You said "underwriter for our homeowner's insurance is requiring renters to have a renters insurance policy for no less than $300k in liabilities"Are they truly requiring the renters to have $300k in liability protection for themselves on their renter policy?

What went wrong, and with the benefit of hindsight, what might you have done differently to protect yourself?

It's hard to disclose away your responsibility to protect sellers and get them the best price possible.

If you have adequate coverage and a decent protection plan in place then you should be fine.

He relied on the advice of his local attorney who was practicing law far beyond his level of knowledge and expertise and the community owner is going to pay for it.What sounds easy and cheap, often becomes very hard and very expensive.

@Richard D.I agree, judges do tend to side with the tax suit defendant/owner in these cases and Bankruptcy courts are there to protect creditors and losing a major asset over a few thousand dollars in a property tax suit doesn't fit their charge. 

Don’t pay the mortgage on time and have the insurance policy lapseIf something’s late the mortgage company is going to investigate it.If there’s no insurance on their investment, the mortgage companies going to investigate it.Now if interest rates rise, there might be a reason for lenders to look at their portfolio and review everything.I don’t know, I just know that if you buy on a wraparound mortgage or sub to, and take care of make the payments on time and insurance, and you some kind of trust to protect yourself, youre in pretty good shape.

Everyone has been very friendly and more that willing to share experiences and expertise.

Although it's not as important as Senior Lien status, determining equity doesn't necessarily drive the outcome of the deal but it can protect you in case of default.For either 1sts or 2nds you can also look at where the property is located to determine foreclosure timelines as well, which could be important in the event of a default.

Although you don't have to worry about the risk because everything worked out for you, the risk that you would take in such an arrangement is complimentary to the risk that the seller is taking in trusting the buyer to protect his credit by actually paying the bills and by not leaving him with a destroyed investment to have to sell if you were to default.