While a conveyance via WD may provide the possibility of the Grantee suing the Grantor for a breach of the warranties and thereby triggering the insurers obligation to defend the Grantor or pay the covered loss, it is not the same as the Grantee being insured under the existing policy. 

If you have been negligent in your risk management, your insurance company could deem your negligence "gross negligence", which means 1) They will not defend you, and 2) You may be on the hook for not only actual damages, but exemplary damages of up to 4X actual damages, depending on the state.Here are some claims we've heard of over the years in the Smokies:1.

The only exception(s) to this (if any) are the items reflected on theaccompanying Escrow Holdback Agreement, if applicable.Citizens is authorized to disburse the final draw in the amount of $________________ in accordancewith the executed Disbursement Authorization on file.It is understood that, in the event the Borrower(s) are dissatisfied in any way whatsoever with theremaining construction after completion by the General Contractor, their sole recourse is against theGeneral Contractor.Borrower(s) and General Contractor, jointly and severally, agree forever to fully protect, defend, andsave harmless Lender from and against any right, interest, claim, and each and every of them, ofBorrower(s) or General Contractor against the Lender, against all losses, costs, damages, and attorneyfees and expenses of every kind and nature which the Lender may suffer, expend, or incur under or byreason or in consequence of holding the remaining proceeds as provided herein."

If that doesn't cover the principal balance plus all accrued interest, exit fees, yield maintenance, prepayment penalties, default interest, advances made for unpaid property taxes and insurance (even forced placed insurance), advances on senior loans, foreclosure costs/fees, toxic waste cleanup, costs of resale, the list goes on and on...the lender can sue each and every one of you for the entire unpaid amount.The way this would likely play out, should the lender elect to enforce the personal guarantee, is they would file suit naming each partner as a defendant. 

Not going to spend a lot of time defending the location I invest in, because I feel like the proof is in the numbers....my "issues" and "bad tenants" are very far and few between.

Some they literally could kill a tenant and you have to pay to defend them.

There are many strategies for off market...Searching public records for preforeclosure defendants, evictions (plaintiff may be tired landlord), etc can be a good source.Driving for deals is time intensive, but tried-and-true.

They will defend the claim and know the legal levers to pull in situations like this...I recently did the same for an auto claim that we clearly aren't liable for, but the other driver's insurance disagrees.

Effectively though, since nothing has been approved by the IRS, you'll need to be sure the position you're taking is conservative enough to be able to successfully defend if challenged.

Not to mention, in the event a lawsuit is brought, the plantiffs attorney will name the deed holder LLC as a defendant and likely the management company as well.