Q: I have a contract for a condominium and was told that the lender could not finance the sale because the association lacked insurance. Insurance premium deductibles are too high and limits are too low. I just renewed my insurance, but my monthly membership fee has increased to compensate for the high premium.How do I sell my apartment? Are there any legal remedies? — Greg
answer: Insurance premiums are rising, especially for some condominium associations, due to factors such as the age of buildings, market conditions, and delays in repairs. As a result, many associations are facing higher deductibles and lower insurance limits to combat significant increases in premiums. Some associations struggle to obtain insurance.
Even if insurance is available, it may not be as good as the resident wants or a potential lender requires. This makes it difficult for condo buyers to secure loans, as lender guidelines require certain conditions, such as a certain amount and type of insurance, to protect their investment.
If the property is underinsured or uninsured and suffers damage from a hurricane, fire, or other casualty, the lender risks not recovering its money. As a result, many lenders refuse to lend to such properties. Even if a lender offers a loan, it will be at a higher interest rate.
This limits buyers to those who can pay for the apartment in cash or who can take out a loan with a higher interest rate. This will reduce the value of the property and make it difficult to sell.
Condominium associations must maintain adequate insurance. However, financial constraints or the need for major repairs can make it difficult to obtain the insurance you need. This will require an increase in local fees from residents. This increased cost further limits sales options, as potential buyers are required to pay large dues on top of other ownership costs.
While it may be possible to pursue legal recourse against the association to ensure that the building is properly insured, litigation is time-consuming and expensive, and may not resolve short-term concerns about selling the apartment. There is a gender.
Unfortunately, if you need to sell your apartment now, you may need to sell it to a cash buyer at a discount and sell quickly.
Gary Singer, a certified real estate attorney, writes about industry legal issues and the housing market. To ask him a question, email [email protected] or visit SunSentinel.com/askpro.
