Sub2 And Insurance
So lets say the orginal owners mortgage includes the insurance which is what I have heard usually happens now a days. If you owner finance the place to someone else after you Sub2 it does the new owner need to get insurance or are they already covered?[ Edited by heyshid on Date 04/21/2004 ]
The property is covered, but they should get liability insurance and "contents" insurance. CAsh ususlly recomends 100K worth of ins.
Some people do nothing.
Please check this article and advise if you have questions. I hope it helps.
Tim
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&articleid=472
Norrist, good article....
One thing I wanted to point out is that it's very common for insurance departments to reject the policy simply due to the borrower's name not showing up somewhere in loss payee, regardless of the fact that some agents will allow the prior owner to be named as additional insured.
This is especially true during consolidations and sales of servicing rights where Chase or Wells buys out the servicing of a bulk portfolio of loans.
My workaround for this for the last few years has been to include the borrower's last name in my land trust title. Naturally, the trust is the loss payee. I used to run into insurance issues all the time, but have not had any problems since making this change.
[addsig]
Hi Tim,
There is only one issue I see by naming them in the LT title (and thus being a Loss Payee). In the event of a property claim, they may now be a payable party on the check. They really shouldn't be and, God forbid, may be tough to locate if you need their endorsement.
Our solution has been to name them as an Additional Insured ONLY. This will then show their name on the declarations page and afford them liability protection ONLY. It also, and for sake of our point here, will keep the mortgage company happy. We simply circle their name on the dec page (along with the correct mortgage company info and loan #) and fax it to the insurance department at the mortgage company.
This way keeps them off as a payable interest. Your solution, however, is the best of the rest I have heard. Best regards,
Tim
[ Edited by norrist on Date 05/02/2004 ][ Edited by norrist on Date 05/02/2004 ]
Tim....er...norrist,
Even if they were a payable party on the check, wouldn't having a Power Of Attorney take care of that endorsement issue?
Hey NebD,
Not being an Attorney, I would assume it would. However, I would rather not have them as a party on the check at all. The "additional insured" solution is better, in my opinion, because it keeps the "old owner" off the claims check alltogether.
Tim