We have a loan that is made to a company that owns the condo buildings and is the process of selling the residential units and leasing the commercial space. The property consist of 5 buildings each with 21 residential units and 2-4 retail shop/restaurant space. How much flood insurance would be required? Would it be $500,000 per building or $250,000 per residential unit and $500,000 for the commercial space? The loan is for $9,000,000 and the ACV is $11,000,000. We have an RCBAP with 100% RCV and for a borrower of a unit we would be fine with that but I was not sure if we could use the RCBAP for owner of the condo building. Thank you for your help.

No one person or entity owns the condo buildings anymore if the condo association has already be formed. While the original owners may have owned the entire place prior to that, your borrower will now only own the individual units that have yet to be sold to other parties. So, it sounds like you are fully covered.

For commercial condo calculations, if Bank collateral consists of one unit with a UPB of $300,000, building is a six unit building total value $3 million, and we receive a private policy insuring the entire building for $900,000----is it okay to accept as we would within an NFIP policy (due to policy limit greater than the loan balance) without doing any calculations such as dividing policy amount by the 6 units--in which case our collateral would only be insured for $150,000 leaving us short? For commercial condos, unlike residential, we do not divide by number of units to determine appropriate insurable value on a per unit basis with NFIP policies. Is it okay to take the same approach with a private policy?

Any private policy that otherwise meets the private flood policy requirements of at least $500,000 would all be what is needed from a regulatory standpoint - anything above that might be required under your safety and soundness requirements.

Thank you!