Lender insurance on note purchase?

Question

We are looking to purchase a real estate note. The note is being sold by the original seller who owner -financed the sale. The buyer did not get the title insurance (not sure why) . The original seller/lender do have the lender insurance but that is probably of no use to us.

The question is when purchasing note, should the buyer get the lender insurance? If note, then how is she protected when issues come up with title.

Thanks

SS

The question is when purchasing note, should the buyer get the lender insurance? If note, then how is she protected when issues come up with title.

Thanks

SS

Roman M. · Answer

lenders insurance is what matters and it is auto assigned to you when you purchase the note. Make sure you get a copy of the lender policy.

If buyer doesn't want to be protected then its buyers problem.

Lender is covered and that is what matters.

If you look at lenders title policy you will note name of lender or assignee (that will be you when loan gets assigned).

Darren Eady · Answer

I'm not sure why the buyer did not collect a lender's policy of insurance on the loan they took out that they are now trying to assign.  I'm also not sure why the seller of the property would be the one selling the note.  Regardless, you should run this note through a title company now and make sure a warranty deed, not a quit-claim deed, transferred the property and have the title company insure your assignment of the note in first position on a free and clear property.  There could be issues you are not seeing based on how the sale was completed.  Of course the buyer of the property should pay for this title report and insurance and shame on them for not going through this process already.