Owner Financing.....Who pays the T & I - Posted by Scott SC

Posted by JPiper on May 05, 2000 at 23:56:47:

Where I have an underlying loan, and do a land contract, I handle it just as you’ve described, collecting a monthly escrow for taxes and insurance. In the case of a property where I have sold with a land contract and have no underlying loan, I handle it as described above.

JPiper

Owner Financing…Who pays the T & I - Posted by Scott SC

Posted by Scott SC on May 05, 2000 at 13:46:12:

If structuring an owner financing deal, who is responsible for the taxes and insurance, the seller or the buyer??

If you make the buyer responsible, how can you verify they actually have insurance on the house?

Re: Owner Financing…Who pays the T & I - Posted by JPiper

Posted by JPiper on May 05, 2000 at 15:08:45:

If your deal is an owner finance deal…and not a subject to deal…as a condition of closing with the buyer have the buyer pre-pay a one year insurance policy, naming you or your entity and/or successors or assigns as the mortgagee. You should require proof of insurance as a condition of closing.

I then maintain an escrow account collected monthly to collect taxes and insurance for the following year, just as a lender would. If the insurance is cancelled, you will be notified by the insurance company since you are named as mortgagee.

JPiper

Re: Owner Financing…Who pays the T & I - Posted by Stacy (AZ)

Posted by Stacy (AZ) on May 05, 2000 at 14:44:02:

You may want to consider keeping your insurance on the property and converting to a landlord’s policy. The buyer’s pay you, and you pay T & I. Tell your buyers to get a “contents” policy for themselves, since this isn’t covered in your policy.

Stacy

Re: Owner Financing…Who pays the T & I - Posted by Diane(Bay Area)

Posted by Diane(Bay Area) on May 05, 2000 at 14:40:58:

From my past experience as a loan processor and underwriter, the lender typically will list proof on insurance on the closing conditions the lender supplies to the escrow officer. It is then the escrow officer’s job to collect and verify the items on the closing conditions prior to the closing appointment. They will ask the buyer for the name, company and phone number of the insurance agent the buyer plans to work with. The insurance agent will typically supply a declarations page as proof of insurance.

Re: Owner Financing…Who pays the T & I - Posted by Stacy (AZ)

Posted by Stacy (AZ) on May 05, 2000 at 18:50:09:

Hi Jim-

In the case of selling on a wrap (land contract), how do you set it up? What do you do with your underlying insurance, for example?

Currently, I change the underlying policy to a landlord policy, have the buyer pay me enough to cover it (and taxes), and have the buyer get a contents policy. Is there a way you like better?

Stacy