The CLUE Report in Real Estate - C.L.U.E Report
Life just seems to get more complicated every year. Real estate transactions illustrate this more than many other areas of our lives. 10 years ago, you didn't even really need an insurance contingency in a purchase contract, as insurance was just going to happen. The lender was, of course, concerned with making sure there was a policy before funding, but buyers and sellers didn't think much about it.
You just got insurance because you wanted and needed it.
Well, the times they are a-changin'. Due to issues like mold, asbestos, and others, insurers are getting skittish, and you can't count on getting homeowner coverage as a buyer as a matter of course. If the home has a history of complaints, especially high-risk stuff like mold, you may find the home un-insurable, or you may have to take out very high-cost coverage.
Now we need these insurance contingencies in contracts, as a buyer wants to get their earnest money back if there is an insurance surprise. It's very disappointing, but as a buyer, there is some good news in not moving into a home with a major problem that could cause health issues.
The tough part is that it can be as much the fault of an owner who likes to file insurance claims. They could have filed more than the insurers like to see, and the buyer is the one getting punished.
What every buyer should be careful to do is to apply for insurance coverage very quickly after a contract is signed by both parties. The goal is to get an approval or the bad news before getting too far into the transaction and the costs involved.
Information Provided by a C.L.U.E. Report
(Comprehensive Loss Underwriting Exchange) Report provides dates of claims, insurance company(ies) involved, the type of policy, whether the loss was related to a named catastrophe (hurricane, etc.), location of the loss (on or off property), the amount paid and cause of the loss.
Time Periods Covered by the CLUE Report
The report goes back five years into the history of a property. It is standard industry practice to purge losses over five years old.
Who Can Order the Report and on Which Properties
Only the owner of the property or an insurer can order the report. If you are representing a buyer or seller, the request for the report must come from the property seller/owner. Reports for a primary residence can be ordered immediately on the internet from ChoicePoint® (Buy Direct), the company that compiles them. Reports for vacation or rental properties must be requested by mail.
The Importance of the Report in a Real Estate Transaction:
The C.L.U.E. Report could provide loss information that would cause a buyer to reconsider the purchase of a home. If there had been a loss paid due to water damage and mold, the buyer might pass on the deal, as it could be expensive or very difficult to get insurance down the road.
The Cost of the Report
A report can be ordered at the cost of $19.50 per address. I'm sure that most real estate professionals would recommend this expense to their buyer or seller clients, considering the importance of the information it provides.
**UPDATE - The homeowner can now get the report free of charge by request, either in writing or online.
Get a C.L.U.E. When Representing Your Real Estate Clients!
For your seller clients, if they have this document showing a clean bill of insurance health for their home, it's just one more thing to give the potential buyer the confidence they need to proceed with a purchase.
The C.L.U.E. Report is now a part of LexisNexis.