Freeze Damage in Foreclosures
By
Frozen Toilet
In Minnesota our temperatures vary drastically from January to July. We need to protect our homes and investment property from the elements. If a property is not occupied it should be winterized during our cold months. Even if the heat is on at a property the danger of damage still exists if it is not occupied. The boiler or furnace may malfunction, and with no one present to catch it problems can happen quickly.
Freeze damage is not fun to fix.
If you are facing foreclosure you should really be aware that freeze damage may affect you. How? Let’s say John Doe owns an older duplex with a mortgage balance of $100,000. After John missed four mortgage payments his mortgage company initiated the foreclosure process. The reason John Doe missed payments is that he could not find qualified tenants to rent his two units.
Frozen Water Meter
The market value is now $75,000 and John does not have the money to pay the difference at closing. The property is now headed for foreclosure. John doesn’t take the time to winterize the place, and stops paying his utilities and insurance.
It is February and the boiler goes out. As a consequence, the water trapped in the registers and plumbing throughout the property freezes. The problem is that when water freezes it expands. The pipes in the duplex crack and break violently as the pressure within them is released. The plaster walls encasing the pipes crumble and the hardwood floors covering them buckle. The tanks of the porcelain toilets shatter.
You may think that John Doe has nothing to worry about. After all, the bank is taking the property back and they can deal with the damage, right? Not exactly. The problem is that now John’s duplex is going to sell for less. It is listed as an REO and sells for $50,000. What does this mean for John? It means that his mortgage company will receive less than half of his loan balance. It also means his financial liability to the mortgage company just DOUBLED. If the lender chooses to go after John they will be seeking much more than if John took the time to winterize his investment property. If you have a vacant property please take time to secure and winterize it.
