Hello all i have been reading for a while kind of sitting on the sides I am pretty confident that i have a grasp on the subject too matter from yellow letter to having the owner sign over the deed via trustee and assignment of beneficial interest.the question that i do have is how do you insure after transfer,or do you name yourself as additional insured as a propert manager. I think i just may have answered my own question but any input from the more experienced investors would be very much apprieciated thank you :deal
nextdeal,
There are a couple of schools of thought on the insurance issue with regard to subject to the existing financing deals.
Some folks have the seller change the policy to a landlord policy when possible, and make the loss payee and the insured the trust or whoever you have taking title.
Some folks state you should keep the existing policy in place and obtain a new one to cover yourself/entity that holds title.
I disagree with both of the above and here is why? and how I handle insurance on my properties.
First, to just ‘change the policy’, many times is not possible. Some insurance companies offer owner occupied policies and some do not.
As for keeping the old policy in place, that’s just nuts, no point paying for two insurance policies, especially since only one of them is good.
Imagine, you make a claim under your policy, then your insurance company finds out there is another policy elsewhere (the sellers), and yours denies the claim, stating the other should cover.
then, the sellers insurance sees that the sellers are not on title any more, and deny a claim as well.
Not good.
So, when you take title, cancel the old policy, and get a new non-owner occupied policy (landlord, or whatever your company calls it).
Basically, fire and hazard is what you’ll get.
With this policy, let the insurer know who the lender is, as they need to be covered, as per the mortgage agreement, and name the loss payee as your trustee, and the insured as the trust or whatever entity holds title.
And NO, it doesn’t matter if the insurance is escrowed with payments or not.
Same thing, get a new policy…and to be frank, when its escrowed, we just set up the policy, give the ins agent the lender info, and they handle it.
As long as the lender is getting payments and their collateral is covered, that’s all that matters.
Others may disagree with me, however, with HUNDREDS of subject to trasnsactions for experience, I’ll stick with what I know works.
Get a new policy when you buy, simple as that.
By the way, non owner occupied is usually cheaper anyway, as the contents are not covered.
It’s also adviseable to get yourself an umbrella liability policy as well for a million or so, since most rental dwelling policies these days don’t seem to include it.
HTH,
Jim FL
also to add what jim is saying, get a new insurance policy because the insurance company will cancel it once they find out about the title transfer so don’t lie if you want to stay away from fraud and deceit.
with the land trust being insured you will have to find a small insurance broker in your town that deals with land trust because allstate will not neither will geico or the other major companies. What companies like allstate can do you is refer you to the right brokerage that can assist you if you have trouble finding one yourself.