DOS And The Insurance Problem
When you do the Trust and then to LLC.
Needing two insurance policys. Oringinal in trust name so bank will not know. Then one in the LLC name since title changed.
Since the transfer of beneficial interest is not recorded why not have two. If sued pull out the LLC one for libility protection. If a insurance claim pull out the one where you have bene interest.
The issue is who (or what entity) owns/holds the deed? Also note the paragraph regarding carrying 2 policies:
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&sid=472
If the insurer can find a way to deny the claim, they will. The DOS isn't the issue that many make it out to be (at least from an insurance perspective). Once the lender understands that:
1. The new policy, correctly written, protects their interests, and,
2. They may actually get their payments, and on time!
You shouldn't have a problem.
We've never had a DOS invoked (knock wood) when CORRECTLY insuring a property. Tim
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[ Edited by norrist on Date 02/15/2004 ]
[ Edited by joel on Date 02/15/2004 ][ Edited by JohnMerchant on Date 02/15/2004 ]
Tim's right. Playing games with multiple policies is very dangerous.
It's not only a policy violation (which might vitiate policies & void coverage by BOTH companies!) to double insure any RE, but also likely a criminal act under state statutes.
Probably best tack, legally, is to put the RE into a trust, then make sure it's insured in trust's name, also covering the lender as its interest appears.
But any private excess double coverage is a no-no.
Johnmerchant this might make it legal but you would not have coverage since the true owner is the LLC and not the trust.