When there is a sale made but before the deed has been delivered incase there is a fire or some casualty or even loss of property or even loss to the improvements which have been made, then an amount is adjusted which will be either equal to or less than 25% of the amount which has been insured which covers the casualty and the purchaser is then entitled to get credit for it. In case the casualty or loss is equal or exceeds 25% of the purchase price then the purchaser can opt to receive the insurance amount. However, this needs to be done in a stipulated and agreed upon time frame post the damages or losses are inflicted and the purchaser has been notified of the amount.
In such cases if the purchaser decides he wants to continue with the contract then the contract is extended by a certain number of days which is acceptable to both the seller and the buyer. The credit of the insurance money is also used so that the sum of the deferred payments is reduced pro rata basis. If the purchaser decides not to go ahead with the contract then the contract gets terminated and the loss or the damages are then to be considered as adjusted based on the contract when the insurers have agreed upon the amount and they are ready to pay the amount. Incase there is no insurance however, and the loss or the damage is more than 5% the purchaser can decide to terminate the contract.
Disposition of Insurance or of Proceeds Thereof, 10.0 out of 10 based on 2 ratings