Posted by Jim FL on February 22, 2005 at 15:39:28:
Lisa,
Nope, don’t need the POA to cancel the policy.
I just send it out in writing, having the sellers sign the letter to cancel for me when we close.
I sign a new policy up, then send out the letter.
Should the policy be escrowed with loan payments, the new insurance carrier/agent handles that for me, with info provided about the account from me of course.
Its not that hard really, and I just cannot see paying for two policies, when one is not any good anyway.
I was wondering if one of the red flags to lenders when putting property into trust would be not having the seller as an additional insured? Of course having power of attorney from the seller to get any insurance money. Of the people that do sub2, what is your thoughts on this and how many do this? About to do my first one and want to make sure i get it right. I plan on cancelling the old policy once i get the new one in place. Thanks.
Posted by Jim FL on February 22, 2005 at 13:29:09:
Lisa,
when you BUY a house sub2, you own it, the seller sold it.
Therefore, the seller has no insurable interest in the house and any policy naming them would not be valid.
So, nope, leave the seller out of it.
Get a new policy, cancell the old.
Too many folks overthink this DOS issue, and frankly, it grows tiresome…some days I’d like to slap Reed and others who make people think this way…based on nothing but the WAG theory. (That stands for Wild @$$ Guess theory by the way.)
Posted by Kristine-CA on February 22, 2005 at 21:12:32:
Jim: I’m with you on the paranoia about the DOS. But gotta tell you, I
recently got an equity line of credit to pay off a hard money loan on a
rental. The deed of trust for the new loan contained a due on sale
clause that spelled out about every possible transfer known to man and
stated very clearly that all of them would be considered a sale. Lease
options, any kind installment arrangment, and and all transfers to
trusts of any kind. The list is very detailed.
This leads to me think that banks are on to many of the ways in which
investors take over payments and get the deed. Not that they have a
way to monitor it, of course. It made me think that maybe the DOS
isn’t such a non-issue. Especially since I was hoping to sell this
property via lease/option. Kristine
Thanks Jim! When you cancel an escrowed policy, I assume you do that with a power of attorney…then have your insurance agent bill the escrow for the new policy?
Posted by Jim FL on February 23, 2005 at 11:20:03:
Kristine,
First, you said this new loan of yours is a HELOC, right?
That’s the difference.
These are more likely to be called due…according to some.
However, since the HELOC is in your name, or company name I’d assume, and so is title to the house, then renting it with an option that is not recorded should not be an issue.
Sure, the clause is there, but I have yet to see a mortgage or deed of trust written in the last 8 years that did not have one…unless it was a private lender, and a sloppy one at that.
I still don’t see this as an issue, and don’t plan on worrying about it in my own business.