Posted by flaguy on April 13, 2000 at 10:58:45:
No not his course.
Landtrust Dance- sold an Agreement for Deed- small grease fire- Now what? - Posted by flaguy
Posted by flaguy on April 10, 2000 at 13:05:31:
We purchased this home three years ago using the Land Trust Dance. You know; put it in a trust, transfer the beneficial interest, avoid the “due on sale” clause. Then we sold it with an Agreement For Deed.
The original Lender would not put the Land Trust as the mortgagor. So for the past three years the underlying loan has escrowed monies for the taxes and insurance in the original owners name.
Problem: the folks who purchased it from me had a small grease fire. The insurance company says we don’t have the Land Trust as the one insured, furthermore, if the person who lives there is on a rent to own, we might have to charge them with negilgence and make our finding know to the original policy owners.
Ouch! Anyone have any insight or experience on how to handle this problem?
We are the trustees and the trust was recorded. We do have full authority to act on the trusts behalf.
But, the insurance company says that only the original owners are coverd. I know I could say that ,yes, they still own it through the trust and I am just “managing” it for them. But there is NO way I am going to risk insurance fraud.
What’s the right thing to do?
Re: Landtrust Dance- sold an Agreement for Deed- small grease fire- Now what? - Posted by Alex Gurevich, TX
Posted by Alex Gurevich, TX on April 12, 2000 at 15:02:19:
To answer you immediate question - go to your sellers and have them contact the insurance adjuster, you’ll do the leg work. Hopefully, the seller will cooperate and sign the checks, etc.
In terms of preventive maintenance I am with Percy. Change your policies from homeowner’s to landlords’ replacement coverage. I had a very similar case with a damage from a roof leak. Insurance company found it to be caused by hail, they were willing to cover it. They dealt directly with the original homeonwer, who endorsed the checks.
Another point, since I started changing insured name on the policy to such of land trust, I had number of objections from lenders - they wanted the original owner to be on the policy. What I started doing to satisfy them (only if they ask for it) is “John Doe, Doe Family Trust, and Alex Gurevich, trustee” - that seem to keep them at peace. The owners would still have to sign the insurance checks though.
Re: Landtrust Dance- sold an Agreement for Deed- small grease fire- Now what? - Posted by JohnB_NJ
Posted by JohnB_NJ on April 11, 2000 at 24:53:43:
Real quick…I would go into detail but its late and I am real tired.
I purchase my own insurance policy for around $350 per year. Sure, now there are two policies, I just only claim on the one I purchased which shows the trust as teh Loss payee, the benificiary as “additionally insured” and the mortgage company as “Mortgagee”…
I find this easier than jumping through hopes with the seller’s policy. Now, of course my policy is a Non Owner Occ. policy. I have my installment land contract buyer get a “tenant” policy.
I got this advice from Bronchick.
I hope this helps…
_JohnB
Re: Landtrust Dance- sold an Agreement for Deed- small grease fire- Now what? - Posted by Percy
Posted by Percy on April 10, 2000 at 16:24:00:
I had a similar problem, bought ‘subject to’ using land trust and sold on Contract for Deed. One week after moving in, the new tenant/buyers had a toilet backup that flooded the carpet in several rooms. The insurance company will only make the check out to the listed insurers. In my case, I have a good relationship with the original seller and he cashed the check for me. (I did all of the leg-work, made the claim, picked up check, obtained mortgage company endorsement.) BTW – I also found that any claim check over $1500.00 requires an endorsement guarantee from the mortgage company.
In the future, when buying property ‘subject to’ you need to convert the insurance from a homeowners policy to a landlords policy. You also need to add yourself or the trust as an additional insured.
Re: Landtrust Dance- sold an Agreement for Deed- small grease fire- Now what? - Posted by JPiper
Posted by JPiper on April 13, 2000 at 02:13:40:
Have the owner sign a limited power of attorney authorizing you to deal with the insurance company and endorse checks on behalf of the owner. The limited power of attorney should also include the ability to deal with the lender and endorse any checks from the lender on behalf of the owner.
JPiper
Welll sounds good, but, I bought a little course 3 years ago that said “tell the sellers the mortgage will come out of their name!” - Posted by flaguy
Posted by flaguy on April 12, 2000 at 16:44:22:
Ouch !
I believed it and told the origianl sellers the same. Contacting them at this point would not be a good idea in my case.
I wish I could just get out of this deal !
Don’t believe everything you buy or read.
Re: Landtrust Dance- sold an Agreement for Deed- small grease fire- Now what? - Posted by Phillip
Posted by Phillip on April 12, 2000 at 18:31:56:
Did you get this information from one of the Bronchick courses, if so, which one?
Re: Landtrust Dance- sold an Agreement for Deed- small grease fire- Now what? - Posted by Ben in Ohio
Posted by Ben in Ohio on April 11, 2000 at 07:19:35:
A recent fire has taught me the value of adequate coverage. You must have replacemnt guarantee, in excess of actual replacement due to additional costs associated with clean up, code upgrade. A policy may have a sentance that reads something like "if the actual replacement cost exceed the policy limit the policyholder is deemed to have inadequate coverage. In that case the insurance company is only liable for ACV, or actual cash value. Example, my recent fire ACV is $70,000. The replacement cost is $112,000. If my policy had a limit of $110K coverage the policy would only cover ACV of $70K. As you can see this is a huge difference.
Also, I have learned that it is not a requirement to rebuild the existing structure. In my case the house FMV in new after repaired condition is about $89K. Not really worth investing up to $110. However, in order to get the full amount I must “replace” that house with another one. As long as the cost of repairs meets or exceed the $112, I will get the full amount from the insurance company.
Re: Landtrust Dance- sold an Agreement for Deed- small grease fire- Now what? - Posted by Alex Gurevich
Posted by Alex Gurevich on April 13, 2000 at 16:02:32:
Jim,
Excellent advice, as usual. In fact I always do this in all “creative” transactions. One more beneficial use of the Power of Attorney I discovered was to request pay-offs. Many mortgage companies has done away with allowing title company/closing agents to request pay-offs when the sale is finally ready to close and the loan be paid off.
They now will only release pay-off figures when they receive a request signed by the original borrower. Power of Attorney comes very handy then.