M.K. from outside of Connecticut writes:
Dear Mister Condo,
My condo has $25,000 worth of Fidelity Bond Insurance and the banks are requiring $29,700 of this insurance in order to sell or re-finance. My buyer’s mortgage is on hold until the association purchases more…(only cost is $50.00) but they are deliberating on this subject. If they decide not to purchase the bank-required amount, they are preventing 30 units from being sold. Any re-course?
Mister Condo replies:
M.K., the short answer is “yes and no”. Let me explain. For $50.00, it is unreasonable for this Board not to purchase the required insurance. Many states require that the association provide adequate insurance and liability protection for itself as well as all unit owners. Many association governance documents also state that the Board shall maintain adequate insurance coverage. This should not require any deliberation on the part of the Board; it is the law. However, not all states have this requirement and I do not know what state you live in or how your condo governance documents read. Either way, I would get in touch with a local attorney and threaten a suit if the Board does not act quickly to purchase the required insurance. It would be far cheaper for them to purchase the $50.00 in insurance than have to defend against a suit. Either way, you should prevail. Good luck!