Please Help

[keysha]

I purchased a property subject 2 about a year ago from a lady whose father quick
deeded the property to her.  I was unsuccessful in obtaing landlord insurance
because of a previous house I purchased in 2007  that burned.  Also, because of
this, the sub 2 property I have has been insured through the mortgage company as
an owner occuppied residence, even though I have a tenat in it.  I was told
after 3 years that I should not have any trouble getting insurance again. My
three years have passed and now I am trying to get the proper insurance on the
house.  So, my question is how should I deal with the bank about the insurance? 
I want to cancel their policy and obtain my own.  Previously, I was told to get
a policy with my name and the mortgagor name on it.  However, the father whose
name is on  the mortgage has recently died as well.  Because this is a sub 2
property I want to be sure I don't send any red flags up with the bank.  So how
should I handle the insurance issue with the bank and insurance companies?
Should I only get the insurance in my name? If so, when I send the insurance
papers to the bank what possible questions will i encounter? I don't think   
the lenders are aware that the lady father is deceased, so will this cause any issues
for me?  I wanted to know  also because the property has an interest rate of 10% and I
was trying to see what I could do to get the bank to lower this now. 

[kdhastedt]

"Quick deeded"?  Please explain...

Keith

[keysha]

The father transferred the ownership of the property to his daughter.  He was not interested in the house, nor was he living there so he quick deeded the ownership to his daughter.  Does this help?

[kdhastedt]

Probably a "Quit Claim" - he quit any claims that he had to the property. 

Keith

[keysha]

Yes, correct.  But how do I proceed about the insurance?

[kdhastedt]

I would talk to an insurance broker...one that represents a variety of insurance companies

Keith

[keysha]

Ok.  Would I encounter any problems with the mortgage company when I cancel their policy and send them a policy with my name only considereing the owner is deceased now? 

[keysha]

Should I even be concerned with the fact that the father name is still on the mortgage even though he quick claimed the property to his daughter, and he is now deceased?  Would this present any problems for me when I send the mortgage company my insurance papers?  Or should the daughter notify the mortgage company that her father is deceased to prevent any problems?

[kdhastedt]

If the 'owner' is now deceased, the property will have to be dealt with, probably via probate.  The court will look at the living heirs and the state laws.  If the Quit Claim was proper and was recorded, it should hold up and the daughter would be the owner.

Personally, I wouldn't touch this with a 10' pole until it was sorted out.

Keith

[Dave T]

Ok.  Would I encounter any problems with the mortgage company when I cancel their policy and send them a policy with my name only considereing the owner is deceased now? 

You said the father quit claimed the property to the daughter.  If so, then the daughter became the owner.  Once you purchased the property from the daughter, you became the owner.  The father's name may still be on the loan, but you are the owner.

[furnishedowner]

keysha,
I don't have any advice to give you except I would see a real estate attorney on this one.  Write down all your questions beforehand.

If I understand you...
1.  A father owned a property and quit-claimed it to his daughter.
2.  He then died.
3.  The daughter sold you the property "subject to" the existing bank loan, which carries an interest rate of 10%.
4.  You couldn't obtain fire insurance, so the bank put on its own policy to protect their investment.
5.  Now you want your name on the insurance and you would like a lower interest rate on this investment property.

Whose name is on the current insurance? What is the cost?
Whose name is on the current loan?
Is your credit and equity good enough to re-finance the house or should you keep the current mortgage?
What is the mortgage amount?  Is it worth the high cost of refinance charges?

Furnishedowner

[keysha]

The father quick claimed the property to the daughter, this was done with the help of an attorney( and it was recorded).  The father was very sick, so the daughter was listed as his POA.  I brought the property sub 2  and the ownership was transferred to me using a warranty deed(this is recorded).  Also, I used a landtrust with the property and I am listed as the beneficiary on the trust.  I don't know if this help my situation with getting proper insurance on the house.

[furnishedowner]

keysha,
Thank you for your PM.
Are you in contact with the daughter?

I believe she is the one who needs to contact the current insurance company with a letter and a certified copy of the death certificates from her father and her mother.  She can get those at the state health department.  They will probably charge a small fee.

She needs to state that the current beneficiaries on the insurance are herself, and you.

I believe she also needs to write to the lender with a copy of the quitclaim deed and have her deceased father and mother removed from the loan.  Then she will tell them that she is responsible for the loan.

Are the loan payments current?
Is the property rented?  Is the property being maintained?

I don't know if she can add your name to the loan...she can ask the lender or you both can consult an attorney.  If the payments are being made, the lender will not want to foreclose, and they likely won't want to foreclose on an estate.  I believe the key thing is that they get copies of the death certificates. 

I want through closing accounts, etc. when my parents passed.  In each case I had to send the certified death certificate before the account could be closed or amended.

After all this the insurance policy needs to be changed to a Landlord-Tenant Policy (OLT) and the policy value amended to reflect the current replacement cost if it burns down.

This all seems like just a common sense thing.  You should consult a real estate attorney if you are uncomfortable with the plan.  The daughter should have taken care of those name changes when she got the property.  Let's hope she can do it now, with your help.

Furnishedowner

[keysha]

Thank, furnishedowner

Yes, I am in contact with the daughter.  The property has a tenant in it, and I am making the mortgage payments as scheduled.  Currently, the property is insured by the mortgage company as an owner-occuppied dwelling.  This is because the father cancelled stop making payments on his insurance policy, and because I was unable to obtain landlord tenant insurance for myself, until now.   

[furnishedowner]

keysha,
Are you having any luck in getting the daughter to contact the lender about her deceased parents?

Also you can get an OLT policy to replace the current owner policy when it comes due for renewal.  Be sure to get a written cancellation from the owner's policy carrier.

Furnishedowner