Insurance For Seller Financed Deal?

[Kenny Breeze]

Hey everyone,

I want my buyer to get insurance on this deal, but I'm not sure what type of insurance they have to apply for. I've read that mortgage insurances are only available for institutional lenders and I haven't found any equivalent for seller financing deals. Do you have any alternatives?

[John Mocker]

kenny

You will want the buyer to purchase General Liability Insurance.  I would normally recommend a limit of $1,000,000 (discuss with your attorney the likelihood a larger loss and whether or not a higher limit should be required) of The policy at minimum should:

1. list you as additional insured with 30 day notice of cancellation

2. be primary & non-contributory

3. have a waiver of subrogation in your favor

The new owner needs to discuss with their agent, what happens once the development starts.  Will the policy still cover the Liability during the construction.  They may have to change policies or endorse the existing policy or it may be fine the way it is (depends on the company).  If they have to change it, you want proof of the new coverage before the old one is cancelled.

You should also consult your attorney to help draft the contract and Mortgage to protect your interests.  

If you have any questions on the above info feel free to PM me.  

John Mocker