Posted by Chris on February 06, 2000 at 12:00:21:
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L/O Insurance - What happens after a fire? - Posted by Lucas
Posted by Lucas on February 04, 2000 at 22:52:59:
Hi I hope someone can clear this up for me,
If im doing a sandwich type lease option, and the house burned down. What happens to my tenant buyers down payment and rent credits?
example:
House value = 175,000
mtg payments = 1,600
mtg balance = 172,000
my buying price = 172,000
tenant buyers price = 185,000
tenants downpayment = 10,000
tenants monthly payments = 1,800
rent credit = 100
3 year lease
after 18 months there is a fire and the house is completely lost! the owner gets 175,000 from insurance. NOW IM SCREWED right?
any help please
Lucas
Re: L/O Insurance - What happens after a fire? - Posted by Chris
Posted by Chris on February 06, 2000 at 11:51:11:
See clause #5(Insurance) in Bronchick’s pro tenant/buyer lease option contract as an example of what to add to your contract. I was looking through Sheets’ form that he provides in his course and it does not have this clause.
You will need an Adobe Acrobat Viewer to open this:
http://www.legalwiz.com/leasepurchase.pdf
-Chris
Re: L/O Insurance - What happens after a fire? - Posted by Nita
Posted by Nita on February 05, 2000 at 20:09:10:
Invest in Bronchick. www.legalwiz.com.
Re: L/O Insurance - What happens after a fire? - Posted by Bill K. - FL
Posted by Bill K. - FL on February 05, 2000 at 09:35:43:
Just some comments in general as I don’t know what is in your agreement with both parties.
The insurance proceeds will pay off the lender first then the owner. If the mtg balance is 172K and the proceeds are 175K that leaves 3K to the owner. Was the policy a replacement type? In that case the house could possibly be rebuilt. If not, and it is a total loss, don’t forget the land value. The lot could be sold to someone else interested in building a new home or rehabbing whats left. Look at what is in your agreements first and see if you could make lemonade out of this lemon. Everyone doing L/O should be aware of this as fires are common especially when children live in the house.
Re: L/O Insurance - What happens after a fire? - Posted by Jim IL
Posted by Jim IL on February 05, 2000 at 01:06:27:
Lucas,
This is exactly why your agreement should state that YOU are to be listed as additional insured on the policy and specifically what happens if there is a claim.
Also, a little language giving you the option to continue as the T/B’er, or not should be in there.
That part should basically say that YOU can accept the insurance proceeds and go ahead with the deal, or, that you can walk away unscaithed.
I also put in my agreement with the T/B’er that they MUST obtain renters insurance for there own personal property. I’m sure not gonna replace a stereo or sofa when the place burns.
hope that helps,
Jim IL