I have couple of question on sub-2 and insurance. I hope someone could shed light for me.
My first question is, how do you, or how is the homeowner insurance generally worked out on a sub-2? Does it stay in the seller’s name, transfered, or is a new policy generally required. I am doing a sub-2 on a nice home in NJ. Everything is pretty much a go. But the seller wants to know whether he has to leave his policy in place. Any ideas, tip or suggestiong would be helpful.
Oh, he wants to remain on title. We’ve agreed to put the title in escrow. So essentially it’s a sub-lease hybrid. Is there a more efficient and better way besides a land trust, to convey title, with him still on it? I am thinking to just add my name added to the deed, and place it in escrow. What would be your advise?
To be more precise, I am taking over the proprty sub2 it’s current loan. What is the general or ideal, way to insurance the property?
I respect all of your opinions. Please share your experiences and view point. Thanks.
Mo,
Sounds to me like you are partnering with the seller.
Since he is remaining as a title holder.
I also think you are a little confused.
Hopefully you have an attorney doing the close?
You stated you were thinking of just adding your name to the ‘deed’.
First things first…
A DEED, is a document which is used to convey ownership/rights to a property TITLE.
So, you seem to be wanting to share title with your seller.
I’d not do this.
Have your attorney draft appropriate paperwork if your dead set on doing the deal as you describe.
Since the seller will remain on title in your scenario, then yes, whatever insurance policy you wind up with, should cover whomever is on title. (you and the seller).
Why are you structuring the deal this way anyway?
I just don’t see an advantage for you here, and a whole lot of potential mess, and loss of control.
When you actually BUY a property subject to the existing financing, you own it, therefore new insurance is needed, as the sellers insurance would not be valid anymore…they have no interest in the property to insure.
I appreciate the input. Precisely. I was confused. That’s why I was seeking experienced input. This is my first sub2 deal. I think I am going to do a land trust. I ordered some books on land trust and short sale yesterday, from amazon.com. I want to read a little bit more on it. what do you and other think about this plan?
Create a land trust with his name and property address
List my LLC as trustee
List him as 100% beneficiary
Have him transfer his beneficiary interest to my LLC
I am sorry but this deal just does not sound right. First off if you are planning on keeping the current owner on the title it would not be consided a subject to deal. If this deal was a subject to deal the owner would grant you 100% ownership to this property for a small aquistion fee and walk away from the deal completely. What I would suggest is that you Lease Option the home from the owner and lease the home to a tenant buyer if the owner will not let you own the property 100%. In my opinion its just to much of a risk to put yourself on the title with someone who is not financially stable.
When anyone says “Oh by the way the owner wants to stay on title” in a Sub-2 deal or something similar, there is nothing really to say, because it is not the way to do a Sub 2 deal.
In my opinion from what I read from the original poster, it looks like they want to do whatever it is they want to call it, just to say they did a deal.
Either stay in control of the deal or do not do the deal, period. I believe some of the other posters are of the same opinion.
In addition to all the excellent advice you have already received, I think you and the seller are not on the same page. You are asking about a SubTo and the seller’s terms are more like a Contract for Deed on the same terms as his current mortgage loan.
If at all possible, you want to get the deed if the property has signifcant equity. If not, then do a sandwich lease option for a few years. In this market, there is no guarantee that this property will appreciate in value in the near future.