Fannie Mae warrantability (insurance)
What this clause says
The Association shall maintain, at all times, the insurance coverages required for the project to qualify as a warrantable condominium under the Fannie Mae Selling Guide, including property coverage on a replacement cost basis, flood coverage where any building sits in a Special Flood Hazard Area, commercial general liability, and fidelity or crime coverage, each in the form and amount then required by that Guide.
What this means in plain English
Warrantability is not a single coverage; it is the whole bundle of insurance conditions a project has to meet for a conventional loan on a unit to be sold to Fannie Mae. The Fannie Mae Selling Guide splits those conditions across three places, and each item has to be checked against the right one. Property, flood, replacement cost, coinsurance, and ordinance or law all sit in section B7-3 (Property and Flood Insurance): the master policy has to insure the buildings for one hundred percent of replacement cost, avoid a coinsurance penalty (typically through an agreed value or replacement cost provision), carry ordinance or law where local code exposure exists, and carry flood equal to the lesser of the National Flood Insurance Program maximum or the building replacement cost for any building in a Special Flood Hazard Area. General liability sits in its own section, B7-4-01 (Liability Insurance), which requires a commercial general liability policy covering the common elements written at not less than 1,000,000 dollars per occurrence. Fidelity or crime coverage sits in a third section, B7-4-02 (Fidelity/Crime Insurance for Project Developments), which requires the coverage for projects of more than 20 units, sized to at least three months of aggregate assessments on all units plus the reserve funds, and extended to any management agent that handles association money.
What it means for an HOA board
A board tends to think about these coverages one policy at a time, but a lender reviews them as a pass or fail set: one item out of position, and units in the project can lose warrantability even though every individual policy is in force. The most common breakers are a property policy quietly written on actual cash value instead of replacement cost, a building that a redrawn flood map moved into a Special Flood Hazard Area with no flood policy behind it, a general liability limit left below the 1,000,000 dollar per-occurrence floor, and a fidelity bond sized to a flat number the prior agent picked rather than to three months of assessments plus current reserves. Because a warrantability failure surfaces at a unit sale, when a buyer's lender pulls the master policy and the deal stalls, the board usually hears about it from an angry seller, not from the carrier. Review the full set against the correct Selling Guide subsections at every renewal, and keep evidence of insurance current so a lender review clears in days rather than weeks.
Program notes
The dedicated community-association specialty markets write to Fannie warrantability as a matter of course and will issue an evidence of insurance that maps to the Selling Guide items, which is what a reviewing lender wants to see. When a project is placed in a generalist habitational program, the warrantability gaps tend to cluster in the same spots: actual cash value valuation, a missing ordinance or law endorsement, and a fidelity bond with no management-agent extension. Treat this clause as the checklist that ties the individual coverage clauses together rather than a standalone coverage to buy.
How this evaluates
The Policy Checker applies these rules in order; the first match wins.
See this in your policy
Check this clause against your master policy.
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