Insurance on lease options

Hi Tammy someone better have Insurance on the property for both your protection in case the home burns or some one gets hurt or a storm damages it, Jim

I'm not even sure you can get homeowners insurance if you don't own it. You can get renters insurance and if your doing a lease option that is all you are is a renter.
If the owner has a mortgage, he will be required to carry insurance.
I would make the owner provide me with verification of a policy as part of your lease option. This will protect you if something happens to the property, especially if you have a big, non-refundable, deposit.
Good luck,
Jim

since it would seem the homeowner would have insurance and would still own the home. Need to dig deeper.

On a lease option you can carry additional liability (umbrella) to protect you from unforeseen problems like someone slipping and taking you to court. In subject tos, you need to get the entire insurance package because you are the new owner. You just have to be cautious about tipping your hand to the mortgage company. LLC, land trust, etc are the best vehicles for this option.

I am sure she is talking about a liability policy for her business/company. As you stated the seller/homeowner will have a mortgage that consists of P.I.T.I. So the property will be protected. If the seller is paid off or only pay P.I. that will have to change.

As you get into L/Os you will learn there is a lot more to them than "get money up front, in the middle and in the end. Sign two contracts and you are done. WRONG!

The hard part after all the paperwork and marketing is actually finding a seller that will do a L/O AND the numbers work. And remember, when the buyer exercises his option the property must appraise for what you sold it for!

With that said L/Os are a great strategy when done right. Got a couple myself. Always looking for them!

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC