Bob,
Interesting point.
I’ve never done this, adding the sellers as additional insured or anything like that.
For my transactions, the insured is the trustee, on behalf of the trust.
Never had a lender have a problem with that, as long as they see that they are also protected with the policy, which of course they are.
If what you do works for you though, of course, keep doing it.
We all have our own little twists to the same basic methods for buying properties.
Just wanted to clarify that my experience has been different than your post.
when you take sub 2 do you leave the taxes and insurance in the sellers name also? What if their T&I is not included in their monthly payment? Thank you.
Jay
Re: Sub 2- What about taxes and insurance? - Posted by Atlanta_bob
Posted by Atlanta_bob on January 16, 2007 at 21:03:01:
Hello Jay:
Best follow the advice mentioned by “Jim-FL”; however, many lenders want to see the name of the “previous” owner on your fire/hazard insurance policy - - since that name is on their Security Deed (and their Promissory Note) and that document requires “the borrower” to obtain (and maintain) a fire/hazard insurance policy on the property that the lender has a financial interest (= loan balance). As such, I always add the previous HomeOwner’s name on my fire/hazard insurance policy as the “secondarily insured” so their name is included on the declaration page of my insurance policy, which is sent to the lender each year. This approach is needed regardless of whether the fire/hazard insurance is escrowed, since the insurance company will always send the declaration page to the lender and that lender will look for the name of the previous HomeOwner on that “dec page”, since that name is on their Security Deed (and Promissory Note). Most lenders don’t care if another name is also shown on the “dec page” since that person could be a relative who is paying for that insurance policy.
Jay,
No, when you BUY a property subject to the existing financing, you become the owner, or, your entity does.
When the deed is recorded, the tax bill will be directed to the new title holder on that deed.
As for insurance, yes, you should get your own policy to cover the property, and the lein holders.
The sellers insurance would not cover anything, as the sellers would not own the property any more.
If these things are included with the payments, (escrowed), then the taxes will continue to be paid by the lender as they have, and when you get new insurance, the insurance agency will collect lender info, and take care of the rest.
If these things are not included with the monthly payment, then you merely pay them as they come due, from your own pocket in a lump sum.
Re: Sub 2- What about taxes and insurance? - Posted by Bill Jacobsen
Posted by Bill Jacobsen on January 16, 2007 at 16:17:33:
I like to have the seller add me as an additional insured on their current policy.
If T&I are not included in monthly payment, the taxes will go to person on title. You can still be put on as an additional insured or take insurance in your name. You run the risk of the due on sale clause being invoked if in your name.