Seller Financing & Best Home Insurance Options for Buyer/Seller?

[Scott Smith]

Looking for advice/suggestions from other seller financed note carriers.

Do you carry the home insurance yourself on the property you are selling (normally forced place coverage) or do you let the buyer carry the home insurance themselves? I know there are pros and cons to both.

The biggest cons I see to not covering it in the payments (escrowing it each month) is that if your property is free and clear and they stop paying or lapse the coverage that your investment is at risk.

However, if you cover the property with forced place insurance, your investment is covered no matter what. Also, in the case that something happened to the house (it burned down for example) the property would be covered and you would be given the check for repair costs.

The other side to you covering the insurance is that it is more of a catastrophic type of insurance and would not cover smaller things, like theft, etc.

What would that look like in this case? Would you just work something out with the buyer, rebuild, etc.

The other downside to having the buyer carry their own insurance is that you have to now monitor and be involved with when and if they pay, the notices that go along with this from the insurance company and the time you will be spending to monitor this multiplied by however many properties you own.

Thanks!