Addressing Insurance and Loan Eligibility Issues
It is becoming increasingly common for boards to address insurance and mortgage lender concerns. While, for good reason, the reality is that, oftentimes, management and the board can lean on their reserve study provider to clarify concerns about reserve funding and deferred maintenance.
In a recent case involving a Midwest-based condo association, the board was unable to complete a brick masonry repair project in 2025, the year in which their reserve study recommended it. Due to weather constraints, the project was scheduled for 2026 instead. A mortgage application was denied due to deferred maintenance. Upon validating the board’s decision and confirming that there were no safety or structural concerns, the lender resumed the mortgage approval process.
Best Practices to Mitigate Risk
As industry expectations continue to rise, boards can position their communities for greater financial stability and resilience against external risks.
Insurance and lending trends will continue to evolve, driving the industry toward a more resilient future. An increased focus on structural integrity and reserves supports a more proactive approach to addressing building deterioration when issues are minor, rather than waiting until they become more complex and more costly to address. Lastly, communities that take a disciplined approach to capital planning will be best positioned to maintain coverage at the most risks of loan eligibility, and support home values.
cai-illinois.org • 847.301.7505 | 57
1. Prioritize Structural and Safety-Related Projects – Addressing high-risk projects, such as roofs, waterproofing systems, or structural concrete, demonstrates responsible stewardship and mitigates the risk of insurance and loan eligibility concerns.
2. Maintain Adequate Reserve Funding and Keep Your Reserve Study Current – Proper funding reduces the risk of future deferred maintenance and signals financial preparedness. Associations should update their reserve studies at least every 3 years, or sooner if funding levels change significantly or if major projects are deferred or completed.
3. Leverage Your Reserve Study Partner for Clarity and Documentation – When questions arise, oftentimes, your provider can discuss insurance and mortgage-related concerns and provide documentation to assist with renewal and loan processing – keeping the community’s insurance renewals and real estate transactions on track.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60
