FHA Condo Approvals – Should We Pay Our Insurance in Full?
I am working with a condominium project in Connecticut to assist them with their HUD approval. The last item needed was to increase the Employee Dishonesty/Fidelity policy and we will provide HUD with the certificate of insurance.
The property manager had to contact the Board for approval to raise the amount of the policy, which would also raise their premium, albeit only slightly. During that conversation, it was said to that property manager that the Board wishes to pay their insurance premium ($160,000) for the year with money from the reserve account when it is set to renew next month.
Luckily for them, the property manager wanted to check with me first to see if that would be OK.
NO! That would not be OK!
HUD does not allow condominium projects to pay operating expenses with reserve funds. Obviously, this would not have come up during this recertification process because they will be approved before this would happen. But it would come into play when they apply for their recertification in two years.
It would show up on the Income/Expense Statement and could very well had led to HUD rejecting the project from the approval process.
Following my advice, the Board decided not to pay the insurance in full and were grateful for having spoken to me first!
The Condominium Project Approval Team at ReadySetLoan is dedicated to helping condominium projects across the nation to obtain their approvals with FHA and the VA or become recertified with FHA. We have assisted nearly 200 condominiums and we can help your association.
ReadySetLoan is an active member of the Connecticut and New England chapters of the Community Associations Institute (CAI) and is a frequent contributor to Common Interest Magazine as an expert in FHA/VA condominium project approvals.
Please contact us with any questions regarding FHA or VA condominium project approvals. You can email me at firstname.lastname@example.org or call me at 404-433-4565. I will be happy to answer any of your questions.
FHA/VA Condo Approval Specialist
404-433-4565 Cell Phone
860-644-3772 Fax Phone
Check out our article in Common Interest magazine on page 19!