Posted by dutch on April 21, 2006 at 23:28:05:
Man, you guys that jump into these things without knowing what you are doing just amaze me.
You don’t know what the POA covers? Spend the $300 bucks and get Bronchick’s course. Here or at Legalwiz.com. Or call your local attorney and spend even more.
Dutch
Okhomesavers
Insurance for Subject-To Purchase - Posted by BigHarold
Posted by BigHarold on April 21, 2006 at 14:15:15:
Hello all,
I’ve just taken over a great property subject-to the existing mortgages, and let me say, Bill Bronchick’s course is the best on creating land trusts. Problem is, I sent the insurance company a letter stating that fact that the property was now in a trust and they needed to add me, the trustee, to the policy. The company then said they needed to hear from the policy holders directly. My problem is, the former owners don’t want anything else to do with the property - thus the reason they signed it over to me. How do I get around this? Do I just get another policy, and how do I do that to make sure I get paid in case of a disaster? Thanks in advance for any help you can give on this matter.
Harold Wilson
Wholesaler (and new GREAT HOUSE owner!)
Re: Insurance for Subject-To Purchase - Posted by Brad Crouch
Posted by Brad Crouch on April 22, 2006 at 14:08:04:
Big Harold,
If the insurance company finds that the named insured on the current
policy is not the name on title, they will not pay any claims.
Any change on the existing policy triggers a notification to the lender,
by the insurance company.
Since the existing policy is actually invalid (as long as the original
insured’s name is not on the title), in my opinion it would be better to
leave the current policy alone and in place. This avoids raising any
“red flags” with the lender.
Get a new policy for hazzard and fire (also known as a “dwelling”
policy), assuming the house is occupied. If the house is not occupied,
you will need a “builder’s risk” policy, and then take out a “dwelling”
policy once the house IS occupied. Make it part of your lease
agreement that the residents are responsible for insurance to cover
their own “stuff” (renter’s policy).
Since the house is in a land trust (and I’m assuming you know better
than to have yourself as the trustee AND beneficiary), the new policy
you get should have the loss/payee listed thusly:
(trustee name), Trustee for Main Street Trust & Beneficiaries ATIMA
ATIMA means “as their interests may appear”.
DO NOT mention the lender on the new policy.
Hope this helps,
Brad
get another policy - Posted by lukeNC
Posted by lukeNC on April 22, 2006 at 09:43:17:
I’d spend $350 and get a new policy, its done all the time.
Re: Insurance for Subject-To Purchase - Posted by clint
Posted by clint on April 21, 2006 at 18:27:01:
You did get a power of attorney signed, right? If you didn’t… The insurance you need is a dwelling fire policy…
Re: get another policy - Posted by BigHarold
Posted by BigHarold on April 22, 2006 at 09:54:37:
Luke,
Thanks for the reply. I was thinking that’s what I should do. So what kind of policy do I get? Same homeowner’s policy? And, since it’s in a trust with me as the trustee (and later beneficiary), do I still put the original owners on this policy, and the bank? And how does that work with the first policy still in place? Sorry for the questions, but first time I’ve done this for myself. Thanks.
Harold Wilson
Real Estate Wholesaler
Re: Insurance for Subject-To Purchase - Posted by rick m
Posted by rick m on April 21, 2006 at 22:09:46:
What should the POA cover? Is this signed at closing or before? Thanks!
Re: get another policy - Posted by B.L.Renfrow
Posted by B.L.Renfrow on April 22, 2006 at 12:34:30:
Although you didn’t ask about this, it’s generally accepted that the trustee and beneficiary should NOT be the same person or entity. I thought Bronchick’s course addressed this.
As for the insurance, there are a couple of options. You can cancel the existing policy and replace it with one of your own. You’ll need to make sure the lender is named as loss payee. The trustee would be the named insured.
Or, as others noted, you could leave the existing policy in place and buy another policy. However, if the insurer is aware of the transfer of ownership and is already asking questions, they’re probably not going to just forget about it. Obviously, even if you left this policy in place, you wouldn’t make a claim on it in the event of a loss.
Also, you don’t get a homeowner’s policy unless you’re going to personally occupy the property.
If it’s vacant, you’ll need a builder’s risk policy. If it’s occupied by tenants, you’ll need a landlord policy.
If you get the wrong kind of policy and have to make a claim, expect to find it denied at best, or at worst, be investigated for fraud.
Brian (NY)