R&R Realty - Jupiter Real Estate
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You are a resident if you do one of the following:
I had something happen on a recent sale. The Seller had just fallen into the “assign your insurance benefits to me and I’ll get you a new roof” scam. They got the money but then did NOT replace the roof. This was a problem when the Buyer went to get insurance on the Property. The underlying premise of the claim is that the roof is ‘dead’. The owner is paid for a new one. But now the new owner wants to insure it.
Most home insurance companies contribute claims history on a property to a database called the Comprehensive Loss Underwriting Exchange, or CLUE. Think of it as a car fax for a house.
A homes CLUE loss history report provides insurance company names and policy numbers and any claim numbers. The report lists the dates of any claims, the loss types and amounts paid for losses, and it will tell if a claim was denied.
Weather-related losses, fires, theft, vandalism and water damage are some of the types of claims listed, says Passmore. But the report does not indicate what part of the property or home was affected. You would need to ask the homeowner for those details.
A report might be blank, for two reasons:
A free CLUE report can be obtained once a year from database giant LexisNexis. Requests can be made online or by calling (866) 312-8076.
Heres the catch for a homebuyer: Only the owner of a property may access its CLUE report. Therefor the Buyer should add language into the Sales Contract along the lines of: “Seller shall provide the Buyer with a Comprehensive Loss Underwriting Exchange, or CLUE, report within say 8 days (before the end of the As-IS period) of the Effective Date.”
You must request the report from the owner of the home youre considering buying, says Karl Newman, president of the NW Insurance Council in Seattle.
Newman says a savvy seller should obtain a CLUE report before showing the home, make several copies and have those available for potential buyers.
Even a homeowner whos not in the market to sell may want to get a CLUE report to check for any inaccuracies.
Since the CLUE report is one of many pieces of information that an insurer might look at, what is in the report can influence your premiums positively or negatively, says Passmore. if there are any inaccuracies, its important to get them corrected, just as it would be for your credit report.
A consumer armed with a CLUE report should examine it for any claims that could lead to skyrocketing home insurance premiums. These include fire, burglaries and physical damage to the structure.
If theres a hazard on the property and someone fell into a hole, a claim would ensue Newman says. When the property has experienced multiple burglaries, that can mean that it needs an alarm system, he notes.
Claims might also indicate issues with the physical location of the property that can affect premiums, says Passmore. If its close to the water or known to flood frequently, insurance can cost more.
A recent claim can have positive ramifications if the damage was addressed properly, says Michael Barry, a spokesman for the trade group the Insurance Information Institute in New York.
For example, he says, if a roof was damaged by a windstorm and replaced by a new one, this would actually make the house more desirable to an insurance company.
Potential buyers should use the CLUE report to let their home inspector know of any repairs that have been made, says Newman, so that the inspector can make sure the work was done correctly.
A CLUE is not a secret database, and it gives no score or recommendations, Newman points out. It just tells what happened in and outside the home. It doesnt take the place of an inspection or disclosures from the seller.
Its an additional tool to evaluate the home and the cost of homeowners insurance, he says.
This one has come up twice recently. A husband and wife buy a property and homestead it. Some years later they have accumulated a savings on their tax bill and decide to get divorced. This decision will necessitate that the title to the property be taken out of the joint name, perhaps sold to a third party, or perhaps the husband, or the wife, is going to retain the house in the settlement.
Who gets the benefit of that accumulated tax shelter? The ability to transfer it into one party or the other now, or to “port” (the accumulated savings is portable) it into a new homesteaded property.
Remember, you MUST re-apply for the homestead exemption in ANY transfer of the property ownership. If your spouse transfers the property to you, you must re-apply. If your spouse moves out, buys a new property and applies for a homestead exemption, you must re apply. You should get a card right after the start of the year stating that you have a homestead exemption in place. If you did not get this then re-apply.
Don’t overlook the value of this. Let’s pick some reasonable numbers. It would not be out of the question to have $200,000 in tax portability savings. This would be the difference between what the property is appraised for and what it is assessed for. So the appraised value of the property is $500,000 and the assessed tax value is $300,000. Note that I did not deduct the $50,000 from this. With the average millage rate being about 2% this saves the couple 2% of $200,000 ($500,000-$300,000) or $4,000 every single year.
Now if one of the couples is renting for the next few (2+) years or moving out of state they should assign this benefit to the other party. If both parties intend to stay here in Florida and buy another property then perhaps it should be split equally between the two parties. And you have 2 years to port this saving into a new property. So, if one were to apply for a homestead exemption in 2023 (apply by March 1st 2023 for the bill you will receive in November 2018) then you must have had a homestead exemption in place for 2020 or later.
OK, here’s something new to watch out for that was just in the news:
BUYING A HOUSE WHICH HAS MADE ONE OR MORE FLOOD INSURANCE CLAIM(S).
Here’s the way it is right now. The National Flood Insurance Program (NFIP) in an attempt to limit properties which make multiple claims on the NFIP has defined problematic properties into two categories, Repetitive Loss properties and Severe Repetitive Loss properties.
A Repetitive Loss (RL) property is any insurable building for which two or more claims of more than $1,000 were paid by the National Flood Insurance Program (NFIP) within any rolling ten-year period, since 1978. A RL property may or may not be currently insured by the NFIP.
A Severe Repetitive Loss Properties (SRL) which is a single family property (consisting of 1 to 4 residences) that is covered under flood insurance by the NFIP and has incurred flood-related damage for which 4 or more separate claims payments have been paid under flood insurance coverage, with the amount of each claim payment exceeding $5,000 and with cumulative amount of such claims payments exceeding $20,000; or for which at least 2 separate claims payments have been made with the cumulative amount of such claims exceeding the reported value of the property.
And now the administration would like to add a new category called Extreme Repetitive Loss Properties AND they want to stop issuing new policies for new construction homes built in the Special Flood Hazard Area (SFHA). SFHA areas are designated on the flood insurance rate map as Zone A, AO, A1-A30, AE, A99, AH, AR, AR/A, AR/AE, AR/AH, AR/AO, AR/A1-A30, V1-V30 or V.
OK, so what is the problem here? First the current law. If you are buying a home which has had even a single $1000 claim made then you have a flood loss and make a claim you could wind up owning a property which has made 2 claims IN THE LAST 10 YEARS and being classified as a ‘Repetitive Loss’ property. The stigmatization of this will adversely affect the property value and drive up your insurance costs if you stay.
As a practical matter, there are only about 50 or so repetitive loss properties in Palm Beach County. If you answer YES to any of the B) questions below then that’s a problem…
If changes are made to stop issuing policies in the SFHA it will affect in fill and tear downs in communities like Lost Tree and Hidden Key. These folks can afford to pay more for insurance PROVIDED someone else will write the policy. No insurance = no loan = reduced sales prices. It will also affect in-fill lots in some locations in the acreage. AND it will affect some new construction but not really in our area as the larger developments are not in the SFHA.
How do I know is there has been any claims made on a property?
First of all, as of January 2019 there are about 66 Repetitive Loss Properties (residential & commercial) in Palm Beach County according to a database called the Comprehensive Loss Underwriting Exchange, or CLUE. Underwriters use the information in a CLUE report to rate insurance policies. Only the Owner and their lender may access the CLUE reports and thus you will have to ask the Owner to provide it to you or sign an authorization for it to be released to you.
The short answer is YES. Rental for more than 30 days for two consecutive years, OR for more than six months, constitutes abandonment of a homestead exemption. What if I rent out a portion, say a room a guest house or an in law suite, of my homesteaded property?
This is the new wrinkle. THE FL SUPREME COURT RECENTLY ISSUED A RULING IN FAVOR OF THE TAX COLLECTOR. At the heart of this NEW case law is that Florida statutes property tax provisions define real estate used and owned as homestead to mean real property to the extent provided in the Florida Constitution, less any portion used for commercial purposes and specifically states that property rented for more than 6 months is presumed to be used for commercial purposes. The tax collector estimated, in this case, that 15% of the property was rented out (and was for the EXCLUSIVE use of the Tenant), producing income, for more than 6 months in a year, and therefore was being used for commercial purposes. They sent the Owner a bill for X Years of the 15% that was NOT covered by the homestead exemption, plus interest and penalties of course. And the supreme court of Florida agreed with the tax collector.
Thus, if you were to say rent out a 500 SF (square foot) room in the house you’re living in or a 500 SF Accessory Dwelling Unit, and your total square foot under air were say 3000 SF then the tax man could remove the homestead exemption on 500 SF of your 3000 SF.
According to the Florida Statute….
196.061 Rental of homestead to constitute abandonment
(1)The rental of all or substantially all of a dwelling previously claimed to be a homestead for tax purposes shall constitute the abandonment of such dwelling as a homestead, and the abandonment continues until the dwelling is physically occupied by the owner. However, such abandonment of the homestead after January 1 of any year does not affect the homestead exemption for tax purposes for that particular year unless the property is rented for more than 30 days per calendar year for 2 consecutive years.
Thus, if you rent out “all or substantially all of a dwelling” (not just a room but you can not keep just say a closet) for more than 30 days per calendar year for 2 consecutive years then you would not be eligible for the Florida Homestead exemption.
The Palm Beach County Property Appraiser has this to say…
You may rent your homesteaded property for 30 days or less per calendar year and maintain a homestead exemption. Rental for more than 30 days for two consecutive years or for more than six months constitutes abandonment of a homestead exemption. Exempt property rented after January 1 of any year does not affect the homestead exemption for that particular year. If the property is rented on January 1 of the following year or the terms of the lease are six months or more the exemption will be denied. Property owners are required to notify the Property Appraiser’s Office when their property no longer qualifies for exemption. Failure to do so could result in a Homestead Tax Lien with substantial penalty and interest. *Florida Statute 196.061 and 196.011 (9) (a). Please call our Exemption Services at 561.355.2866 for more information.
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Legal Q&A: Post-hurricane condo concerns STUART, Fla. – Oct. 2, 2017 – Question: Our condominium suffered wind damage from Irma and the biggest problem is the windows. Our documents require the owners to repair and replace windows but the owners are claiming it is the association’s responsibility. Who is right? –B.A., StuartAnswer: Under the current statutes, the first question in this analysis is whether the damage was caused by an insurable event. If the damage is from a hurricane, this is going to be an insurable event. Therefore, window replacement responsibility is not necessarily governed by the documents, but rather by the statutes. Specifically, section 718.111(11) of the Florida Statutes provides that the condominium association is responsible to repair and replace property insured by the condominium association. It is important to note that insurance responsibility may be the same, or it may be different, from the responsibility set forth in your governing documents.Thus, I would contact your insurance carrier and determine whether your condominium policy covers the windows. If so, the condominium association will be liable to repair and replace the windows damaged by Irma and the cost would be a common expense.Notwithstanding the above, there are a few exceptions. First, the statute provides that the condominium is responsible to insure “all portions of the condominium property as originally installed or replaced of like kind and quality, in accordance with the original plans and specifications.” So, if an owner previously replaced the original windows with something other than “like kind and quality” then the condominium may not insure those improved windows.Second, the statutes also allow a condominium to “opt out” of the above analysis. If the association has opted out, the analysis would be governed by your governing documents and not the statute.Third, the condominium association is not responsible to repair or replace when the damage is caused by intentional conduct, negligence, or the failure to comply with the rules. For example, if the rules require the owner to deploy hurricane shutters and the owner failed to do so, the condominium association may not be responsible for those particular windows under the above analysis.My recommendation is you contact your insurance carrier as well as a licensed Florida attorney to make sure that the condominium association is acting under its documents and the applicable statutes.
Source: Legal Q&A: Post-hurricane condo concerns
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