Q: I have a contract on my condominium and was told the lender cannot finance the sale due to the association being underinsured. The policy deductible is too high, and the limit is too low. We just renewed the policy, and our monthly dues increased to pay for the larger premium. How can I sell my apartment? Do I have any legal remedies? —Greg

A: Insurance rates are increasing, especially in some condominium associations, due to building age, market conditions, and delayed repairs. Consequently, many associations face higher deductibles and lowered policy limits to counter significant premium increases. Some associations struggle to obtain insurance at all.

When a policy can be obtained, it may not be as good as the residents want or potential lenders require. This makes it harder for condominium buyers to secure loans, as lenders’ guidelines require specific conditions, such as a certain amount and type of insurance, to protect their investment.

Lenders risk not recouping their money if a property is underinsured or uninsurable and sustains damage from a hurricane, fire, or other casualty. Consequently, many lenders refuse loans on such properties. Even if a lender were to offer a loan, it would be at a higher interest rate.

This will limit your pool of buyers to those who can pay cash for your apartment or afford a loan with a higher interest rate. This will result in reduced property value and make it more challenging to sell your property.

Condominium associations must maintain proper insurance coverage. However, obtaining necessary insurance can be challenging due to financial constraints or required extensive repairs. This will require increased community dues from the residents. This increased cost will further limit your selling options as potential buyers need to include paying more significant dues along with the other ownership expenses.

While it may be possible to seek legal recourse against your association to force them to insure the building properly, lawsuits take a long time, are expensive, and will likely not help your short-term concern about selling your apartment.

Unfortunately, if you need to sell your apartment now, you may need to sell it at a discount to a cash buyer for a quick sale.

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