Monday, August 15, 2011

Insuring Your Property

Property Insurance - What is available, what does it cost?

Good insurance coverage is available in Belize.  There are several companies from which to choose, and naturally the policies vary a bit company by company. 
The commentary below is a overview.  Each company/policy will have its own particular conditions so do read policies carefully before purchasing coverage.

Structure/Buidling Insurance:
The base-policy is for fire.    Some policies exclude damage due to "brush fire" so read carefully.  If you live in a rural area where brush-fires may indeed be the prime fire-risk you face, find a policy that covers this potentiality. 
Additional riders add coverage for "All Perils".  “All Perils” riders cover a wide variety of potential events:Flood, windstorm, hurricane, earthquake, burst pipes, vehicular impact, airplane parts falling from the sky, malicious acts, earthquake, volcanic activity.
Deductibles will vary by occurrence.  The coverage is clearly stated in the policy.Deductibles also vary by company.   Read and understand this part of any policy you are considering.  It's at the heart of what you are buying.  

Rates vary depending on location and method of construction.
Seaside properties will have higher rates for hurricane coverage than properties located inland. 
Wooden buildings have higher rates than concrete. 
"Mixed construction" has another set of rates.  Mixed construction refers to a combination of concrete and wood.  The classification refers to the materials used for the construction of exterior walls.   Example - a first floor of concrete and a second floor of wood will be classified as "mixed construction".
Rates as of this writing run from 1% for seaside concrete construction up to 3% or more for wooden seaside construction.

Interior Contents:
Interior contents can be covered.  If you are buying building insurance as outlined above, the interior contents will be added to the base policy.
If you rent an apartment or home, you can purchase insurance on contents as a stand-alone policy.
Be sure to make an inventory of items covered and to submit it to your insurance company.  It is further recommended that you take photos of the goods themselves in situ to verify your inventory.  Burn the photos and written inventory to a CD and send it along to your agent.
Coverage should reflect the "value today" of the goods, not the cost to buy them new.

Piers can be covered, and carry rates parallel to "wood seaside" construction.  They cannot be insured on a stand-alone policy.  Pier coverage must be attached to a building/structure policy. 

Coverage during construction:
Contractors insurance is available.  All perils contractors policies cover the same range of items as those noted for completed buildings.  The rates and length of time of the coverage are different than those for completed structures.  Details should be discussed with the insurance agency you are considering.
Amount of coverage:
Your coverage should be for full replacement value.  Under-insuring has very stiff financial penalties if you file for a claim.   

Experience with filing claims - good companies give excellent and prompt service.  The coverage is really extensive, and unlike the unfortunate victims of Katrina you will not be sitting around splitting hairs over whether water damage was considered to be from rain or flood.  The coverage is written to INCLUDE the most threatening events, not to catch you up in a labyrinth of fine print.  DO read your policy carefully and DO comply with the provisions in it,  Do check the financial strength of the company you are considering before buying.   DO document your property.  DO prepare it properly for an impending storm - if you are putting up shutters, take photos.  If you are pulling your boat take a picture of it up on the land.  

Enjoy your property in Belize, knowing that you have excellent options for insuring your property, and that in the unlikely event of filing a claim that you will be treated well and fairly !

Monday, August 1, 2011

"Buy It" Part Three - What Happens in Escrow?

Webster's defines "escrow" as follows:  "A deed, a bond or a piece of property held in trust by a third party to be turned over to the grantee only upon the fulfillment of a condition."

You as the Buyer (grantee) have made an agreement with the Seller (grantor) to purchase a piece of property.   The title to the property will be turned over to you when certain conditions are met.   These conditions include payment of the purchase price, and other things clearly spelled out in the contract to buy.

The "third party" in the escrow is called the "Escrow Agent".  It is not you, and not the seller.  It is a mutually agreed upon "other".  It can be an attorney, a para-legal service, a title company or a company that has as its sole business the activities of escrow.  Sometimes it is a real estate company or even an insurance company.   The job is an important one and the escrow agent should be chosen with care.

 Here is a basic outline of the steps that take you from the "opening of escrow" to the "closing of escrow": 

Opening Escrow - Copies of the signed sale agreement and Earnest Money check are given to the Escrow Agent.  The Ernest Money check is deposited (cashed) into the trust account of the Escrow Agent.  

Title Search - Seller provides copies of title documents to Escrow Agent.  Escrow Agent uses these documents to have a search of the Title done.  If title is "good" the transaction proceeds.  

Other contingencies are met within pre-determined timelines.  These may include things such as a review of survey, CC & R's, house inspection, verification of inventory. 

Seller and Buyer provide their names and addresses to the Escrow Agent so that transfer documents can be created.

Transfer documents are created, and sent to the Seller for signature.  If the Buyer needs to sign (some types of transfer require this, others don't) then the documents are sent along to the Buyer for signature.  The transfer documents are then returned, fully executed, to the Escrow Agent.

Brokers for Buyer and Seller create a closing statement for each party and submit them to the Escrow Agent for use at closing.
Buyer's will show balance of purchase price (or down payment) due to close plus any other agreed upon fees, pro-rations, etc.   The final number will be what the Buyer needs to send along to the Escrow Agent to close.
Seller's closing statement will show the price, less Broker fees, plus any pro-rations (owed by Buyer to Seller) for property taxes, etc. as noted above.  The final number net the Seller will receive.  

Buyer sends balance of purchase price and any other agreed upon fees (for instance pro-rations for property taxes or homeowner's fees) to the Escrow Agent's Trust Account.

Closing Escrow - on the agreed upon date for completion of the sale, the Escrow Agent registers the transfer on behalf of the Buyer; sends the Seller his/her net proceeds and also sends the Brokers their fees.   Buyer will receive back the stamped original transfer document from government within a few weeks time.  Meanwhile, copies of the document lodged at the registry (along with a receipt for same) are a guarantee of your status as the new owner. 

Voila!  A "Closed Escrow."  Congratulations - you now own property in Belize!