Whether you’re selling your company or establishing a new structure for it, you need to think through its titling. The titles of a Residential Care Facility for the Elderly (RCFE) give legal ownership of the property and the right to operate the business. Making sure the appropriate person or people are named on the title protects you in a number of ways.
To be more specific, properly allocated titles help you avoid potentially very costly gaps in your insurance coverage.
The Two Types of Titles at RCFEs
When it comes to RCFEs, you can encounter two different categories of titles.
First, there’s the legal title, which says who owns the real estate on which the facility sits. This title impacts any associated mortgage, commercial property insurance, and even the liability coverage.
The second type of RCFE title is the operational title. More frequently called the license, this documentation clears the named parties to run the facility.
Generally, you want both the legal and operational title to be in the same name. The cleanest setup for insurance and legal considerations is to have everything under one umbrella.
There might be some instances, though, in which you want to transfer one or both titles. If you’re selling your RCFE, for example, both legal and operational titles usually get transferred to the new owner.
Or you might set up a limited liability company (LLC) and transfer the titles so that they fall under your LLC’s name rather than under you personally. In any case, transferring titles should trigger an update to your insurance policies.
True No Matter What: Coverage and Title Need to Match
No matter why you’re transferring an RCFE’s title, one thing is always true: the name on the title and the name on the insurance policy need to match.
Let’s use legal title and commercial property insurance as an example. If you buy property coverage for your RCFE, you’ll need to choose a named insured. That’s the person or people the policy pays out to in the event of a covered loss. If those names don’t match up with the name on the legal title, the insurer can argue that the named insureds don’t have an insurable interest in the property. They could deny your claim.
Named insured and the name on the title is equally important with liability coverage. If you have your RCFE license under your LLC but your liability coverage is under your own name, you could face a gap in coverage. If a lawsuit does come up, that could mean that you don’t get any backup from your policy — even if you’ve been paying your premiums.
Clearly, then, transferring an RCFE title necessitates updating any applicable insurance coverage to match. Fortunately, that doesn’t have to be complicated.
With an experienced RCFE insurance agent by your side, you get someone to guide you on any necessary updates — and even handle the paperwork for you. If you’re considering a title transfer or you’ve already completed one and you need to update your policies, we’re here to help. Contact our team at InsureMyRCFE at (805) 413-5668 today.
