On a seller financed property, is the new home buyer required to carry homeowners insurance?

Q: The party whom I am financing (sold house to) has cancelled (not renewed)their insurance policy this year on the house we sold them in Tucson .  Are they not responsible for carrying the insurance on the mobile home as long as they are still making payment to us?
A: Our affiliated insurance provider, Long Insurance Group, says: Usually the lender makes the decision to require insurance, which a lending institution will require. If an individual is acting as a lender then they can require insurance as part of their purchase or finance agreement. However in this specific case we don’t the terms of the finance agreement and therefore don’t know if there is a formal requirement. We suggest the lender check the specifics of their agreement with the buyer. Whether or not there is a requirement for insurance, not having insurance could be be disastrous for both parties.The new owner could be out of a home in the event of a total loss and still owe payments on the home. The lender is now out an asset used for collateral for a loan and risks the new owner defaulting on something that no longer exists. Long Insurane Group highly advises insurance be placed on the home for the sake of both parties involved. They would be more than happy to help if needed, however a lapse of insurance coverage may make it difficult. Long Insurance Group can be contacted at longinsurance@longinsurancegroup.com or by phone at 520.918.6565.  

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