0:11
Today, I'm going to talk about, this is called additional interest endorsements, woo.
0:18
Very interesting on additional interest endorsements.
0:21
This is where you retain or maintain insurance on something, where you started out with the, the ownership of it and you conveyed the ownership to something else. An entity, that you've had insurance in your own name. And, now, you need to have insurance to cover the new entity so that you can do both estate planning.
0:41
And, there is a seamless, uh, connection, right between you're in shared interest before and after the transaction transaction.
0:50
So, I, you know me, I don't like to re-invent the wheel, so, I've done an excellent explanation of how this works.
0:57
So, this is called Transition Transfers After Acquisition. Now, I've spoken about this many times.
1:04
In response to questions people have had where they, they do mortgage financing and they, the bank, gives them a hard time about trying to title the property in the name of an LLC.
1:16
During the lending process, which can be done, it's just now not everybody the bank wants to deal with that.
1:23
The underwriting has always done for the individual, the human being, but what I have people do is just go ahead and close and in their names, right, and then just convey the title over and because the beneficial interest stay the same from before and after the conveyance. So, the deal closes the D is recorded. You own the property.
1:40
Now, you got a mortgage on it, and then a week later, or a month, or two later, you file a quick claim deeds, transferring the title to the LLC, but you still retain the debt obligation.
1:50
So, the titleholders now knew, but you own the title holder, right? Your, the single member, LLC, or husband or wife, single member, LLC, a single member LLC in that case. And you're, you're both the borrowers, right? So this article here is very clear. I just love it, I just had to just show you this.
2:10
Where this is a typical scenario the idea with OK.
2:15
Where as long as the owner of the property that has the insurance, conveys the title of the property, we're talking about real estate right now.
2:23
Conveys the title of the property to an entity, a trust, or something, and still retains the same interest. The same beneficial interest, OK.
2:34
The, there is no need to talk to the insurance company, or anything like that. We don't need to get an endorsement. An endorsement is, let's call it an addendum something you add to the insurance policy. When there's a change interest, that was, insurance, was had already considered, when the policy was issued.
2:53
If the interest changes, then the, the insured, the insurance company, has to have the opportunity to consider whether or not it's going to add coverage for the new interest. Let's say the new person. OK.
3:09
The new Alright, so here in this example, the LLC is a great example.
3:15
Alright, so the owner of a property wants to claim the property to LLC?
3:19
It doesn't It doesn't change anything because she's still the owner, the LLC, OK, single member, LLC.
3:25
She's the owner of the property, or it can be husband or wife husband or wife.
3:30
No change. And so the insurance industry has an internal form. It's called a Form 107.9.
3:37
I couldn't find that anywhere except But found some examples of this.
3:40
But basically, it's insurance lingo for whether or not the insurance carrier needs to add an additional interested party to the insured list of insureds Now. Sometimes the insurance company will say, No, we're not gonna ensure that entity, or person, or whatever, for some reason. But you, at least have to give them a chance.
4:01
And if they do have a need, like in this case, I'm gonna show right now, there's an example where they would have any, then they would have a way to handle that.
4:08
So let's say it's a trust, OK?
4:11
So it has to do with the seller, OK. And the trust is created by written instrument.
4:16
It has to be in these cases. And the in the owner of the property is the settler the trust. Then, the policy will continue in full force.
4:24
And just like it was before, without having to file this request or obtain an additional interest endorsement, an endorsement is an agreement, OK, a modification or amendment to the original insurance policy.
4:38
None is needed if the trust if the if the owner or the title holder of the real estate is the settler on the trust.
4:49
And not the settler with someone else. It's still the names have to be identical. It has to be, you know Bill Smith, Bill Smith.
4:56
It can't be Bill Smith, Bill Smith and his brother right and this is the example It can't be, but if it's not, then there's no need to get an endorsement on form 1 0 7.9 Now, in these and these examples here.
5:09
Married Couples OK, it's like I told you before Married couples. It's a single person.
5:15
Now, how about this one this guy buys a property and gets married after the fact.
5:21
He wants to add his way alright, but still marriage is as a one person, right.
5:29
It's always viewed as one person. Almost always viewed as one person, OK.
5:33
Now, if, if they wanted to add somebody, let's say, they wanted to add a cousin or something, well, then, the interest would change. And, yeah, the bank would then, or the bank, not the bank, but the insurance company would then need this type of form, OK? So, it's kind of nice to have this language. I mean, really what you're doing, as it's called an additional interest endorsement. That's an endorsement.
5:53
You want to have it if the interests changes from the title holder, ensured to the new title holder.
6:02
Without insurance, that was never covered right in your in original insurance agreement. You need to tell that contact the insurance company and give them the chance to add another party. So, here's an example of how that would look.
6:14
Let's say a married couple, own real estate. They just got a mortgage and they bought the real estate and now they want to convey it.
6:22
And they want to add their adult children add to the, to the title.
6:27
But let's say they do like this, they form an LLC and they own the LLC, and they also together own the real estate.
6:36
The real estate has all the insurance, the title insurance, and all that they convey that insurance or they convey that title, the property, to their LLC for estate planning purposes. They retain the beneficial interest. So, the name of the title holder went from Bill and Mary Smith.
6:51
Now this name, this, LLC, it can be billon Mary Smith, LLC, it could be the address of the property, company, LLC.
7:00
The beneficial interest did not change, but what if they wanted to add their adult children, their children, they're 18.
7:05
At least 18 years old or older, they're adults now.
7:08
They want to add their children on their, well then that's going to change, but it's not going to change in a way where the insurance company is likely going to exclude or deny adding another interested party because it's their children, OK?
7:21
Now, if you wanted to add another interested party, like, for example, a C corp, that's some sort of unrelated business or something. Probably the insurance company may not do it. The insurance company will probably ask the C corp, it's even got to cover it to get a new policy, Right?
7:37
But if it's, if it's feasible, the insurance company is going to, if the interests have changed, insurance companies are gonna say, Yeah, no problem.
7:46
We're just going to add an endorsement as an addendum tier existing policy. Now, here's what it looks like in different states.
7:53
Um, I have found here, let's look at Florida first.
7:57
So I found this website here.
8:01
It's underwriting, right? These are underwriting rules, so I just happened to find, Actually, let's go back a little bit.
8:06
I wanted you to see, I have all the guidelines by state. I just found this on the internet. So these are underwriting guidelines, OK? You've heard, you've heard me use these terms over the years. So here I'm just showing you is an example of what it looks like. So I'm going to pick for Excel in a corridor then here's what it looks like.
8:22
So if my let's pick the first one.
8:25
If my insurance company, if I wanted to do this here this is what my insurance company's gonna look at.
8:30
This is probably a term of the contract my insurance company is going to add here is a form as to what it looks like.
8:40
This is probably going to be the actual endorsement, OK?
8:45
Easy enough.
8:47
Sometimes you want to do that, right?
8:49
So that way the new title holder can be ensured.
8:52
It's probably a good idea.
8:54
So I just want to share that with you, little technical things there.
8:58
I don't really go into that too much, but I thought, since I had it handy here, and I kind of great example, I just want to share that with you.
9:04
So, anyways, hope that helps.