[WSBARP] New wrinkle on closings

[Kary Krismer]

On 11/3/2020 4:39 PM, David Daniel wrote:
> I am concerned about an insurable interest in the event of a casualty.
> The Buyer would have an insurable interest due to the change in 
> definition of "closing", and as paragraph 3 says, both parties should 
> ensure that they have adequate coverage from the point of closing to 
> the point of recording.

I agree with that analysis, and I think I said that going in.  My issue 
is more with situations where the transaction doesn't record and the 
title company offers to treat it as closed.  There I don't see the buyer 
having an insurable interest under the unaltered state-wide PSA.

That said I am still concerned because I don't trust insurance 
companies.  I once worked on a case that involved whether tenant 
improvements were personalty or realty.  The insurance company was 
taking a position contrary to Washington Supreme Court authority in 
order to impose a large co-insurance penalty on their insured, and to 
pay the realty portion of coverage pro-rata with the landlord's 
insurer.  The insurer in the Washington Supreme Court case and in my 
case was the exact same insurer. They lost on partial summary judgment 
with the issue of bad faith remaining.

I've always wondered whether they were able to recover the portion they 
paid to the landlord.  When their attorney asked why they weren't 
getting a credit for that amount paid out on the realty portion of 
coverage the judge explained the obvious:  "You paid the wrong party!"

Kary L. Krismer
206 723-2148

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