If a condominium association refues to purchase flood insurance, does the contents policy purchased by the borrower meet the regulatory requirement for purchase of flood insurance? We have a borrower who is purchasing an office condo, and the assocition, we're being told, will refuse to purchase insurance.

My lender is telling me that the insurance agent plans to purchase two policies for our borrower-one for the unit and one for the building. My understanding is that this is not possible for a nonresidential unit. The borrower can only purchase contents coverage, correct?

That is correct AND you cannot close this loan if flood insurance is not properly placed on the building.

http://www.fema.gov/library/file?type=originalAccessibleFormatFile&file=f029_condo.txt


Non-Residential (Commercial) Condominiums

Building and Contents - Non-residential (commercial) condominium buildings and their
commonly owned contents may be insured in the name of the Association under the
General Property Form. The "Non-Residential" limits apply.
Building Contents
Emergency Program $100,000 $100,000
Regular Program $500,000 $500,000

Unit Owners' Coverage (Contents) - The owner of a non-residential condominium unit
may purchase contents coverage only for that unit. Building coverage cannot be
purchased in the name of the unit owner.

For more information about the NFIP
and flood insurance, call
1-800-427-4661,

Thank you so much; I always appreciate the affirmation, especially with flood issues.