A couple of Q's about "subject to" deals - Posted by rayrick

Posted by Bronchick on March 11, 1999 at 17:35:05:

Just the letter will do.

A couple of Q’s about “subject to” deals - Posted by rayrick

Posted by rayrick on March 11, 1999 at 09:36:53:

Alright. I’ve got Bronchick’s Land Trust course and I’m getting ready to start “gettin’ the deed”. A couple of lingering questions: 1) when doing a “subject to” deal, do you just go out and get your own title insurance? You don’t try and get the seller to give you a policy as in a traditional sale, do you? From Piper’s post below it sounds like he, at least, just gets his own policy.

  1. Insurance- There seems to be some controversy on this point (see Piper’s post below). Bronchick recommends that you just have the seller write a letter to the lender naming the trustee as additional insured, and then your name(the investor’s) gets thrown in there too for good measure with the hope that this doesn’t raise any eyebrows. At this point you’ve got a small committee of names listed as the insureds on this policy. Is this the consensus approach?

Sounds like some folks then go out and extinguish the seller’s claim, noting to the insurance co. that they no longer have an insurable interest. Doesn’t this defeat the purpose of keeping the lender in the dark about the transfer of the property?

Now, when you’ve got this little group of names all listed as insureds, what exactly happens in the event of a claim? Do they all have to come to some sort of agreement on who gets the money? Who needs to sign what for the insurance co.?

Lastly, does one need some specific provisions about how insurance will be handled written into one’s purchase contract? Do you say something like “Seller agrees to name Buyer as additional insured on the Seller’s homeowner’s insurance policy?” Then do you need specific language on what is done in the event of a claim? What is that language?

Okay, enough peppering. Thanks a bunch. My ducks are almost in a row, but there’s still a couple of mischievous fellas that refuse to cooperate!


Re: A couple of Q’s about “subject to” deals - Posted by Bronchick

Posted by Bronchick on March 11, 1999 at 10:13:53:

You should get title insurance if you are buying from another party. I said not to bother if you are transferring your own property into trust.

As for the insurance, the trustee (or trust) is named as the primary “loss payee.” he loss payee is the one who gets the check. The beneficiaries are the “additional insureds” for liability purposes in the event they are named in a lawsuit.

If you don’t trust your trustee, then the loss payable clause should read “John Doe, Trustee of the XYZ Trust and the Beneficiaries as their Interests May Appear.”

This requires the signatures of the beneficiaries to cash the check.

Re: A couple of Q’s about “subject to” deals - Posted by rayrick

Posted by rayrick on March 11, 1999 at 11:19:58:

Thanks Bill. That “primary loss payee” business clears it up a lot (guess it’s time to go reread that insurance co letter you include in your course!). Do you include any language in your purchase contract about this stuff or do you just mail out that insurance company letter yourself and be done with it?