Homeowner's insurance/mortgage question

[all night moe]

I understand this is more of a legality question but, I'm hoping to get some insight here. I'll try and keep this short....

I'm on a land contract. A mortgage with the previous owner, who also has a mortgage with their bank. Since they are required to have HO's insurance, I cannot have my own. They are not insured for wood stoves. My contract is poorly written for their behalf and doesn't state that I cannot have stoves.
I am wanting to hook my livingroom stove back up and add a small stove in the kitchen. I'm afraid, if i proceed, what they would do to the existing insurance policy financially with the yearly payment. We do not see eye to eye at all. They were here early summer acting like they own the place and wanted to barge in. I forced them to leave. They never wanted to sell me the house but just save it from foreclosure, which I did.

My question is, can I have HO insurance for their mortgage to satisfy their bank? Then I would force them to cancel theirs.
Any insight is appreciated.

 

[gthomas785]

I'm confused. Who owns the property?

 

[all night moe]

Me. They are now the ''bank.'' Although they have a shared investor... their bank.
Their bank is unaware of my contract. Banks typically frown on a second mortgagee.

 

[all night moe]

I'm confused. Who owns the property?

 

[bholler]

Me. They are now the ''bank.'' Although they have a shared investor... their bank.
Their bank is unaware of my contract. Banks typically frown on a second mortgagee.

I'm not entirely sure you legally own the property if their bank "who still technically holds the deed" doesn't know about your contract with them. It sounds like you need a lawyer honestly. And adding a woodstove probably won't change the cost of a policy that doesn't allow them it would most likely cause that policy to be void.

 

[gthomas785]

I don't really see why the seller is maintaining a policy if they don't own the property. That should be your responsibility. If the bank is unaware of the contract and does not approve of it then you are firmly in sketchy legal territory and may not be quite as secure in your claim to the deed as you think you are.

 

[bholler]

I don't really see why the seller is maintaining a policy if they don't own the property. That should be your responsibility. If the bank is unaware of the contract and does not approve of it then you are firmly in sketchy legal territory and may not be quite as secure in your claim to the deed as you think you are.

Yeah the previous owner holds the policy because the bank requires it. Because legally they still own the property i believe

 

[all night moe]

Thank you both for the replies. My land contract is a state approved form. I did file this at the county clerk's office. It is also notarized, with our signatures and theirs. Odd as it seems, I'm sure I'd be gone already if I had no grounds. The Mrs of their party never wanted to part with the house. They live in a different state and cannot afford to own both their properties.

They have a policy to satisfy their bank. Come to think of it, I recall them being addement for me not to communicate with their bank.

 

[all night moe]

Yeah the previous owner holds the policy because the bank requires it. Because legally they still own the property i believe

Indeed, I'm the third party with invested interest.

 

[all night moe]

My next step would be to buy them out.....
Not financially feasible at this time.

 

[bholler]

Thank you both for the replies. My land contract is a state approved form. I did file this at the county clerk's office. It is also notarized, with our signatures and theirs. Odd as it seems, I'm sure I'd be gone already if I had no grounds. The Mrs of their party never wanted to part with the house. They live in a different state and cannot afford to own both their properties.

They have a policy to satisfy their bank. Come to think of it, I recall them being addement for me not to communicate with their bank.

I still think it's time to get a lawer involved. Because things sound extremely fishy. I know in my state that would not be a legal property sale. Here what you are in would be classified as a rent to own situation which would mean you only have the rights of a renter not a homeowner. Who's name are the property tax bills in? (Assuming your state has them)

 

[all night moe]

Who's name are the property tax bills in?

Theirs.

 

[bholler]

Theirs.

That means in the states eyes they are still the property owner

 

[stoveliker]

The point is that the mortgage they have with their bank means the bank owns it if they don't pay.

But if you don't pay your part, your bank owns it.

So who owns it?

Do the two banks know of each other?

I suspect not, given that you can't talk to their bank.

This is not kosher imo.

 

[stoveliker]

In fact, I suspect that you might end up being in the middle with nothing. So I would not invest in anything now as you might just loose all of it if two banks have a claim to the place.

 

[bholler]

In fact, I suspect that you might end up being in the middle with nothing. So I would not invest in anything now as you might just loose all of it if two banks have a claim to the place.

I don't think there are 2 banks. I think the previous owner holds a mortgage with a bank and the poster is simply paying them. Atleast here 2 banks could not hold a mortgage on the same property

 

[all night moe]

I still think it's time to get a lawer involved

I agree... cannot afford consultation at this time.

classified as a rent to own situation which would mean you only have the rights of a renter not a homeowner.

This I understand. Though, my contract has me listed as a mortgagee, with percentage rate, and loan terms.
The catch is their existing mortgage.

 

[bholler]

The catch is their existing mortgage.

Exactly without that there would be no issue. My guess is your contract would be void if challenged in court. But laws in this area vary so much by state i really dont know.

 

[all night moe]

Ultimately, what I need to do, is get financing to buy them out.
There is no balloon payment or early payoff fees.

 

[gthomas785]

It's fine for a property owner to put the land under contract while still paying the mortgage. That is somewhat common. What's not common is for the bank to be unaware of it and still require the previous owner to hold an insurance policy. Really the bank should not care who the policy holder is as long as the property is covered. But for your own interest moe, you should be the policy holder with the previous owner listed as an additional insured.

 

[bholler]

It's fine for a property owner to put the land under contract while still paying the mortgage. That is somewhat common. What's not common is for the bank to be unaware of it and still require the previous owner to hold an insurance policy. Really the bank should not care who the policy holder is as long as the property is covered. But for your own interest moe, you should be the policy holder with the previous owner listed as an additional insured.

It really comes down to state laws. There is way to much variation for us to know.

 

[all night moe]

I will keep this thread updated.
I am currently heavily invested. This is my fourth year of payments to the month, and a $40g down payment.

To finance a buyout, I believe I need 20% down. Not happening at this time.
Further note, in my pocket, the Mr. is not welcome in this state. It'll be tuff for them to take me to court.