[TheBank]

We have a proposed loan to be secured by one building that has 8 townhomes that will be owned by an entity that will rent the townhomes. The building is located in a SFHA. What is the maximum amount of flood insurance for the property? Would it be similar to a condo at $250,000 per residential unit? The 8 units are all in one building and are side by side, adjacent with no space between each unit, with two end units. The building is new construction. Would the property be eligible for something similar to what a condo association purchases to cover all units?

Or would we need to use a maximum of 500,000 for the entire building?

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[jholzknecht]

FEMA offers threes flood policies:
• Dwelling
• Residential Condo Building Association Policy (RCBAP); and
• General.

The Dwelling policy is for a one-to-four unit dwelling. The RCBAP is for a condominium association. The General policy is for everything else. The General policy seems appropriate for your loan. The maximum coverage is $500,000 for the building.

Definitely check with your agent. It is possible that an alternate arrangement may be available, through FEMA, or more likely, through a private insurer.

[Author]

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