Insurance Claim Q:RTO tenants, "sub to" - Posted by Lauren IN

Posted by Linda Simms on September 05, 2003 at 16:31:04:

I agree, a very interesting question. I also will be interested in the replys on this. If there is an insurance company involved it is hard for me to imagine that they are going to pay off to other than the owner of record. On the other hand if the tenant is responsible for all repairs, are they responsible for this and do they or how or when do they get reimburse. I will withhold by final comments until I see the differeint ideas.

Insurance Claim Q:RTO tenants, “sub to” - Posted by Lauren IN

Posted by Lauren IN on September 05, 2003 at 12:57:07:

A drunk driver took out my tenants fence and a tree about a week ago. My tenants are responsible for repairs and maintenance according to their L/O agreement. I bought the house “subject to” and have it in a land trust. Who should be dealing with the at-fault party (meaning the drunk driver or insurance company, which I’m not yet sure if the car was even insured). Would the claim check legally need to be made out to my tenants, me, the land trust, or the trustee of the land trust? If this becomes a homeowner’s insurance claim (due to the possibility of an uninsured driver), would the check be made out to my seller?
Any input is appreciated, thanks,

Unanswered Question… - Posted by JT-IN

Posted by JT-IN on September 05, 2003 at 18:15:09:

I left one of the questions unanswered here, and maybe the main Q… “Who should be dealing with the at-fault party?”

The party “at risk” should be dealing with the drunk driver. Now if your insurance is set up correctly, then they are at risk, and will represent you, as they will be “at risk”, if he is not culpable… If an insurance co is not “at risk” here, then I would say it may be you being “at risk”… as opposed to your Seller or the T/B… but read your L/O contract for further explaination.


Sellers… No Way… - Posted by JT-IN

Posted by JT-IN on September 05, 2003 at 18:01:29:

The Sellers have nothing to do with any claim to do with this property. The only thing that they have is the mtg in their name. You deeded property to a Land Trust, so the Land Trust, and Trustee should be the Payee on the Ins Policy… and that is who claims get paid to… You also may have the Mtg Co on as an additional insured, and if so the check would be made out to the Mtg Co and the Trust and Trustee, requiring all to endorse the proceeds. This is for protection of all parties involved.

Now this somewhat depends upon how your L/O structures the clause on Insurance and claims. If you did happen to require the T/B to provide the Ins, then the Mtg Co should also be listed as an additional insured, the Trust and Trustee as an additional insured and the Tenant; again requiring all parties to endorse the check. I personally prefer to carry the insurance and have the T/B provide a renters policy. Of course you can go either way here, because the T/B does have what is called… “an insurable interest”, and they are entitled to purchase coverage.

If you were operating off of the old owners policy, then hopefully you required them to sign a POA at the time you did the transfer. This is the very reason that you should do so, because you never, ever ever want to have to go back to a Seller, and NEED to have them sign anything.

If the above is properly set up, it should be no problem; if not, it can be horrendous.

Just the way that I view things…


Re: Insurance Claim - Posted by Stewart

Posted by Stewart on September 05, 2003 at 14:48:41:

Interesting, I will be interested to see what people say on this. I would think insurance would pay to the trust since you probably have a landlord policy naming the trust as a benificiary but then, hmm, that doesn’t seem to work. Maybe they pay to the trustee and then trustee will turnaround and pay you as the benificiary of the trust.

Re: Sellers… No Way… - Posted by marvin

Posted by marvin on September 08, 2003 at 15:06:38:

Question about operating off of the “old owner’s policy” - the old policy was likely an owner occupied policy. Are you saying that you can keep the old policy in place and still have it be valid, or is it necessary to have the policy changed to a landlord policy?