Insurance and taxes

Who/how do you take care of the taxes and insurance on a sub 2


You set up an escrow servicing account through a local title / escrow company which cost's about $10 to $15 dollars per month, the sub2 party makes their payment every month to this account and the servicer makes all the underlying payments and impounds funds for taxes and insurance if necessary.


Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance involves pooling funds from many insured entities (known as exposures) to pay for the losses that some may incur. The insured entities are therefore protected from risk for a fee, with the fee being dependent upon the frequency and severity of the event occurring. Insurance is a commercial enterprise and a major part of the financial services industry, but individual entities can also self-insure through saving money for possible future losses.
A tax is a financial charge or other levy imposed upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many administrative divisions. Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent. The legal definition and the economic definition of taxes differ in that economists do not consider many transfers to governments to be taxes.

Nice copy and paste from Wikipedia which has no relation to the original question. :rolleyes

Yes, but she was able to get her link in there…

Put the property in a Land trust with the sellers last name as Trust. Cancel the old policy and get a new one with the trust and insured. Send the new DEC sheet to the mortgage company. They will think that the seller/owner has just moved it into a trust for estate planning.
Taxes are usually escrowed in the payment and paid by mortgage company. Nothing to worry about there. If not then send the county a check when they are due. Simple. Main thing is not to throw up a red flag for bank to check into the deed transfer.

Good luck

There is a LOT more to the insurance aspect of wraps, subject-to’s, and other seller-financed transactions than investors realize. These issues can and will cause legal issues later down the line if not dealt with appropriately on the front-end of the transaction. Unfortunately, I see on this forum (and numerous others) that everyone has an opinion or story about a ‘friend of a friend’ or another investor that the author knows but I rarely, if ever, see any post with accurate data and/or advice. This is because insurance is (incorrectly) viewed as a ‘commodity’ whereas the only difference between policies is price. Absolutley nothing could be further from the truth. The reality is that an insurance policy is not simply a piece of paper that can be transferred (like a real estate contract) or something that can be ‘modified’ to fit some funky gray-area of a deal just because the parties involved want the deal to happen and think that they can find some sort of odd ‘work around’ later on. It doesn’t work like that - period. An insurance policy (of which there are MANY types and versions) is a legally-binding aleatory contract governed strictly by the rules of insurance law and contract law and the opinions and stories about ‘friends of friends’ have no credence whatsoever once a claim occurs or an unexpected loss happens. There are issues of insurable interest, material mistrepresentation, risk eligibility and underwriting guidelines, carrier ‘appetites’ and many other issues which WILL become very relevant once a claim is filed and there is the situation of the property transferring legal (and/or equitable) title and/or being in the name of an LLC or Trust. Insurance policies are NOT transferable (EVER) and any insurance advice given by other investors (who are only repeating what they themselves heard from other investors) is almost guaranteed to be inaccurate as is most investor-related insurance advice given from most general insurance agents, who more often than not (no fault of their own) are salespeople rather than experienced investors/insurance professionals with backgrounds in contracts, real estate, civil torts, and related issues. There are several articles on our website related to insurance and wrap mortgages, seller-financing, and other such investor-related issues but I will adhere to forum rules and refrain from posting any link here.

Nice little sales pitch Kelly. Does your company insure land trusts and/or the Trustee of the trust?

Kellytroy may have a sales picth but let me add on by saying that what he is talking about is what I preach all the time. Use investor grade professionals. This is what Kellytroy does. All things being equal and I don’t know or endorse him but I perfer you use him instead of your local Allstate agent in most cases.

I will agree with BLUE. Make sure that you use a company that understands what your doing. Most standard insurance agents don’t understand and don’t know how to insure your property. It has bit me before.
It would be great if the board was able to create an affiliate tab where investors can find certain trades (like insurance agents) that work with investors and know how we do things.
Just a thought :biggrin