Mortgagee / additional interest clauses
What this clause says
The Association shall cause its insurer or agent to name each first mortgagee of a unit, upon written request, as a mortgagee and additional interest under the master property policy, and to furnish evidence of insurance to any such mortgagee, unit owner, or closing agent on request, including at each policy renewal and within a reasonable time after any material change in or cancellation of coverage.
What this means in plain English
A lender that holds a mortgage on a unit wants proof that the association's master policy is in force, and wants standing to be told if that policy lapses or changes materially. On a condominium master policy the lender is generally named through a mortgagee clause on the property coverage and as an additional interest or certificate holder, and it requires an evidence-of-insurance certificate (commonly an ACORD form) at closing and at each renewal. This is a contract requirement between the unit borrower and its lender, not a statutory one, so there is no state law that sets it. For loans intended to be sold to Fannie Mae, the Fannie Mae Selling Guide section B7-3 (Property and Flood Insurance) sets the evidence-of-insurance standard the certificate has to satisfy, including confirmation of the master policy limits and the replacement-cost basis.
What it means for an HOA board
The association does not borrow, but nearly every unit owner with a mortgage has a lender that expects to verify master-policy coverage on demand. When a sale or refinance is underway, the closing agent requests an evidence-of-insurance certificate showing the master policy limits, the replacement-cost valuation, and often the lender named as mortgagee or additional interest on that unit. A slow or incomplete certificate turnaround is a common, avoidable reason closings stall at the lender's insurance review. Keep the master policy's agent of record set up to issue certificates quickly, confirm the certificate reflects current limits and the replacement-cost basis a Fannie-backed loan expects under B7-3, and do not let outdated broker or management contact information sit on the policy where certificate requests get lost.
Program notes
The dedicated community-association markets and their agents treat evidence-of-insurance certificates as routine service, frequently same-day. The friction is almost never the carrier; it is a stale agent-of-record record or a management company that routes every certificate request by hand. Confirm who issues certificates, and how fast, before a closing timeline depends on it.
How this evaluates
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Common questions about this clause
- What is a condo master insurance certificate and why do lenders ask for it?
- What should an HOA board check at master policy renewal?
- How do I get a copy of my HOA master policy and certificate?
- What is the difference between RCV and ACV for an HOA master policy?
- What is the Fannie Mae condo questionnaire and how does insurance factor in?