New mortgage lender is requiring I buy condo owners insurance
I live in California, I have applied to refinance my condo, which I have owned for 30 years. The new lender is requiring that in addition to the HOA (Homeowners’ Association) insurance policy on the property that I purchase condo-owners insurance, which only insures my personal property within my unit.
I am fighting them on this as they should not have an interest in my personal property, Should they??
Is this legal? No other lender has ever asked me for this.
The condo’s insurance policy may only cover “from the walls inward”. As @user662852 points out in a comment, things like cabinets, appliances, and fixtures may need to be covered by your personal insurance. They may also want you to have liability coverage. For example, suppose you are filling your sink and walk away, “just for a moment”, and your downstairs neighbor’s unit suffers significant damage from the resulting flood. The condo association is going to hold you responsible, and may file a lien against your unit to enforce payment. Mortgage companies don’t like to get in legal battles over priority, so they may want you to have liability coverage.
Requiring owner’s insurance isn’t universal, but it’s pretty common in some states. You could try to find a lender that doesn’t require it. Some HOA do require it.