Due on Sale Clause and Insurance (Land Trust + LLC)

[Jeff L.]

This is regarding the LLC + land trust combo, where the property is titled to the land trust, and the land trust's beneficiary is the LLC.

1) Which entity should your insurance policy be on: your LLC, or the land trust?

2) Of the people that have actually had the bank invoke the due on sale clause, most have said the bank was alerted due to the name changing/added on the insurance policy. My own lender even told me this when I asked him.

My question is, is the insurance policy still valid if you keep the policy in your personal name even after changing title? You own the LLC, which owns the land trust, so would the insurance still be binding?

If not, then you're damned either way. You either have the insurance in your LLC's name, risking alerting the bank OR you keep the insurance in your name and risk having the policy be useless.

How do you get around this?

[Kimberly Jones]

I am not even sure you can find a lender that will lend on a land trust. Might want to confirm that much before you bend your mind on the insurance part.