Does the bank also have to take a security interest in the primary residential structure for the flood detached structure exemption to apply?
No—the bank does not necessarily have to also take a security interest in the primary residential structure for the exemption to apply to a detached structure. For example, assume the primary residential structure and a detached garage are in a flood zone, but the bank only takes the detached garage as collateral for the loan. As long as the detached garage meets the three conditions of the exemption, the bank does not have to require coverage for it, even if the primary residential structure does not also secure the loan.
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