House we are under contract to buy is in a high-risk flood zone

word_docJune 21, 2013

I sure didn't see that coming. We entered into contract this past Monday and when we went to apply for the mortgage and were signing all the paperwork for the mortgage application, one of the papers indicated that the house was in a flood zone. I didn't think too much of it at first, figuring maybe they put a whole package of papers into a mortgage application, but it kept bothering me so I looked up the address in the federal government flood zone website. It was quite a shock to see it come back saying it was a high-risk flood zone property. The house is not near any water that I'm aware of (although I know sometimes that doesn't matter) so it just was not something I even thought about.

However, I'm sort of wondering why the seller or his agent did not disclose that information. I guess it's possible they did not know? The seller has only owned the house for a little over a year -- it was a foreclosure that he bought and rehabbed.

I called one of the insurance agencies listed on the government website to get an idea of how much a flood insurance policy would be, and the agent told me that it is possible just part of the land is in the zone and not the actual house. Apparently that is common. If that's the case, the premium will be pretty cheap. If not, its going to be expensive.

If the house is in the high-risk zone, that's a deal breaker for me. Absolute deal breaker, as much as it pains me. What I'm not sure about is whether it should be a deal breaker if just part of the land is in the zone. I feel like that is a definite possibility because the house is situated up about 10 feet higher than street level.

I really am so surprised that this is not a required disclosure. I don't know that technically I would be able to use that to get out of the contract but it's sort of immaterial because we haven't had the inspection done yet and I have until today to get the earnest money to the agent, so it's not a big concern at this point.

I really don't know much at all about high-risk flood zones except not to buy a house in one. But as I read a little about it yesterday, I discovered that many times it's just the property, or a part of the property, and not the house that is high risk. Figures there would be something like that thrown into the mix to muddy the waters (heh).

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How large is the property? That would make a difference to me. Part of our property is in a 100 year flood zone, but it's 100's of feet from the house. We did have to prove to the insurance company that the house itself was not in the flood zone. It was pretty easy to do with just a simple mortgage survey.

    Bookmark   June 21, 2013 at 10:19AM
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it is a one-third acre lot. The seller's agent says the maps must be wrong. I don't know what to's the official National Flood Insurance program site (a "dot-gov" site) and it came up in the mortgage application paperwork.

    Bookmark   June 21, 2013 at 11:22AM
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The flood maps have been re-drawn in recent years, so it is possible that the sellers did not know that it is now in the flood plain.

    Bookmark   June 21, 2013 at 12:02PM
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The agent forwarded a 2007 FEMA flood map (which is good since that is a post-Katrina, stricter one) and it looks like the flood plain stops RIGHT at the edge of the property on the east side. Then to the west and north it's completely clear. It looks like the property itself is completely clear except the very edge of it. The house is up on a bit of a hill so it was sort of surprising to hear about this.

    Bookmark   June 21, 2013 at 12:13PM
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And to complete the story: I heard back from the insurance agent. The study they ordered showed that we are indeed not in a flood zone. She said if the mortgage lender requires us to purchase flood insurance, we can buy it at the preferred rate of $366 per year for house/contents.

    Bookmark   June 21, 2013 at 2:26PM
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Hopefully you'll be able to just provide the insurance study showing you are NOT in the flood zone afterall.

    Bookmark   June 21, 2013 at 2:48PM
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Did you (can you) check with the Country/City building dept? They can tell you who to check with for any restrictions. I know in CA in Los Angeles County they have to release that information to you along with earthquake information.

    Bookmark   June 21, 2013 at 3:17PM
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Sometimes the home may be in the floodplain, but built above flood level, and a surveyor can be hired to determine that and issue an elevation certificate, so satisfy the mortgage and insurance companies.

    Bookmark   June 21, 2013 at 4:02PM
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I think we'll just go ahead and buy the insurance since it's only $366 a year. It's close enough to the flood plain that that seems like a reasonable idea, although I really can't imagine the house would flood.

    Bookmark   June 21, 2013 at 9:01PM
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If the Flood Determination states you are in any "A" flood zones, you will be required to get flood insurance. If an elevation study is done and you find the structures are out of te zone ( although part of te lot is), you can contact FEMA and get a LOMA waiver. Then you will not have to get insurance.

However, if you do get flood damage from rain, runoff, or even a broken water main, you home insurance will not cover it.

    Bookmark   June 21, 2013 at 10:44PM
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UGH! FEMA is using data at a large scale to designate folks in a flood plain at a microscale. It doesn't work that way. We are supposedly in a flood plain, the river that will flood us will have to flow backward and up 600 feet. Super likely. Oh and all of the folks that are lower than us in elevation they are magically not in a flood plain. We are having to pay about $2,500 to get a waiver from LOMA. Cost being in doing the land survey work and having an engineer sign off on it. Such a pain. So don't automatically assume the government is right on the flood designation.

    Bookmark   July 6, 2013 at 2:12AM
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Our house was built in 1987. When we bought our house in 2002, we had no idea that the house was in a flood zone. It wasnâÂÂt until a year or so after purchase that we went to refinance our mortgage and were told that we were in a high-risk flood zone (AE). We live in coastal CT. We had a survey and elevation certificate done and they found that only a small part of our property was in the flood zone but FEMA said it didnâÂÂt matter. We had to be insured for the maximum. At first we were paying $500/per year. But then we received a renewal notice for $3000/year. They said that since our basement housed all of our utilities, we would have to pay more. We had not flooded, not even during Irene, but we wound up with a foot of water during Sandy. The coverage for basements is very little so we received very little money from FEMA to fix the damage. Our damage, relatively speaking, was very little compared to our neighbors. The scary thing is FEMA is losing money and in order to continue to operate, they will have to collect more premiums, which I fear means my $3,000/year premium may go to $9,000 or more. No one really knows what is going on. City hall, the insurance agent, etc. donâÂÂt know what to tell you. We may have to fill in our basement which is so horrible because it costs so much money and itâÂÂs major living space that we use daily. If there is anyone who is familiar with FEMA and understands what I am talking about, please chime in. I donâÂÂt even understand how a house built in 1987 was permitted to have a basement in a flood zone. All I can think of is that it was not in a flood zone but they redid the maps after we purchased the house. Very unlucky.

    Bookmark   September 10, 2013 at 6:54PM
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in Texas what started the re-doing of flood zone maps was Tropical Storm Allison (2002 I think). All of Harris County (Houston) was re-done over a couple of years.

The home I owned then was one of about 3 in a 500 home subdivision that wasn't in the flood zone. Of course, if everything around me had flooded I would not have been able to leave the house.

Then there was Katrina, Ike, and then Sandy - so one should really investiage what the status is of their property, and also speak with their insurance agent on order to determine what insurance they need and what it might cost.

I may be wrong, but I think flood insurance is to cover damage from rising water (i.e., if you lost your roof to the wind from a hurricane your roof would still be covered/insured).

My current home is 150 ft above sea level and the river that is a mile West of me would need to rise at least 30 feet to impact us.

    Bookmark   September 10, 2013 at 7:39PM
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beachlily z9a

I live on a barrier island on FL's east coast. We have the ocean on one side and the intercoastal water way on the other and at this point our island is 3 blocks wide. Because the foundation of this home was raised 7 ft (we are sorta on a mound of sand), we are not officially in a flood zone. You must be kidding! We purchased flood insurance anyway.

    Bookmark   September 11, 2013 at 4:51PM
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In my area the maps are still needing to be redrawn, I think. However, last year when I was doing the research for the purchase of my first home,that is one of the things I checked, because some of the homes in my area are near the Rio Grande. I'm about . . . 5 miles from it, and I made sure that my house was NOT in the flood zone.

Always do your due diligence! Regardless of whether this is a "required" disclosure in your area, if there's any chance of it, it's up to the prospective homeowner to find out--about this, or anything else in a home. No use saying, "but they should have told me!" after the fact!

This post was edited by Violet.West on Thu, Sep 12, 13 at 12:49

    Bookmark   September 12, 2013 at 11:54AM
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I've done a lot of research on this because of the impact of the Biggert-Waters Act next month.

First, flood insurance is handled through various insurance companies but is all (mostly) under the National Flood Insurance Program (NFIP). FEMA manages NFIP. The maximum coverage is $250K for the residence and $100K for contents. As with most insurance, you can raise your deductible to lower your premium. New policies in flood zones will all require an Elevation Certificate (EC) by a surveyor to determine your BFE and level of your home (explained later).

The Flood Insurance Rate Map (FIRM) determines if you are in a flood zone and the amount of risk. The FIRM maps are always being re-drawn, so you might be out of a flood zone one year and in the next. The result after FIRM is that building codes change to reflect the zones, so in "new" flood zones we have older, pre-FIRM homes built lower than newer post-FIRM homes.

As you've figured out, you do not have to be anywhere near the water to be in a flood zone, and you can be right on the water and not be in one. (Really - a good friend has a waterfront home on Tampa Bay but is X, although his pool is VE).

The amount you will pay is based on two main things - Base Flood Elevation (BFE) which is how high someone has determined your spot will flood. Mine is 11 feet.
The variable is how high the top of your bottom floor is.
Example: My house is a one-story pre-FIRM slab, so my tile floor is the top of the bottom floor at 8 feet. The raised, post-FIRM houses are only garages and rec rooms on ground level (no liveable space), and their "top of bottom floor" is at least 8' up.

My "minus 3" from my EC is what determines my rate. Obviously, a "zero" or better (+) is going to have the lowest rate.

The biggest question is where the BFE comes from. My neighbors are all upset because it has never flooded here in 40 years since it was built, even a little bit, through many, many tropical storms. Remember that is what most of the Sandy victims said, too, only many of them were there even longer.

Also, keep in mind that 30% of claims every year are NOT in designated flood zones. I seriously doubt that all the homes being inundated in Colorado right now are in flood zones.

I won't get into the impact that the Biggert-Waters Act will have on many homes unless someone asks, but the bottom line is that it's going to affect many of the communities that are still recovering from the BP Oil Spill and the recession in general. People just started going back to the gulf beaches this past summer and now all those businesses that were built before the FIRM maps were in place are going to get hit with a big insurance bill that could put them under and will stall our recovery.

Hope this helps you understand a bit about flood insurance. It can be pretty scary, but it's managable for the most part.

    Bookmark   September 13, 2013 at 1:03PM
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This post was edited by deee on Mon, Sep 16, 13 at 7:14

    Bookmark   September 14, 2013 at 11:23AM
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We had an article about this in our local paper today. The title is "Rising Flood Insurance Rates Could Sink Home Sales." I can't link it because it is a pay site. It says that In our area some older homes built on slabs could see flood insurance rates as high as 25K!

I live on a small island in South Georgia. We are in an AE 12 zone and our house is raised so we pay the lowest premium. The house next to us is an X zone which means they do not need flood insurance. The reality is that the ocean is 1/2 mile away and tidal creeks are even closer. If we get a hurricane during high tide we are all in trouble.

As c9pilot mentioned the new rates will be devastating to some. If I was looking at homes anywhere near water I would wait to purchase until the dust settles from the rate increases.

Most county GIS maps have flood zones so it should be easy to check out the flood risk of a potential home.

    Bookmark   September 14, 2013 at 12:00PM
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You don't have to be near an ocean. Look at the Boulder CO area right now.

    Bookmark   September 15, 2013 at 12:44PM
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