Insurance on a Lonnie Deal

[Jonathan V.]

A couple friends and I are going to be purchasing a MH soon in the form of a Lonnie Deal. I know almost everything about the deal other than getting out there and doing it ;-) (So I've probably got about 40% of the info down lol)

Anyways, we will have liability insurance on the LLC, but what about the mobile homes? Do we require the buyer to pay for it?

I have a friend who is an insurance agent and he could probably structure the deal up so that I could just have it with me at closing and work it into the note that if they don't have insurance then they lose the home.

Any advice is appreciated, thanks.

[Marc Faulkner]

I disagree with Realtyman and believe it is important that there is insurance on the unit when you are doing a contract sale. The good news is that it does not cost you as the note holder anything! The insurance, as stated above, is paid for by the buyers of the mobile home. Just like you are required to have insurance when you finance a car, you should require insurance when you sell a mobile home on a contract.
If you are listed as "Loss Payee" and "Additional Insured" the insurance company will keep you posted as to how your payers are doing on keeping up on the policy. This is an early tip off that your payers may be having financial problems and you should be proactive and call on them to check things out. Also, what if the home burns down and your payer does not have insurance? What if it takes out the neighbors home in the process? Make your buyers get insurance!!!