Owner Finance with property insurance problem

[Joel Owens]

Okay here goes...........

So on one of my apartment buildings I owner financed with a seller I was added as an additional insured.

The seller checked with the insurance company weeks before we closed and they gave their blessing.

Now the policy is coming back up for renewal in March of 2012.The owner of the property insurance company is now up in arms saying his employee didn't give the seller the correct info and that unless the seller shows ownership he can't renew the policy in March.

The reason he said is insurers do not like to see additional insured because they think someone will commit arson and burn them down and make a claim.

These buildings are 30 years old and it's hard to find another policy that is not very expensive for them because the policy was written and renewed each year before they hit the 30 year mark.

Many new insurance companies won't touch a building that old unless all wiring,plumbing,roofs,etc. have been replaced so their will not be many claims written when they underwrite the policy.

If the insurance gets cancelled in March then the underlying mortgage company would be notified which we don't want to happen.

The seller has talked to her attorney (not the closing one) and have mentioned something about titling the property back to the seller but have an agreement stating I still have ownership in the property.I am not comfortable with that solution at all especially after all the work and money I have put into turning these properties around.

The other option the seller mentioned is cashing her out of the 2 buildings early coming due in March for the insurance policy and then the other buildings don't renew until end of the year 2012.

I am open to suggestions.Per the agreement I have years before I have to cash out the balloon note.