Condominiums: Underwriting Guidelines

In order to insure the condominium units, all condominium documents must be read by the title examiner. The examiner should review all condominium documents and deeds for the following:


1.  The interests created must comply with all state laws and requirements creating condominium estates.

2.  Compliance with State Laws providing that the unit and common elements may be assessed individually for tax purposes. (All taxes for years prior to the time must be paid in full).

3.   The restrictions must be reviewed for any forfeiture or reversionary provisions. If such provisions are contained in the instrument, they must specifically state that they are subordinate to the insured mortgage (reversionary clauses should be set out word-for-word as exceptions on Schedule B of the commitment or policy).

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4.  Review the state condominium law to verify that the insured mortgage is not statutorily subordinate to condominium assessment liens. (Some states allow six months or more of postmortgage assessments to take priority by statute. In such cases, exceptions should be taken to the effect of such statute by specific reference).

5.  Certification by the condominium association stating that all assessments are current and paid. (Any unpaid assessments or liens must be paid and released or excepted to in the commitment and final policy.)

6.  No recorded instrument contains any right of refusal. (If such right does exist, an exception must be made in the commitment and final policy. This exception may not be deleted unless the agent obtains a waiver of these rights, in recordable form, from all parties involved).


7.   When reviewing title to condominiums, all underlying mortgages affecting the entire project or individual units should be fully or partially released or exception made in the commitment or policy. Every condominium commitment and policy must contain the following exceptions:

“Limitations and conditions imposed by the condominium law of ___________as set out in [STATUTORY CITATION}”; and “Terms, provisions, covenants, conditions, easements, rights, options, and liens established by and contained in the [DECLARATION OF CONDOMINIUM] of [CONDOMINIUM PROJECT], of record in [RECORDING INFORMATION].”


New condominium projects may not be insured without prior written authorization from Agents National Title.