Posted by Anne_ND on July 17, 2007 at 06:01:45:
Nothing to worry about UNLESS the reason you’re doing all that hoo-ha with the land trust is to hide ownership. If so, you’ve just put all your information in the one place that one person can put 1 and 1 together and get 2.
If you think it would be hard to get info from your insurance company about the information in your policy, think again.
Anne
Transferring Deed – Is it risky? - Posted by Todd C
Posted by Todd C on July 12, 2007 at 11:28:29:
If I quit claimed a title to an LLC, how much risk have I placed upon myself with the lender? Are they proactively seeking these transactions? When a quit claim deed is recorded with the city/county govt., is that information forwarded to the lender? Should I notify the insurance company of the change to ensure my coverage continues to be valid?
My first thought is that the lender will only know of the transfer due to non-mortgage payments – leading to foreclosure. It may also become aware of the transfer if the property is damaged or destroyed and the lender and insurance company must get involved.
Re: Transferring Deed – Is it risky? - Posted by Rich-CA
Posted by Rich-CA on July 12, 2007 at 19:26:33:
I once took the “its no problem” position. But there was a court case in the 1970s that went to the US Supreme Court that paved the way to the DOS clause that we know and love today (enacted by the US Congress with the Garn-St. Germain Depository Institutions Act (could have gotten the name wrong, except the first part).
What was this case about? A lender called a loan due and the borrower fought it in court (and lost). Why did the lender call the loan due? Interest rates were rising and the rates for the loan in question were much lower. In other words it was profitable to call the loans due so they could be refinanced at market rates. The person who lost made their payments on time and was not in danger of default.
Goess what the rates are doing now? Going up? When I bought my first house in 1985 I had to pay 15% on an ARM and they were not doing fixed loans in CA. So how much of a gap does there need to be before they start looking at this as a way to enhance a bottom line savaged by sub prime loan losses? Who can say. I can only say its happened before.
As to checking recorded documents. The other post is in error. I had a long talk with the Wells Fargo assumptions department on two different occasions and the one that handles escrow accounts for tax payments. They get periodic tapes from the various counties that they use their expensive computer systems to match to their loans. Yes, they can find this except in Counties that are entirely manual.
The one kind of transfer the law requires they allow is a transfer into a Living Trust. Some suggest doing this because transfer of ownership (beneficial interest) in such a trust is not recorded and short of busting down your door, they have no way of knowing your LLC now owns the trust you formed.
Re: Transferring Deed – Is it risky? - Posted by gerald(tx)
Posted by gerald(tx) on July 12, 2007 at 13:46:30:
Todd,
You have no worry. First, deed recording is not sent to the lender. Second, even if the lender is aware of it, they could care less as long as the payments are made on time. Third, if the DOS was ever invoked, you are still responsibile, you have proof that this was merely a change of entity, not ownership.
If you leave the insurance issue alone, in your own name, you are still covered. Let sleeping dogs lie.
And in your other post regarding the name on the checks, fret not. The $10/hr gals in the recievables department have no interest or motivation to investigate who is paying any check. In fact, many lenders have their operation computerized to opening the envelopes, recording the digital info from the check and the payment slip, to where no human hand even touches the payment.
You have no worries.
gerald
Re: Transferring Deed – Is it risky? - Posted by Natalie-VA
Posted by Natalie-VA on July 13, 2007 at 13:00:22:
Gerald,
Are you saying that if he had a homeowner’s insurance claim that there wouldn’t be a problem? The home would be owned by the LLC, and the insurance would be in his name personally. I’m no insurance expert, but I would see a problem with that. Thoughts? Maybe you were talking about title insurance?
–Natalie
Re: Transferring Deed – Is it risky? - Posted by gerald(tx)
Posted by gerald(tx) on July 13, 2007 at 16:04:08:
That’s right, I see no problem with a claim.
He is listed as the insured, and would file a claim as the insured. (As the individual who bought the original policy, not thru the LLC. This is the key!)
The insurer would have no reason to question the claim. They have no spies at the courthouse trying to deny on some technicality.
Re: Transferring Deed – Is it risky? - Posted by Natalie-VA
Posted by Natalie-VA on July 14, 2007 at 07:08:36:
I would think if it were a large claim (fire damage) that the claims adjuster would verify ownership at a minimum. Their job is NOT to pay out money, and IMO, paying money to an insured entity that is not the same entity that owns the property would be a no-no.
There’s no way I would trust my insurance company to take care of this. We’re in a lawsuit right now where our insurance company of 20 years is refusing to pay lost wages in an auto accident my husband had even though the other guy was clearly at fault and that is not in dispute. They will do anything to try and save a buck.
–Natalie
Re: Transferring Deed – Is it risky? - Posted by gerald(tx)
Posted by gerald(tx) on July 14, 2007 at 10:42:48:
Natalie,
Remember the first rule of insurance. ‘Anyone may insure anything, providing they have an insurable interest.’
This individual would certainly have an insurable interest. Ownership entities don’t enter into the equation. Particularly in this situation where ownership has not actually changed hands.
gerald
Re: Transferring Deed – Is it risky? - Posted by Natalie-VA
Posted by Natalie-VA on July 14, 2007 at 13:55:40:
Gerald,
Thanks for the discussion.
“Anyone can insure anything, providing they have an insurable interest.”
I can live with this part. I’ve insured many houses that I purchased at foreclosure auction but didn’t settle on yet. I didn’t own these houses yet, but had an insurable interest.
But, in the poster’s situation, don’t you think that ownership HAS changed hands? It went from him to his LLC. Why don’t you think ownership entities don’t enter the equation? Is it because he owns the LLC, so he has that insurable interest?
–Natalie
Re: Transferring Deed – Is it risky? - Posted by Todd C
Posted by Todd C on July 14, 2007 at 17:33:53:
I apprepeciate the discussion. I called my insurance company yesterday to share my plans to transfer title to a LLC and the agent suggested that once I make the change–let him know so that the change will be reflected on the policy. He indicated that they do business with alot of investors and recommend that name change occur to ensure coverage reflects the titled entity. So, that’s what I plan to do.
Thanks
Again
Re: Transferring Deed – Is it risky? - Posted by James
Posted by James on July 16, 2007 at 09:12:14:
I just have everything on the policy. lol
My Four-Step Process: