HOA Insurance Delays Are Causing Home Sales to Fall Apart — Here’s What NAR Is Doing
A growing issue in today’s housing market is quietly causing some home sales to fall apart, especially in condo and homeowners’ association communities. The problem centers around delays in obtaining HOA master insurance documents, which lenders require before approving financing.
Why Are HOA Home Sales Falling Apart?
Many home sales in HOA communities are falling apart due to delays in obtaining the required master insurance documents. Without this documentation, lenders may refuse to approve financing, which can delay or cancel a transaction entirely.
Master insurance refers to a group of policies purchased by a homeowners association that typically covers shared spaces such as roofs, exterior walls, and common areas. When buyers apply for a mortgage, lenders need proof that this coverage meets specific guidelines to protect their investment.
Delays Are Disrupting the Closing Process
The challenge arises when these documents are slow to arrive.
In many cases, buyers and sellers request the information from the HOA but face delays from associations that may be managed by volunteer boards or part-time staff. When lenders don’t receive the required documentation in time, transactions can stall or fall apart completely.
“Many times, these things are falling apart because the banks won't finance [without proof of insurance],” said Lisa Parenteau, immediate past chair of the Resort and Second Homes Committee. “But you don't find that out until you've already paid for an appraisal, you've locked in a rate, and you've done this and that, and your heart's all set and you're starting to pack.”
Rising Insurance Costs Are Adding More Pressure
Rising insurance costs are also adding complexity to the issue.
Some associations are reducing coverage due to higher premiums, which can lead to increased scrutiny from lenders during the underwriting process. That additional review can create further delays and uncertainty.
“It's affecting our members,” said Ron Jackson, current chair of the Resort and Second Homes Committee. “It's affecting the consumer ultimately—buyers can't buy, sellers can't sell.”
Why This Issue Is Becoming More Widespread
This problem is becoming more significant as HOA communities continue to grow.
Today, roughly one-third of U.S. housing is part of a homeowners association, meaning millions of transactions could be impacted if delays persist. As more buyers purchase condos and HOA properties, the importance of timely and accurate documentation continues to increase.
What NAR Is Doing to Address the Problem
To address the issue, the National Association of REALTORS® is working toward solutions that would improve how quickly and consistently these documents are provided.
One proposal includes creating a nationwide disclosure approach that would require associations to make master insurance information available to sellers earlier in the process.
The goal is to reduce delays, improve transparency, and help keep transactions on track.
What This Means for Buyers and Sellers in Chicago
In Chicago, where many properties are part of condo or HOA communities, delays in obtaining insurance documents can significantly impact transaction timelines.
Buyers and sellers may need to plan ahead, especially in buildings with complex management structures or slower response times.
Working with experienced real estate professionals and requesting documents early can help prevent unexpected delays during closing.
How to Avoid Delays When Buying or Selling in an HOA
Experts recommend taking a proactive approach:
Request HOA insurance documents as early as possible
Maintain clear communication with the association or property manager
Work with an experienced agent familiar with HOA requirements
Review insurance coverage details early in the process
Being prepared can help reduce the risk of last-minute surprises that could delay or derail a transaction.
Talk to Our Team About Navigating HOA Transactions
If you're buying or selling in an HOA or condo building, understanding these requirements early can make a significant difference.
Our team can help you navigate HOA requirements, avoid common delays, and keep your transaction on track.
Contact us today for guidance on buying or selling in Chicago’s condo and HOA communities.
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Ranked among the top 1% of real estate teams in the Chicagoland market, Cory Tanzer and the Cory Tanzer Group are experts in helping buyers and sellers navigate today’s market across Downtown Chicago, the North Shore, and the Western Suburbs. Recognized for their neighborhood expertise in areas such as University Village, University Commons, South Loop, and Pilsen, the team helps clients stay one step ahead by understanding where the Chicago market is headed next.
