Can a lender mandate insurance coverage?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Can a lender mandate insurance coverage?
I have PUD/townhouse with hazard insurance covered by HOA. It does include “walls in” coverage. Few weeks ago I received notice from the bank that I don’t have hazard insurance. After multiple e-mails and phone calls it turned out that they want me to purchase insuranse to cover betterments and improvements that will cover 20% of appraised value. I reviewed my closing documents and this requirement is explicitly mentioned only for condominiums. May I refuse to purchase additional insurance I do have my personal insurance that cover betterments but much less than 20%.
Asked on September 9, 2012 under Real Estate Law, California
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
Whether or not your lender for the home that you have can mandate that you have insurance coverage for what it wants depends upon what your trust deed (mortgage) states as well as your loan agreement. As such, you need to read these documents in that the answer to your question will lie in these document.
Custom and practice in the lending industry for a home is that the lender requires that the borrower has in place at all times insurance for the secured item for the loan.
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.