Can someone explain who's responsible for the taxes and home owners insurance on an owner finance deal? How are all parties protected? FYI what if there's a mortgage still on the home that's being wrapped?
It will have to be in the contract who is responsible but in my case always the borrower. It can be escrowed for the lender or servicer to pay. I make sure I'm listed as loss payee on insurance and will be notified if premium is not paid or terminated. It's easy to check if taxes are paid. Failure to pay is a default and bad times are a coming for borrower.
Normally a Policy should be in the name of the owner (name on the title of the property). The other party can be listed a mortgagee (if the title transferred) or an additional Insured (if the old owner retains title). If the Homeowners policy is in the name of the old owner, the purchaser should make sure that the policy would respond to a loss of their contents and their Liabiltiy. If not, they should purchase a Renter policy to cover those.
Great question James. Glad to know someone else out there was wondering the same thing as me. Thanks BP Community for responses/help.