BIC TIP #1267: Keep It Insured Until Closing

Keep it insured until closing. In this BIC TIP for property owners, listing agents, and sellers, Stephen Long explains why the seller must maintain homeowner insurance and utilities right up until the end, and why “the end” is later than many sellers think. The key is understanding that closing means recording.

The Contract Puts It on the Seller

The contract is specific about this: the seller is responsible for maintaining utilities and insurance through closing. It is not optional, and it is not something to cancel the minute the seller signs papers at the attorney’s office.

Listing agents, this is a conversation worth having early, long before your seller starts calling the power company and the insurance agent to shut things off.

Settlement Is Not Closing

Here is where people get tripped up. Signing at the attorney’s office feels like the finish line, but under the contract, closing is defined by the recording of the new deed.

Picture a settlement on a Friday afternoon where the deed does not record until Monday. Everyone shook hands, the seller handed over keys, and the champagne is open. But officially, the transaction has not closed. The seller still owns that house for the weekend.

The Weekend Nobody Thinks About

During that gap, the seller is still responsible for utilities and insurance. That matters, because if something happens to the house over the weekend, such as a fire, a burst pipe, or a storm, it could be a very big problem come Monday morning.

If the seller already canceled the homeowner policy, they may be facing a loss on a property they technically still own, with a buyer who is not obligated to take it in a damaged condition. Nobody wants to start the week with that phone call.

The Practical Takeaway

Coach your sellers to keep homeowner insurance and utilities in place until the deed is recorded, not just until they sign. Have them confirm with the closing attorney when recording actually happens before canceling anything.

It is a simple step that protects your seller, the buyer, and the deal. Maintain insurance right up until the end.

This BIC Tip is general real estate education for licensees and consumers, not legal, tax, or financial advice. Rules and forms change, so verify current NCREC rules, MLS rules, and standard forms, and consult a North Carolina attorney or qualified professional about your specific situation. See Disclaimers & Disclosures.