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Owner Financing Property Insurance
Summary
In an owner-financed property sale, the property is considered sold when the deed is transferred, even if payments are ongoing. The buyer should obtain insurance in their name, while the seller may need to maintain insurance as a lienholder. A promissory note and deed of trust or mortgage should be drafted to secure the sellers interest. Adding the buyer to the deed can simplify inheritance but may have tax implications. Transferring the deed entirely gives full ownership but may affect Medicaid eligibility. Legal Aid of Western Missouri and Missouri Legal Services offer assistance for low-income individuals. Prepare for consultations by gathering documents, listing questions, and outlining goals.Full Conversation
I own a rental property that has no mortgage. I'm going to do a owner financed with my son, and he is going to buy it from me. Do I continue to pay the "rental property insurance coverage" on it under my name, or does he get the insurance coverage on it in his name, or what is our best option. We want to handle every aspect involved in this process, to be the best case scenario for both of us AND, best situation of all possible issues, for him after my death.
Hi Lesa!
Here are some key points to consider:
- Once the property is sold to your son, he should obtain insurance coverage in his name.
- You may need to maintain insurance as a lienholder if you are financing the sale.
- Consider consulting a local attorney for estate planning and proper documentation.
Would you like more information on estate planning or financing documentation?
Here are some key points to consider:
- Once the property is sold to your son, he should obtain insurance coverage in his name.
- You may need to maintain insurance as a lienholder if you are financing the sale.
- Consider consulting a local attorney for estate planning and proper documentation.
Would you like more information on estate planning or financing documentation?
But when is the property actually considered "sold" to my son? Wouldn't it actually be considered sold, and he be the sole property owner, when all payments are made totalling the agreed upon total purchase price? That most likely be in many years from now
Hi Lesa! The property is generally considered "sold" to your son when the deed is transferred to his name, even if he hasn't completed all the payments. However, you can retain a lien on the property until he pays the full purchase price, effectively giving you a security interest.
Do you need more details on how to structure this arrangement legally?
Do you need more details on how to structure this arrangement legally?
Yes please.
Lesa, structuring an owner-financed sale requires careful legal planning. Here are some key points:
- Promissory Note: Draft a detailed promissory note outlining payment terms, interest rate, and consequences of default.
- Deed of Trust or Mortgage: Record this to secure your lien on the property.
- Insurance: Your son should obtain homeowner’s insurance, and you should be named as an additional insured or lienholder.
Consider consulting a local attorney to ensure all documents are properly drafted and recorded.
Would you like more details on finding an attorney in Missouri?
- Promissory Note: Draft a detailed promissory note outlining payment terms, interest rate, and consequences of default.
- Deed of Trust or Mortgage: Record this to secure your lien on the property.
- Insurance: Your son should obtain homeowner’s insurance, and you should be named as an additional insured or lienholder.
Consider consulting a local attorney to ensure all documents are properly drafted and recorded.
Would you like more details on finding an attorney in Missouri?
Additional questions: transferring the deed to his name, is it as easy as putting his name on, and taking mine off (or leaving mine on also to reflect me as a lie holder). What needs to be in place be fire this happens, and are there things the I need to be aware of prior to or after it is transfered over?
Lesa, here are some key points to consider for transferring the deed:
- Quit Claim Deed: You can use a quit claim deed to add your son to the deed or transfer it entirely to him.
- Deed of Trust/Mortgage: Record this to reflect your lienholder status.
- Title Insurance: Ensure title insurance is updated to reflect the new ownership.
Would you like to know more about drafting a quit claim deed in Missouri?
- Quit Claim Deed: You can use a quit claim deed to add your son to the deed or transfer it entirely to him.
- Deed of Trust/Mortgage: Record this to reflect your lienholder status.
- Title Insurance: Ensure title insurance is updated to reflect the new ownership.
Would you like to know more about drafting a quit claim deed in Missouri?
If we did a Quit claim deed, what are the benefits and the drawbacks for both of us, to ADD him to the deed? What's the benefits and drawbacks to both of us, to putting it entirely in his name? Financially, how would both scenarios effect us individually? When I die, what things does he need to be aware of. If I die with bills out there to be paid, and my name is still on the deed, can they come after him or the house to get their payment?
Lesa, here are the key points for both scenarios:
Adding Him to the Deed (via Quit Claim Deed):
- Benefits:
- Simplifies inheritance process.
- Potentially avoids probate.
- Drawbacks:
- You may lose full control.
- Potential gift tax implications.
Transferring Entirely to His Name:
- Benefits:
- Full ownership to him immediately.
- Drawbacks:
- Loss of control.
- May affect Medicaid eligibility.
Financial Implications:
- Adding Him:
- Potential capital gains tax on sale.
- Shared financial responsibility.
- Transferring Entirely:
- Full financial responsibility on him.
- Potentially higher property taxes.
Upon Your Death:
- If your name is still on the deed, creditors can pursue claims against your share of the property.
Would you like more information on handling these issues with a local attorney?
Adding Him to the Deed (via Quit Claim Deed):
- Benefits:
- Simplifies inheritance process.
- Potentially avoids probate.
- Drawbacks:
- You may lose full control.
- Potential gift tax implications.
Transferring Entirely to His Name:
- Benefits:
- Full ownership to him immediately.
- Drawbacks:
- Loss of control.
- May affect Medicaid eligibility.
Financial Implications:
- Adding Him:
- Potential capital gains tax on sale.
- Shared financial responsibility.
- Transferring Entirely:
- Full financial responsibility on him.
- Potentially higher property taxes.
Upon Your Death:
- If your name is still on the deed, creditors can pursue claims against your share of the property.
Would you like more information on handling these issues with a local attorney?
- On the drawback of " May affect Medicaid eligibility" that is referencing MY current Medicaid coverage, or his future potential Medicaid eligibility?
Hi Lesa, the "may affect Medicaid eligibility" remark primarily refers to your current Medicaid coverage. Transferring property may impact your eligibility due to asset transfer rules.
Would you like more information on how to address this with a local attorney?
Would you like more information on how to address this with a local attorney?
-a basic definition/description of "asset transfer rules" please.
Asset transfer rules typically refer to regulations governing the transfer of assets from one person to another. Key points include:
- Look-back Period: Medicaid reviews asset transfers made within the past 5 years.
- Penalties: Improper transfers can result in ineligibility for Medicaid for a certain period.
- Fair Market Value: Transfers should generally be at fair market value to avoid penalties.
Would you like more detailed information on how this might affect your Medicaid eligibility?
- Look-back Period: Medicaid reviews asset transfers made within the past 5 years.
- Penalties: Improper transfers can result in ineligibility for Medicaid for a certain period.
- Fair Market Value: Transfers should generally be at fair market value to avoid penalties.
Would you like more detailed information on how this might affect your Medicaid eligibility?
Back to my original inquiry, prior to completing the change of deed, can he get and be solely responsible for the insurance coverage to fully insured the property, where I can drop the coverage I currently carry on the property! Is this answer the same rather just his name is on the deed or both of us are in the deed?
Yes, your son can get insurance coverage and be solely responsible for it before the deed is changed. However, it's generally advisable for both of you to be listed on the insurance if both names are on the deed. Consult with an insurance agent to ensure proper coverage. Are you interested in the steps to transfer the deed?
"it's generally advisable for both of you to be listed on the insurance if both names are on the deed." Why is that?
Hi Lesa! If both names are on the deed, it's advisable for both to be on the insurance because:
- Both parties have an insurable interest in the property.
- Ensures coverage for both owners in case of damage or liability.
- Prevents disputes with the insurance company in case of a claim.
Would you like more details on the deed transfer process?
- Both parties have an insurable interest in the property.
- Ensures coverage for both owners in case of damage or liability.
- Prevents disputes with the insurance company in case of a claim.
Would you like more details on the deed transfer process?
I'm on disability. I have Medicaid, food stamps, and am considered low income. Are there any free or discounted attorneys near the Grain Valley Mo, or the Kansas City Mo area that might be able to assist me with this process?
Lesa, there are several resources available for low-income individuals like yourself to find free or discounted legal assistance in Missouri:
- Legal Aid of Western Missouri: They provide free legal services to low-income individuals.
Would you like more information on how to contact them?
- Legal Aid of Western Missouri: They provide free legal services to low-income individuals.
Would you like more information on how to contact them?
Legal aid... They answer questions and can refer me to attorneys that will handle the whole process from start to finish, or legal aid has attorneys on site that will handles the whole process ?
Legal Aid of Western Missouri offers both options:
- They can help answer your initial questions and provide guidance.
- They have attorneys on staff who can assist you through the entire process.
- They also can refer you to other attorneys if needed.
Would you like their contact information?
- They can help answer your initial questions and provide guidance.
- They have attorneys on staff who can assist you through the entire process.
- They also can refer you to other attorneys if needed.
Would you like their contact information?
Yes please
Legal Aid of Western Missouri
Phone: (*) *-*
Website: www.lawmo.org
Would you like more details on how to prepare for your consultation with them?
Yes please. Any other area pro bono attorneys or references you can offer me?
Legal Aid of Western Missouri
Phone: (*) *-*
Website: www.lawmo.org
Lesa, aside from Legal Aid of Western Missouri, you can also reach out to:
Missouri Legal Services
Phone: (*) *-*
Website: www.lsmo.org
Would you like more tips on preparing for your consultation?
Tips on preparing for consultations please
Lesa, here are some tips to prepare for your consultation:
- Documentation: Gather all relevant documents (deed, insurance policies, financial records).
- Questions: Prepare a list of specific questions regarding your situation.
- Goals: Clearly outline your goals and concerns for the attorney.
- Notes: Take notes during the consultation for future reference.
Would you like any other specific information?
- Documentation: Gather all relevant documents (deed, insurance policies, financial records).
- Questions: Prepare a list of specific questions regarding your situation.
- Goals: Clearly outline your goals and concerns for the attorney.
- Notes: Take notes during the consultation for future reference.
Would you like any other specific information?
No ty.
It seems like you've gathered a lot of useful information. If you need further assistance, don't hesitate to reach out to the resources provided or consult with the suggested legal aid organizations. Good luck with your property transfer!
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