FAQ: Condo Review
Condo review requirements
5th Street requires a condo questionnaire completed by the HOA on all loans where the property type is a condo. Below are FAQ’s.
Insurance must cover 100% of the insurable replacement cost of the project improvements, including the individual units in the project. An insurance policy that includes any of the following coverage, either in the policy language or in a specific endorsement to the policy, is acceptable:
Guaranteed Replacement Cost – the insurer agrees to replace the insurable property regardless of the cost,
Extended Replacement Cost – the insurer agrees to pay more than the property’s insurable replacement cost, or
Replacement Cost – the insurer agrees to pay up to 100% of the property’s insurable replacement cost.
If the policy is a “bare walls policy” This policy typically provides no coverage for the unit interior, which includes fixtures, equipment, and replacement of interior improvements and betterments. As a result, the borrower must obtain an individual HO-6 policy that provides coverage sufficient to repair the condo unit to its condition prior to a loss claim event, as determined by the insurer.
Liability Insurance Requirements
The amount of coverage must be at least $1 million for bodily injury and property damage for any single occurrence.
Who needs to order the questionnaire?
The broker should order the questionnaire.
Does 5th Street require their form to be used?
We do not require our form to be used, we accept any form.
Does 5th Street require the short or long form?
We require the long form on investment property transactions, all other transaction types can use the short form.
Does 5th Street need the bylaws and budget?
We do not require the bylaws and we only require the budget if the reserves within the HOA are deemed too low after the underwriter reviews the project.