A set of insurance policies held by community associations, including homeowners, condo and condominium associations, is causing headaches for some sellers and would-be buyers.
Community association delays in providing master insurance and other documents to lenders can complicate transactions, especially ones with tight closing deadlines.
It’s an issue members of the National Association of REALTORS® first flagged in 2025, and now the trade group is taking steps to solve it.
What Is Master Insurance?
Master insurance is a colloquial term that describes a “program” or bundle of insurance policies purchased by community associations,” Doug Dierdorf, CIRMS®, a community association insurance expert, explains.
Typically, there’s a policy covering damage of, and liability in, common areas, including structural elements like exterior walls and roofs. Another policy might insure the association against crime or a cybersecurity threat, or protect its board members in the event of a lawsuit.
The community association is the policyholder and purchases coverage with owner dues.
When a buyer wants to purchase a property that’s part of an HOA, mortgage lenders often require documentation showing that the association has master insurance coverage meeting Fannie Mae and Freddie Mac coverage guidelines, to protect the lender’s collateral.
Dierdorf, managing partner at The Baldwin Group, spoke in a personal capacity, noting that the opinions expressed are their own.
“When you buy into an HOA, part of the value of your home is that you're inside of a community that might have amenities,” he said. “And if something were to negatively impact those amenities or structures that was out of your control, and if the association did not have proper insurance coverage, the loss that happens could directly impact the values of your property."
Factors like aging condo buildings and a pattern of multimillion-dollar lawsuits are causing the price of insurance to rise, Dierforf says, and some associations are choosing to go underinsured. That reality is driving heightened lender scrutiny of master insurance when underwriting loans in community associations.
How Slow Disclosures Are Dissolving Deals
It’s clear to see why master insurance is causing headaches for some buyers, sellers, brokers and agents.
Picture this: Your clients are closing on a condo and waiting for their financing to be approved, when their mortgage lender informs them that they need a certificate of the association’s master insurance coverage. Your client asks the seller, who then turns to the HOA. The HOA, perhaps managed by part-time staff or volunteer boards, takes days to respond—disregarding texts and emails from the seller—or responds with documents that show the master insurance doesn’t have sufficient coverage needed by the buyer’s lender.
What happens in this scenario? The deal may fall apart.
“Many times, these things are falling apart because the banks won't finance [without proof of insurance],” Lisa Parenteau, immediate past chair of the Resort and Second Homes Committee, says. “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.”
Members of Parenteau’s committee brought the issue to light, and she successfully led an effort at NAR to recommend a national disclosure approach to help sellers obtain master insurance policies on a timely basis.
“It’s affecting our members,” Ron Jackson, current chair of the Resort and Second Homes Committee, says. “It's affecting the consumer ultimately—buyers can't buy, sellers can't sell.”
According to Community Associations Institute (CAI), a global trade group representing community associations and those who live in them, these predicaments are rare and most homeowners have a neutral or positive experience with their association.
“This issue does arise periodically in real estate transactions involving community associations, particularly in today’s insurance environment, where increased underwriting scrutiny, policy renewals, carrier changes and evolving lender requirements have made the timing and delivery of master insurance documents more complex than in prior years,” a CAI spokesperson says. “These situations are more likely in associations with smaller staffs, volunteer boards or part-time management, where response times may not be as immediate.”
Agents in this scenario are sometimes asked by their clients to get involved, which Jackson warns may carry risk. For example, if you are asked to help explain or interpret information provided by the HOA, only to later learn that the coverage did not meet lender requirements or the association’s coverage was insufficient.
“Agents get involved because that's what we do, solve problems—or we try to—but sometimes we put ourselves at risk,” Jackson says. “It's kind of like trying to practice law when you're not a lawyer.”
“That was another thing that we felt was pretty important, to underline that it is not within our scope,” Parenteau says.
“I'm convinced ... this is only going to continue to increase because the number of associations exponentially continues to increase,” she adds.
To streamline this process, CAI recommends associations designate a point of contact; maintain up to date insurance documentation; anticipate insurance related requests during peak transaction periods; establish clear internal processes, communication protocols and response timelines; provide advance notice of policy renewals; and use digital platforms for record sharing.
Do you have a story related to master insurance? We want to hear from you! Email eblock@nar.realtor
Why It’s a Big Issue in Second-Home Communities
In an ideal world, sellers would already have these documents before putting their house on the market.
Parenteau tells her clients this. “I advise clients to gather these documents upfront because I’ve seen what happens when they don’t,” she says.
Especially with second homes, the seller might not be in regular communication or even know who to contact at the association to obtain the required information.
“In resort markets with an investor, they're not going to HOA meetings,” Jackson says. “I'm sure they get the mail or the email ... but they're really not engaged.”
“In today’s insurance environment, timing matters more than ever,” CAI CEO Dawn Bauman says. “Early communication, clear expectations and proactive planning by all parties can go a long way toward keeping transactions on track while ensuring that buyers receive accurate and complete information.”
What the Data Says
In the past five decades, and particularly between the 1980s and 1990s, HOAs and condo associations have exploded.
In the U.S., about 33.6% of residential housing is part of a community association, according to CAI. About 77.1 million people live in these homes, townhomes, co-ops and condos, and the number of community associations is expected to grow in 2026.
In Parenteau’s market of Cape Cod, Mass., you can’t throw a rock without hitting one. Parenteau says, “upwards of 75%” of homes there are part of an association. About 80% of Jackson’s Myrtle Beach market is part of one too.
For Jackson, he has experienced sellers extending escrow, and buyers walk away—especially when the property lacks sufficient insurance.
Member Feedback Leads to NAR Action
Because resort and second-home communities often have a high concentration of community associations, those markets tend to be disproportionately impacted.
That’s why Parenteau, Jackson and the rest of the NAR’s Resort and Second Homes committee brought the issue forward.
The committee recommended that NAR support a nationwide disclosure requirement for community association boards to provide master insurance information to sellers in a timely fashion.
The recommendation, advanced at NAR NXT in Houston last November, positioned NAR to begin engaging on the issue and exploring potential advocacy options.
“It was very inspiring to have been able to shepherd this from the twinkle of our eyes to eventually having the policy accepted unanimously by [the Executive Committee],” Parenteau says.
Next Steps: Collaborating Toward a Workable Solution
For now, NAR staff are actively engaged on the issue and working with state and local REALTOR® associations and industry partners, including the Institute of Real Estate Management, to better understand where breakdowns occur and what solutions may be most effective.
Several states already have laws addressing access to master insurance information, but those requirements vary widely, and there is no consistent, nationwide approach. NAR’s focus is on understanding what works, where gaps remain and whether greater consistency could help address the problem.
“Master insurance issues are critical to our members,” said Austin Perez, NAR’s staff director for the Resort and Second Homes Committee. “We want to fully understand the scope of the problem and work collaboratively with our state associations and partners before determining the best path forward.”
Potential approaches could include exploring state or federal disclosure frameworks, encouraging adoption of effective state‑level models, developing model disclosure language, or providing best‑practice guidance and training to help REALTORS® navigate situations where they are caught between clients, community associations and lenders, Perez explains.
This work will take some time, as NAR gathers input, assesses options and works with partners to determine what approaches are most effective for members.
