Re: Land Trust & insurance - Posted by Bill Gatten
Posted by Bill Gatten on January 26, 2000 at 14:19:59:
This is one of the many reasons the PACTrust is set up like it is (i.e., the land trust always being in the seller’s[borrower’s] name). By leaving the seller in and taking a forfeiture of its interest (e.g., 10-20%) at the trust’s termination), insurance can comfortably remain in the sellers name to cover “HIS” trust. You, as a beneficiary with the Power of Direction (control) and full use and poessesion (and tax benefits), are then fully covered…without hassles in trying to get an insurance company to insure a trust in which the borrower on the loan has no connection or control. When you are a 100% beneficiary interest holder, and when the seller has given away all control and direction, having done so can cause a real squirrel fight when it comes to insurability issues (hazard and title insurance). Leaving the other party on has myriad other benefits as well (re. the due on sale clause issue, protection from creditor and tax liens, BKS, marital dispute, ect., re. “non-partionability of personalty”).