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No reason or right for a property owner to rely on compulsory insurance



Loan lender includes within the terms of the trust agreement allows the lender to unilaterally choose an insurance policy to protect its interest if the property owner fails to purchase insurance called the lender as a named mortgagee. If the owner fails, the lender can buy insurance for its sole protection and invoice the borrower for the premium.

I Mark R. Bautzer, Managing Director of Select Portfolio Servicing, Inc., et al . , E072733, Court of Appeal of the State of California Fourth Appellate District Division Two (December 24, 2020) Mark R. Bautzer sued the mortgage (Select Portfolio Servicing, Inc.) and the fire insurance provider (Assurant, Inc.). He claimed that Select procured, or Assurant provided, a policy with limits that were not sufficient to cover the loss from a fire that destroyed the property. The trial court upheld Select's division without permission to amend and granted Assurant's draft judgment on the pleadings, which resulted in the entire action being dismissed. Bautzer appealed.

FACTS

Bautzer, in his capacity as trustee, sued the revocable trust of his deceased mother, who owns properties in Ojai that contain a single-family home. He claimed that in July 2014, "while acting as an agent for Assurant, [erbjöd[him] to protect the premises through fire insurance through an insurance policy that Select would purchase from Assurant."

When a fire destroyed the home in December 2017, Assurant paid out the $ 866,977 insurance limit, which covered neither the cost of rebuilding the home nor the remainder of the mortgage (which at the time was approximately $ 1,013,000). Select used the proceeds of the mortgage and then initiated foreclosure proceedings to collect the remaining balance of approximately $ 150,000. Although the land value was estimated at only $ 645,000, Select would not accept payments from Bautzer that were less than "what was required by the loan terms."

The deed of trust required that "Borrowers shall keep… The property insured against fire loss." (Italics added.) But it also says if the borrower "fails to maintain any of the coverages", including fire insurance, can "The lender receive insurance coverage, at the lender's choice and the borrower's expense . (Italics added.) The insurance industry often refers to this type of insurance scenario as "compulsory placement" or "lender placement" insurance. FAC) which was identical to the original complaint except that it added allegations that he was correct. Select regretted once again and raised the same argument against the benefits of Bautzer's claims as it had in its objection to the original complaint.

ANALYSIS

Breach of contract claim fails

Bautzer formulated for the first time in his opposition acknowledges that (a) the act of trust is the applicable contract and (b) the purchased Select purchased forced placement, achieved in the event that the borrower neglects its obligation to purchase insurance.

Bautzer cannot claim breach of contract against either Select or Assurant under the Act of Trust. The document makes it clear that when a borrower does not obtain fire insurance, the lender, on the [its] alternative, can obtain fire insurance, but is not obliged to do so. In addition, the deed of trust also warns that even if any compulsorily placed or lender insurance that the lender procures will be “at. . . The borrower's cost, "it" may not "protect" the borrower's interest in the property and does not have to be of any specific type or in any specific amount.

In short, when Bautzer failed to obtain insurance, the trust deed is allowed to buy any type or amount of insurance for the benefit of the lender (to protect its collateral interest in the loan). Assurant, in turn, was not private with Bautzer. Its customer was the lender (and its mortgage service, Select), not the borrower.

Because Bautzer himself acknowledged that Select had "chosen [ed]" to purchase compulsory insurance as entry, contradicts his claim that Select had instead offered to act as something like an insurance broker and get an insurance according to his specifications. When, as here, a legal notice is requested for a legal act – as an agreement – the court may not only note the fact of the document and its recording or publication, but also facts which clearly derive from its legal effect. [19659003] The essential elements of contract formation are the ability to enter into an agreement, a legal object, the parties' mutual consent to be bound and sufficient consideration. A complaint must state on its face whether the agreement is in writing, orally or implied by conduct. If the action is based on an alleged breach of a written agreement, the terms must be stated verbatim in the complaint or a copy of the written instrument must be attached and incorporated by reference. Bautzer's complaint does not meet any of these requirements. Importantly, it did not contain any allegations that he gave Select any consideration for having promised to obtain insurance that was "sufficient" for his purposes. that insurance contracts in the trust control and do not require Select to purchase any special type of fire insurance means that Bautzer's two other causes of action also fail. In California, as a rule, a financial institution is not obligated to take care of a borrower when the institution's involvement in the loan transaction does not exceed the scope of its conventional role as a lender of money alone. Borrowers are not indebted to the borrowers of the loans they serve. Select was not liable to Bautzer's duty of care. Its obligations to Bautzer are in the contract, not liable for damages.

Select is the loan services; Bautzer never claimed to have hired it to act as an insurance broker for him. The insurer was not liable to Bautzer's duty either. Its relationship with Bautzer is even weaker than Select, as Assurant was never in secret with him. Select received the insurance policy from Assurant and then invoiced Bautzer for the premiums, which were approved in accordance with the deed of trust. The insurer was not under a legal obligation to choose (let alone to Bautzer) to make any special insurance available or to advise on deficiencies in the insurance limits.

Bautzer's argument on appeal was boiled down to an insistence that, since the case was at the demur stage, the court should only look at his complaint and ignore the terms of the trust deed. He claims that since he claimed Select promised to find him an acceptable insurance policy, the court would accept it as the truth.

Legal principles and common sense dictate that the court should not do so. Bautzer's accusations and the legally acclaimed trust document reveal, as a matter of law, that none of his theories of responsibility are sound.

When a person acquires property with a mortgage, he or she must insure against the risk. loss of property through fire and other listed risks to protect the interest of the owner and the interest of the lender. When, as here, the borrower does not acquire the insurance prescribed by the deed of trust, the lender has the opportunity to protect his interest with compulsory insurance that only protects the lender's interest. Bautzer, without any logical basis, relied on the forced placed insurance to protect both his and the lender's interest. He made a big mistake that cost him and his mother's property seriously and allowed an asset valued at more than a million dollars to be destroyed without any insurance coverage for Bautzer or the farm. , Esq., CFE, now limits its practice to serving as an insurance consultant specializing in insurance coverage, insurance claims handling, fraud and insurance fraud almost equally for insurers and policyholders. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award.

For the past 53 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurance companies and their claims staff to become insurance claims staff.

https://zalma.com/zalmas-insurance-fraud-letter-2/ Last read two issues of ZIFL here.

Go to Barry Zalma videos on Rumble.com at https://rumble.com/c/c-262921 [195659003] Read posts from Barry Zalma at https://parler.com/profile / Zalma / posts [19659003] Listen to the podcast: Zalma on insurance https://anchor.fm/dashboard/episodes Zalma on insurance

Go to Barry Zalma on YouTube – https://www.youtube.com/channel / UCysiZklEtxZsSF9DfC0Expg] / [1965900gotoinsuranceclaimslibrary-https://zalmacom/blog/insurance-claims-library/

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