ADVICE FOR HOMEOWNERS REGARDING AOB's
ADVICE TO HOME OWNERS REGARDING
ASSIGNMENT OF BENEFITS AGREEMENTS
CONSULT AN ATTORNEY BEFORE SIGNING!
Even 19 months since Hurricane Irma, potential Buyers are asking Sellers to file insurance claims for roof damage. To the untrained eye, the roof may seem perfectly fine, structurally sound, and have no leaks.
In addition to the Buyer, Contractors (Assignment of Benefits Companies or “AOB”) also ask the owner to sign an agreement by promising a new roof. What can happen, if signed, without consulting an attorney?
These agreements, regardless of their name, are all very similar to each other. Their purpose is to assign all the “rights, benefits, and proceeds” of an insurance claim to the Buyer or Contractor. The assignment usually includes the right of the assignee to collect for contractual damages, consequential damages, and statutory damages. The assignment then allows the Buyer or Contractor to file a lawsuit and collect the proceeds from the insurance company directly.
NEVER sign this type of an assignment without consulting with an Attorney first - even when in conjunction with a Sales Contract. I am a great resource for you and your client and happy to help.
Remember, most contacts to sell real estate do not entitle the Buyer to a new roof! The roof only needs to be structurally sound, with no leakage. In the event the Buyer asked for the assignment, a Seller may be leaving a lot of money on the table.
Here are a few actual examples shared by a real estate attorney;
- Homeowners had liens placed on their home by the AOB company because they felt they weren’t compensated enough by the insurance carrier.
- AOB companies randomly approached homeowners. The company inspected their 20-year-old roof, and made a claim even though there was no evidence of damage (leaking, cracked tiles, etc.). After investigating the claim, which usually includes an independent engineering company inspection, the insurance company determined that the condition of the roof was strictly age related, so the claim was denied. Because the engineering inspection showed these roofs were at the end of their useful life, the homeowners were forced to put on a new roof, at their own expense, by the insurance company. NOTE: In every one of these instances, this would not have happened if the AOB Company had not knocked on the customer’s door, or approached the owners in their yard. This frequently happens.
- One home owner had two estimates for their tile roof. One was for $37,000 by a reputable roofing company, but the AOB claim was for $65,000 - the Contractor pocketed the difference! The AOB promised to pay for the insurance deductible as long as the homeowner filled out and signed a sheet of paper listing contact information for their neighbors, family friends, etc., that the AOB could call.
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