Missing parts of a puzzle - Posted by JT-IN
Posted by JT-IN on May 11, 2006 at 23:37:16:
Some of the things that should have been covered in the contract language, apparently were not. In theory, which I realize is not what you are NOW dealing with, these issues should be identified in the Land Installment Contract, (aka Land Contract, as well as a Contract for Deed).
What I would now recommend that you do is to call your insurance person… Explain the facts to them… the fact that you have a Land Contract on the property… and what the occupant is claiming has happened. Do not go into the fact that he wants a copy of the contract, or any other extrainious details… just the fact, Maam… (that statement is likely way before your time, but it was Sgt Joe Friday, a TV detective, who would repeatedly state that, many years ago… Just the facts, Maam).
A couple of things here… Does your ins co know that you have sold the property on a Land Contr…? If not, this could be a problem for you… If you have the property insured as if you live in it yourself, which is a common problem or mistake many newbies make, since that type of ins is cheaper… but it doesn’t cover what is at risk of loss, and that is what ins is all about. Then let your isn agent handle things from there…
What should be covered in your LC is how the ins works… How it should work is this… Your Vendee in the LC, which is the technical name of guy living in the house and buying on LC, should have the house insured with his own policy, for the structure and contents if he chooses. This policy should name you as an “Additional Insured”, just the way that Banks are named when they hold a Mtg on a property. He pays the premium and all costs with the policy, and if he doesn’t, since you an Add Insured, then they will send you a notice that premiums have not been paid, or that coverage is going to lapse, then you can properly protect yourself from there…
You then mentioned MIP… MIP is Mtg Ins Premium, which is FHA’s verson of PMI, or private mtg ins. This insures the lender, if and only if the Mortgagor, or Borrower defaults on the loan. Nothing more, nothing less. That is all that MIP covers.
Back to the claim at hand… If behoves you to get this settled, as you are potentially at risk here of some Judge stating that you should have done such and such… Once you get beyond this claim issue, then re-write the isurance portion of the deal, with some form of addendum and set up the ins the way it should have been, from day one… Now it is all about getting the dust settled on this potential claim. It doesn’t pay to right in theory, if some judge sides with the other guy. Do what you need to do to get it settled… Don’t be stuck on arguing about principle here, as you can’t eat principle.