A home sale or a vehicle sale can close with a service contract still in force. The contract was written for the person who signed it, and the paper does not always move to the next owner on its own. This guide explains what to find, read, and ask before the closing date, and how to tell whether you have this problem at all.
How to tell you have the problem
You have it if any of these is true. The contract names you as the holder and you are about to stop owning the unit. A payment is still drawn from an account you are closing. The sale paperwork asks for a contract document you cannot find. The buyer or the lender has asked whether the contract transfers. The contract says coverage ends on sale or requires written notice to the administrator before a sale.
What to read in the contract
Find the holder name, the administrator's contact details, and the transfer clause. Look for a line that says whether coverage follows the unit or the person. Find the cancellation section and note who may cancel, how notice must be given, and whether any refund is worked out by a method the contract states. Check the definitions for the words that decide what a buyer inherits, such as the words that describe the covered unit and the owner. If a new owner would enroll late, read the waiting period language as well.
Questions to ask before closing
Ask the administrator, in writing, whether the contract transfers to a new owner, what form the transfer requires, who signs it, and whether any charge applies. Ask whether the seller's coverage ends on the closing date or on a later date. Ask what happens if the buyer does not accept the transfer. Ask the closing agent or the lender whether they need the contract itself, a cancellation confirmation, or only a written statement that the contract is not being sold with the unit.
How cancellation and transfer usually work
In general, a service contract may transfer with the unit, may end at the sale, or may let the holder cancel and receive a refund under a formula printed in that contract. The words in the contract control the outcome. Many contracts require written notice, so keep a copy of the notice and proof of the date it was sent. Ask for written confirmation that the account is closed and that no further charges will be made.
Where the state rules come in
Each state page on this site names the regulator, cites the statute or program, says whether the state publishes a roster, and prints that roster in full on the state's own as-of date where one exists. Read the rules for the state where the unit sits. Where the state has a rule on transfer or cancellation, the state page restates it in plain words. This edition has not read every state. Where a state page says not read, check that state's regulator directly before you rely on any rule for that state.
What a roster does and does not tell you
A roster is a list of who is registered or listed with a regulator. Being on a roster is not a quality rating, and it is not a promise about any claim. Check the as-of date printed with the roster, then check the company name against the list the state publishes on its own website. Keep a dated copy of what you looked at.
Method
Gather the contract and every notice you have sent or received. Mark the transfer, cancellation, and definitions sections. Write down the holder, the administrator, and the closing date. Send your questions in writing and file the replies with the sale papers. Do not sign a transfer form you have not read in full. This guide does not give legal advice. For a question about a specific contract, ask the administrator, the state regulator, or a lawyer you choose.