FIDELITY BOND REQUIREMENTS
The FHA adjusted an element of the certification requirement for condominium associations.
Previously, management companies had to provide a separate fidelity bond insuring the association as well as themselves (creating insurance problems for management companies). The FHA is dropping the requirement for those management companies named as additional insured on the association’s policy.
But, as with most governmental agencies, the right hand does not know what the left hand is doing. Fannie Mae continues to require that management companies carry their own fidelity coverage. Complying with FHA and Fannie Mae’s shifting demands continues to be a drag on the housing industry.
RECOMMENDATION: Boards wanting to meet FHA and Fannie Mae requirements should talk to their association’s insurance broker.
Thank you to Scott Iden of US Approvals, LLC, a company specializing in FHA certifications, for this update.
Adrian J. Adams, Esq.
ADAMS & KESSLER LLP