In this case we were not buying the property. We were buying the note and trust deed on the property. The buyer of the property (also the payer of the note) remained the party vested in title and the owner on the insurance policy.

We took an assignment and note endorsement to the lien instrument so we could collect the future payments on this seller financed note. As the first lien holder we become the mortgagee/loss payee on the insurance policy (rather than the owner). This is the same sort of coverage the banks have when they make a loan on property. The seller or note holder also signs a transfer of their interest as a mortgagee/loss payee at closing which is directed to the insurance company.

Hope that helps clarify. We appreciate you reading our articles here on the site!

Maybe I am missing something here or the state this happened is unique.

When I close on a property purchased for investment I ask the Insurance Agent to fax or Email a “Binder” that names me as the Owner to the closing or Escrow Office. I will not close without it.

In your situation and assuming the Buyer had paid his premiums, when the Buyer signed off and the deal was closed he no longer had an “insurable interest” in the property thus even if the insurance was still in force the Insurance Company wouldn’t pay him for something he no longer owned.

And unless you had some type of assignment with the Insurance Company you would likely be treated as a 3rd party without standing.

I must say that Fred & Tracy are great at what they do and how they help people.