Ready Set Sold with Bryan Vogt #16-04: Joe Harnist: You want to sell but your house has mine subsidence. Now what?

Bryan Vogt: Welcome back. Thanks so much for rejoining us. I am Bryan Vogt, your host of Ready Set Sold. As I left you before in the last segment, we talked about that dreaded thing of mine subsidence, and being in the Metro East, there is that element of mine subsidence, and Joe Harnist is my guest from … He’s the president of Harnist Insurance, been doing this forever. Yeah, doing insurance. We talked about, off-air, that it is still extremely rare. Even though, yes, we know most people, if you lived here at any period of time, know that there are mines and this was a big place for mines, it’s very, very rare.
I don’t want to get people thinking that, “Oh my gosh, if I have a house, this is what’s going to happen to me.” It just doesn’t. But what I wanted to bring up … and that’s why I was so happy that Joe’s was at the end of this segment, here is the situation, if you do have potential mine subsidence, but you still need to sell.
Now, the real estate side, very briefly, is that you must declare that. If you have mine subsidence, that is something you want to declare. You want to protect yourself and let buyers know that, but there’s some options that, quite frankly, I didn’t even know about, and that would be, there is traditionally a settlement. Maybe you can kind of just briefly walk us through what a mine subsidence deal would look like, Joe? And then, we can take it from there.
Joe Harnist: Yeah, Bryan. Well, obviously, mine subsidence is actually a state bureaucracy. It’s handled by the Illinois Mine Subsidence Fund, and they use the insurance companies as a conduit to provide the coverage to clients and collect the premiums, obviously. But subsidence claims … if you’re trying to look at a house that has a claim, those claims can actually be assigned to a new owner.
Say you have a home with a claim, and that owner has collected some of the claim money to make temporary repairs for things that have gone wrong and stuff, and the subsidence has not ceased. Then, you can go to the Illinois Mine Subsidence Fund and get an assignment of that claim to the new owner from the previous carrier so that things going on after you purchase the home … you still have money from that claim to help offset those expenses going forward.
Bryan Vogt: Right. And I think what I’m hearing you say … and that’s really important, too. I’m glad you brought it up, that this is state-run, and then the insurance companies kind of work with that. But it really starts with the state. They make a lot of determinations bywhat they think they monitored and what have you, and there’s different things that they do.
But what I also heard you say is the ability to be able to take that claim and give it to the new homeowner, which is huge. I don’t think most people know that. Again, this doesn’t happen very often, but we have seen situations where, again, many times, people think of mine subsidence as kind of this gigantic sinkhole. And the house is eventually going to go … some of it, evaporate.
Joe Harnist: Right.
Bryan Vogt: There’s just … There can be mine subsidence, but it doesn’t have to be very major. And then, I think that’s the other point, too. It may make sense to a buyer to purchase a home with, potentially, mine subsidence. Of course, you always want to double check … make sure that’s the direction to go. But at least the buyer could do it. And knowing that if there’s funds that are needed to repair it, that can be transferred over to them, correct?
Joe Harnist: Right. Right, and a lot of times, on the subsidence claims, a lot of it’s cosmetic from cracks that are in there, and things that can be easily repaired. A lot of times, the money that’s involved in the claims is there for people to make temporary repairs, because the Fund will not make a payout on a full loss until the subsidence has actually quit.
Bryan Vogt: Gotcha.
Joe Harnist: And that’s monitored by the people from the subsidence fund. They come back periodically and look at it to see if it’s stopped moving over a period of time, so-
Bryan Vogt: And just, also, for listeners … and hopefully, you know this, too. Look, if you have mine subsidence and you’re a seller, it is a big problem, okay? We’re not trying to say that this is going to be the greatest solution in the world, but at least there’s potentially of some options. At least, depending on … again, every situation is … every sale is situational.
Joe, you made a great point, and that is, it depends on how serious it is. Is it minor? One of the things that we run into, Joe … and maybe, again, you guys do, too, is especially older homes. They’ll have those cracks up around the ceiling, and they’ll be on the wall. And sometimes, people jump to a conclusion that it’s mine subsidence when it’s just settling.
Joe Harnist: Yeah, that does happen a lot, and even with basements and anything dealing with concrete. I mean, you’re putting a solid structure on a movable surface. And like you said, compaction of soil, sinking, water … there’s a lot of things that can affect that concrete or concrete block, whatever the case may be. It can create cracks and everything. It doesn’t necessarily mean that it’s mine that it’s mine subsidence.
Bryan Vogt: And one thing, too … and this is really, really important. And I know, Joe … I know what your answer’s going to be, but I’ll still ask it. Look, it rarely happens. It’s unlikely to happen, whether you live in O’Fallon, Belleville, Swansea, near Scott Air Force Base, any of those things.
Having said that, should people have mine subsidence insurance? That’s my question to you, Joe.
Joe Harnist: In my opinion, which I tell all my clients, yes.
Bryan Vogt: Right.
Joe Harnist: I mean, in St. Clair County and other surrounding counties, it is actually mandatory. It’s mandated by the state of Illinois, but the insurance companies provide it and write it. The only way you cannot have it is to sign off on it.
Bryan Vogt: Right.
Joe Harnist: I highly do recommend that, because in this area, too, a lot of times, we write … we have the mine subsidence. But then, we also write earthquake coverage.
Bryan Vogt: Right.
Joe Harnist: And those two go hand in hand, because you don’t want to have a situation where you have an earthquake or a little shake of an earthquake, and then, they say, “Well, it wasn’t an earthquake. It’s mine subsidence,” or “It wasn’t mine subsidence, it was an earthquake.”
Bryan Vogt: Sure. Sure.
Joe Harnist: You don’t want to get into that argument if something happens.
Bryan Vogt: Sure, so you’re covered either way. No, that’s great to know.
Joe Harnist: Right.
Bryan Vogt: And mine subsidence insurance is so cheap anyway, so it’s just kind of a no-brainer.
Joe Harnist: Yeah, it’s not terribly expensive at all, no.
Bryan Vogt: Right. And sorry to cut you off. We’re running out of time. I want to thank Joe Harnist, the president of Harnist Insurance, for joining us today. And next segment, we’ll do the tip of the week. Want to make sure you tune into that. You’re listening to Bryan Vogt with Ready Set Sell. See you in a few.

You’re listening to Bryan Vogt with Ready Set Sell. See you in a few.