Question about house lease/purchase.....

[dukluk]

Got a young family-member couple who is in a 6 month lease-to-purchase home contract with a builder/contractor.

They have already signed all the paperwork, purchased renter's insurance, and moved in, last week.

Now, the builder/contractor wants THEM to purchase homeowner's insurance because his builder's risk insurance will only cover the home, during construction.

WTF????....why or how should THEY be responsible for the homeowner's insurance, and don't even own the home, yet???

[Natty]

Sounds like owner financing so they will probably have to purchase homeowners ins.

[Jelly]

The contractor is tchnically a leinholder at this point. It's in their best interest to get a HO policy to protect their contents, laibilty and their interest in the home.

If the house burns tonight, the contractor get paid and no one else.

I'd be willing to bet the builders risk policy limits are far less than the sales price..

JMHO

[Hambone]

I haven't seen the agreement, but if it is a lease-purchase, the contractor still owns the house. If it is an owner finance, the builder would deed the property to the couple and the couple would execute a deed of trust securing the loan with the property.

I will defer to Jelly's expertise on the insurability of the house, but it looks like more of a landlord-tenant situation based on the few facts available.

[SHANE704]

If the house is not deeded in thier name, then no I wouldnt get homeowners insurance. I was told that in MS there really isnt a lease/purchase agreement....more like a lease agreement with an option to purchase at the end. I would just get renters insurance right now with high contents.