Remember, buying a home ‘subject to’ the seller’s financing, means WE own the home, the SELLER owns the loan. Our goal after buying, is to lease out the home to a tenant buyer. We will need an insurance policy that’s called a ‘non-owner occupant’ policy.
The seller had an ‘owner occupant’ policy, so if we continued to use that policy and made any insurance claims, they could be denied!
So it’s important to get a new ‘non-owner occupant’ policy. To facilitate that, we get a Limited Power of Attorney, signed by the seller, authorizing us to take care of the property and to deal with the insurance company and the mortgage company.
Even though the seller’s policy may be paid up for several months, usually we immediately get a new policy naming the seller, the lender and our trustee as the beneficiaries. We then attempt to get a refund from the seller’s original insurer. If the seller’s original insurer wants to write that new policy, fine. But most of the time, the original insurer will simply stonewall our efforts and avoid giving us a refund.
Naming the three beneficiaries isn’t a problem should we need to collect on a claim, since we have the seller’s POA.
All these forms are available in our home study materials and in Bob Talks Forms.
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