on the market in May/June. And I would only do it if the short term tenants had great credit, excellent references, and agreed to show the property. Otherwise, who needs the headache?

[happyscooter]

Estate has been settled through probate. So the heirs own the house. I am an heir. I don't think my parents would want me to give up my part but I can't be dragged through something that I think is preventable.

[Deleted]

Really? Wow, no way would I co-own something with my sibling!

Was there a reason probate was settled before the property was sold? I know it's water under the bridge and none of my business but as the Trustee of my mom's Trust I didn't consider the estate settled until everything was sold, distributed and the final estate return was filed (about 2 years).