Should Lenders Notify Insurance Providers Regarding Foreclosure Proceedings Against Residential or Commercial Real Estate?
The Tennessee Court of Appeals recently decided an important case addressing whether lenders are required to notify property insurers regarding commencement of non-judicial foreclosure proceedings against residential or commercial real estate. U.S. Bank, N.A. v. Tenn. Farmers Mut. Ins. Co., No. W2012-00053-COA-R3-CV (Tenn. Ct. App. Nov. 29, 2012). In the US Bank case, the owner of the residence failed to make timely mortgage payments, and the bank commenced foreclosure proceedings. Soon thereafter, the owner filed for bankruptcy, which stayed the foreclosure proceedings. After the foreclosure proceedings were stayed, the residence was destroyed in a fire, apparently as a result of methamphetamine production in the home. After the fire, the bank made a claim to recover insurance proceeds, and the insurance company refused to pay the claim. The insurance company’s refusal to pay the claim was based on the bank’s failure to notify the insurance company regarding commencement of foreclosure. The […]
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