HOA insurance insufficient to sell my unit Texas

My client as well as other unit owners can’t sell due to insufficient insurance by HOA.

Hi Mechele,

We ran into this same issue this year. We have always had a 7.5% for wind coverage. Our insurance cost skyrocketed so we had a special assessment and we had to up our insurance even more to have 5% wind in our policy for anyone to get Fannie Mae mortgages.

Hopefully it is something as small as that so homeowners will be able to sell. Good luck!

Melissa and Julie make good points. There could be an issue with the amount of the deductible (too small) or previous claims (too many over a short time), the company is pulling out of the market in your area (like some are doing in Florida). Your clients need to go to their board and ask questions and be willing to listen to the answers (which they may or may not like).

If I was on this board, I would have pushed my colleagues to keep the homeowners informed so they knew what was coming down the road. And in some cases, the insurance just up and dropped some HOAs and now they’re scrambling to find someone to take over – which will always lead to higher premiums.

There’s also the matter of reserves – does the community have any? How old is the last reserve study (over 5 years and it’s time for a new one). Has it been funded according to the study recommendations? No reserves could be a big reason the community’s having trouble because there’s not enough money there or in the operating budget to cover a big repair or replacement bill.

Once your client gets this information, he/she/they and the other homeowners may need to make a heavy decision on what they’re willing to pay for the master insurance – or consider taking some limited common elements and turning those over to the homeowners for maintenance and the insurance coverage on their own homeowner’s policy (which could lead to more drama). I hope resolving this is something similar to what Julie noted, but if not, this could get ugly.