Contract for deed and insurance? - Posted by Corey (ND)

Posted by David G. on October 29, 2003 at 20:31:46:

You can opt to keep her insurance in place PLUS get another insurance with another company for a landlord policy.

Another option is have her write a letter to her insurance company where she is requesting that the policy should be changed to a landlord policy.

David G.

Contract for deed and insurance? - Posted by Corey (ND)

Posted by Corey (ND) on October 29, 2003 at 17:43:42:

Just closed on a nice house. Purchased it on a contract for deed. My delima is how do I insure the property? The former owner still owes about 35% LTV on the home, it is financed with a small local bank. We wanted to keep her insurance in effect, but she dropped auto insurance with them when she moved (a long distance away). At that point they would not insure her house. Her agent found alternative coverage. I contacted my insurance agent for rates, but my concern is if I get insurance with my agent her bank may find out she has sold the home on a cfd and will then call the loan due.

What is the best way to handle this?

By the way my insurance is $200 a year cheaper than she can get (that is a lot of extra beer money).

So give me your thoughts.

Re: Contract for deed and insurance? - Posted by Jim FL

Posted by Jim FL on October 29, 2003 at 20:56:53:

Don’t make it more complicated than it has to be.
Get a new policy yourself, since the rate is better.
When you do, the insured needs to be the title holder, and anyone else holding an interest in the property.
That would be your seller, the lender, and you, or your company.
The proof of insurance can be sent to the lender I would think without problems.
They will see the collateral is covered, the policy is a rental dwelling or non-owner occupied type, and some lein holders, which surely they’ll assume your company is in all likely hood.

You could also have the seller deed the house into a trust, have the trust sign as the seller in the contract sale, and the insurance listing the trust as insured/loss payee along with the lender.
This would also solve it, and if you show the seller this protects her a little, by shielding the property from leins caused by her personally, as well as saving a few bucks on insurance, they should come around.

Either way, I don’t see this as that big of an issue.
The lender wants payments and protection for their collateral, that’s about it.

Good luck,
Jim FL

Re: Contract for deed and insurance? - Posted by Sal

Posted by Sal on October 29, 2003 at 19:58:38:

She should have kept the insurance on the house and added you as co-beneficiairy (sp). This way it would not bring attention to herself and cover your interest.

Insurance usually notifies the lien holder of the stoppage of homeowners insurance.

At this point, do not know what to tell you other than wait and see except be sure have you added as beneficiery.

I am not an expert. This website is excellent in terms of information. Look at the archives on this subject.


Thanks Jim - Posted by Corey (ND)

Posted by Corey (ND) on October 29, 2003 at 21:53:00:

I kind of figured that but didn’t want to mess this up. In the past when I have purchased on a CFD they have not had a mortgage to deal with.

Appreciate the advice.