What happens to a roof insurance claim while you are selling the house?
Short answer. The claim stays with whoever owned the home on the date of loss, so the seller keeps the right to the insurance money unless the purchase contract says otherwise. The cleanest options are to finish the repair before closing, or to negotiate a price credit or a written transfer of the claim proceeds with the buyer, keeping the mortgage payoff and the insurer's depreciation rules in mind.
Scenario 1: the storm happened before you listed
Finish the claim and the repair before closing if you can. It takes the roof out of inspection negotiations and keeps the money with the person who holds the claim. Disclose the claim and the repair on your seller's disclosure.
Scenario 2: the storm hits while under contract
Most Georgia purchase contracts address damage to the property before closing. Read that section with your agent or closing attorney. Common outcomes include:
- The seller files, completes the repair before closing, and provides documentation
- The parties push back closing until the roof is replaced
- The seller credits the buyer, or agrees in writing to pass the insurance proceeds to the buyer, who replaces the roof after closing
Complications to plan for
- The mortgage company on the check. If your loan is paid off at closing, the lender's endorsement process changes. Coordinate with the lender and closing attorney. See mortgage company checks.
- Withheld depreciation. On replacement cost policies, depreciation is usually released only when the work is completed. If the buyer replaces the roof after closing, recovering it may be difficult, so price that into any credit. See recoverable depreciation.
- Your policy ends at closing. The claim for the earlier storm survives, but you no longer insure the house, so document everything before you hand over the keys.
Get it in writing
Whatever you agree, put it in a signed amendment to the purchase contract. Verbal promises about insurance money are a common source of disputes after closing.