How Do You Protect Yourself In A Sub2 Deal?
Sub2 Investors,
1) How do you address who will receive any fire insurance or condemnation proceeds?
2) How do you protect yourself drom sellers' divorcing, declaring bankruptcy, becoming mentally incompetent, or dying?
Thanks
housebyr
housebyr,
Basic question basic answer, when you get the deed you own the property. So what happens to the seller after you record the deed does not effect you.
Insurance is covered under a Power of Attorney, Affadavit and Insurance Paperwork.
John $Cash$ Locke
John, first time to talk with you. It is my pleasure since I have enjoyed and learned from your advice articles. I have just learned from the seller on a subject to that he is about to file a Chapter 7 in 30 days. I thought I may have to pay it off if he does, since a BR Trustee pulls a credit report when a person or entity files BR. Trustee also has authority to reverse any transfer of assets done within the last 12 months. What is your thoughts on this scenario. First time this has occurred with me, but I have thought it may happen one day. Appreciate your response. LEM
Lemjam - from personal experience, I highly advise you NOT to touch a property with a 10-foot pole if you know for sure the seller is going to enter BK. Even if trustee is not going to reverse the sale, the title company might have issues with the fact that former owner is in BK later on(unless you obtain a full title policy at the time of deed transfer).
Hi LEM,
You are absolutely correct in that you will have to work with the trustee if your seller files (no matter under which chapter) bankruptcy. You will probably have to prove to the trustee that you now own the property by showing the trustee the new deed, affidavit and any other paperwork. You shouldn’t have much to do except show the paperwork to the trustee. Then it will be up to the trustee and court to decide what to do with the house. Equity will probably have a bearing on their decision.
Best of luck
John (LV)