What are a buyer’s rights under a land contract if the property burns down but the seller has defaulted on the mortgage?

I am buying my house on land contract. The owner and title company failed to inform me that the owner had a defaulted mortgage before selling me the house. The house caught fire and is a total loss. Due to the foreclosure the bank is saying they get my insurance money and my property. Can I go after the owner and title company for anything since I had the homeowners insurance and I made the payments.

Asked on November 26, 2011 under Real Estate Law, Michigan


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If you were purchasing the property directly from the seller and the home you were buying burned down, you need to carefully read your written contract with the seller as to who is entitled to the insurance proceeds in the event the structure suffers damage before close of escrow assuming there is a policy of insurance upon it. The written agreement would control the obligations owed you by the seller and vice versa in the absence of conflicting state law on the subject.

If the homeowner's insurance policy on the home was in your name, you should be entitled to the proceeds concerning the costs to rebuild the home. I suggest that you immediately consult with a real estate attorney about your situation.

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