House #12: Flood Zone!

June 25, 2009 · 16 comments

This week started off about as badly as any week we’ve had in this business. Everything that could go wrong, was going wrong. And it all culminated with a phone call from our lender on Wednesday morning letting us know that The Mini House was in a flood plain, and that we’d need to get flood insurance for them to lend against the property (we were scheduled to close on Thursday, 24 hours later).

Before I go too far into this story, a quick reminder of the last time we bought a house in a flood plain — it was The Yellow Stain House, and at the time, we didn’t know enough to check the flood plain status of the house during our due diligence period. Long story short, after days of phone calls, meetings with surveyors, and jumping through more hoops than I care to remember, we were able to get proof that the physical structure of the property was not truly in a flood plain, and were able to successfully petition FEMA to update their flood maps.

If you’re wondering why this is such a big deal, it basically boils down to the fact that a house in a flood plain is difficult to resell, as lenders will require expensive insurance coverage, and buyers don’t want to incur the risk.

Anyway, after that whole nightmare with The Yellow Stain House, we always check the county records to determine if a house is in a flood plain before we get too far into the deal. And when I got that phone call from my lender, I was confused. I was certain that I had checked the flood plain status as part of my due diligence (that’s why I have an acquisition checklist!).

So, I went back to the county records, and sure enough, the house was listed as being in Zone X, which means there’s essentially no chance for flooding, and lenders should not require any coverage. But, my lender insisted it was in a flood zone, and forwarded me the Flood Certificate generated by FEMA.

Surprise, surprise…it appeared that FEMA had updated their local flood maps last December (just 6 months ago!), and in the update, this house got put into Zone A, which is a 100-year flood plain (meaning that there is a 1% chance of flooding any given year). Because the map updates were so new, the country records haven’t yet been updated, and unless I had called FEMA myself (add that to the checklist!), there is no way I could have known.

From there, things got worse…

Because I couldn’t back out of the contract without losing my $5000 deposit, and because my lender would only finance the deal if I got insurance, my next step was to call my insurance agent. My agent asked if we had a survey (specifically an “elevation certificate”) that indicated the exact elevation of the property, so he could provide that to the insurance company to get me a quote. Because the house wasn’t originally in a flood plain, no survey was ever done. My insurance agent basically said that my two options were to get a survey done, or to get a letter from the city indicating no survey was ever done.

My brother called our survey guy, while my wife and I went to visit the city planning office. We verified that no survey was ever done, and were told that the only person that might be able to provide the letter was the head of Public Works for the city, in another building. So, we went to visit him.

He explained that the new flood maps were a result of some major flooding back in 2005, and that because elevations throughout the area where our house sits were very inconsistent, the whole area was designated a flood plain. Looking at a map, he was able to quickly tell us that our specific property was probably NOT in a flood plain, but that we’d only know for sure if we got a survey done. He mentioned that a couple houses relatively close to ours had completed surveys and were able to successfully get themselves removed from the flood plain.

In the mean time, he wrote us our letter for the insurance company to allow us to get coverage. But, before sending it to our insurance agent and spending the $1000 or so to get a year of coverage (non-refundable), my brother got a call from our surveyor saying he could get out to the property tomorrow and have a survey and elevation certificate for us by the beginning of the weekend. If the house was actually not in a flood plain, we would know by Saturday.

So, we pushed the closing out to next Tuesday, are having the surveyor do his work tomorrow and Friday, and hopefully by the end of the weekend we’ll know if the house sits in a flood plain or not, and will take it from there in terms of getting insurance and figuring out our exit strategy on this one.

I’ll have more to say on this one by early next week…

16 responses to “House #12: Flood Zone!”

  1. Owen Dashner says:


    Any feedback yet on whether or not the house sits in the flood plain? If so, would it make the house FHA uninsurable- or would an FHA buyer just need to obtain flood insurance? I just looked at a house this weekend that I’m interested in, but found out that it was added to the 100 yr flood plain last spring when we had a lot of flooding in Omaha.

    This house also has quite a bit of lead-based paint present as well, so I’m a little leery of taking on a project with both LBP and flood zone designation. Have you ever dealt with LBD remediation/abatement? The HUD site published an extensive LBP inspection report, and it’s not something I’ve had much experience with.

    Feel free to PM me if this is too off topic. Appreciate your insight!

  2. J Scott says:

    Owen –

    Here’s the latest update on the flood zone issue:

    As for FHA, they will insure a property in a flood zone assuming the buyer carries appropriate flood insurance. If you’re considering buying a property in a flood zone, I would recommend that you contact your insurance agent, and get a quote for the flood insurance (this will require an elevation certificate from a survey). That will give you an idea of how much the insurance will cost, and depending on the burden on the buyer, you’ll get an idea of how difficult it will make resale. For example, The Mini House flood insurance is only $260/year, or about $22/month, which shouldn’t impact a buyer’s payment too much.

    By the way, flood insurance is provided by a FEMA-run organization, so regardless of what insurance company you order it through, the price will be the same. No need to shop around.

    As for lead-paint, I’ve never tackled it. I would recommend contacting a company that does LBP abatement and getting a quote.

    In terms of making decision whether to move forward or not with this house, I would treat the flood plain and the LBP issues separate. The LBP issue boils down to cost; how much will it cost you to remediate it, and is there enough room in the budget to pay that price? If so, just get a professional team in there to do it…it’s not difficult if all you’re doing is writing the checks. As for the flood plain, get a quote on the insurance, and determine the extra cost to your buyer. For example, if the insurance is $1200/year, that’s an extra $100/month; for a $500K house with a $3000/month payment, the extra $100 doesn’t mean much. But for a $100K house with a $700/month payment, the $100/month adds about 15% to the buyer’s total monthly payment.

  3. Bonnie Seraphine says:

    Hi, I have a similar problem accept when we purchased our house 2 yrs ago we were given a survey that says we are not in a flood zone. After living in the house 2 yrs we found out from the appraisal district that we were in the flood plain. My problem is that we would have never purchased the home if it had been in the flood plain. Now what do we do? Can we sue the title company for not finding this in their search?
    If anyone has any info I would love to hear it.

  4. J Scott says:

    Bonnie –

    Do you know if the FEMA Flood Maps were revised in the past two years? Perhaps you really weren’t in a flood zone two years ago, and now you are?

    Unfortunately, you can’t sue the title company, as this isn’t something they are responsible for finding. Generally, it’s your insurance company that would figure this out or, if you had a survey done, your survey company would figure it out.

    Something to keep in mind is that just because your municipality thinks you’re in a flood zone doesn’t mean you are. Generally, they lump an entire area together, and say that the whole area is in flood plain, when in reality, the flood plain only covers properties that are below a certain elevation. In other words, while some of the houses in that area might be considered in the flood plain because they sit below the cut-off elevation, others in that area may actually be above the cut-off elevation and not in the flood plain.

    You can have a survey done that will tell you specifically if you’re in the flood plain or not, and if the surveyor determines that you’re not, you can have the flood maps revised to remove your property.

  5. Scott says:

    I’m going through the same stuff with my house now…Last year my property was deemed “in the flood plain” by FEMA. I’ve lived in this neighbourhood my entire life and in that 40 years there has never been any flooding…maybe occasional big puddles here and there…even in the flood of ’96.

    Now, my lender is insisting I get flood insurance…about $1500.00 a year and has to be paid up front! I’ve spent the last year trying to find a way to get around it. I had a survey of my property done and the elevation certificate says my dwelling is above the flood plain. Now all I have to do is see what to do next…Last years’ insurance policy is up so I’m pressed for time. The WORST part is; my second mortgage foe $30,000 is requiring me to get $186,000 worth of coverage ! My house is only worth $135,000. Its driving me nuts, so I’m just venting now…

    Best of luck and keep us posted !


  6. J Scott says:

    Scott –

    If you have an elevation certificate that indicates that your dwelling (the actual house) is above the flood plain level, the next step is to apply for a “Letter of Map Revision” (LOMA) through FEMA. This means that they will use the elevation certificate from the surveyor to determine that specifically your house is not in the flood plain, and will update their flood maps to remove your house. If you have any questions about how to do this, talk to your surveyor…he should be familiar with the process.

    Once you have the revision by FEMA (generally about 6 weeks), your mortgage company should exempt you from flood insurance coverage.

    Good luck!

  7. Scott says:

    J Scott, Thanks for the info. Is there a charge for the LOMA, or is that only if FEMA actually does the surveying ?

    Thanks !


  8. J Scott says:

    Hey Scott,

    Here is more information:

    As for cost, here is information: (you probably want a LOMA, which would likely be free)

  9. Scott says:

    Thanks again…This info is very helpful and I’m very glad that there doesn’t appear to be a fee . I’ve already shelled out about $700.00 so far and this is all based on a gamble that FEMA will change the map in my favour…and after that, hopefully my lenders will let me off the hook.

    I’ waiting for my LOMA application to show up in the mail at this time…the guy I talked to at FEMA said I need to include a copy of my deed and a copy of my property’s tax map along with a copy of the surveyor’s info (flood certificate) this whole thing has been such a tremendous pain in the butt…hopefully it’ll be done soon !

    I’ll keep ya posted !

    Thanks !


  10. Scott says:

    Well, all my paperwork and information is all in a row. I got everything I needed per LOMA application and had everything put on disc. I sent it off to FEMA about 2 weeks ago and still waiting on my LOMA.

    The surveyor I hired stated that the lowest part of my house is .7 inches above the flood plain. Hopefully that will be enough. The thing that stinks is the fact that my lender can require me to purchase the flood insurance anyways. If that’s the case…Then what ?


  11. J Scott says:

    Hey Scott,

    My lender in the past (and the broker who I work with for my buyers) all agree that if a property is not a flood plain, there is no requirement for insurance. That said, if your lender has a different requirement, I’m not sure there is much you can do.

  12. ryan says:

    hi, just wondering if you would know anything about my situation. my whole property is in the AE flood zone, the flood elev. level is 329′, the property sits at 327′ but the top of the bottom floor sits at 329.8′. my mortgage was sold to a new co. and they are making me increase flood coverage and the coverage they are wanting me to increase to will make my payment around $1600 a year rather than $900 and thats a big difference for my house payment now. is there any way to get FEMA or the NFIP to take my house out of the flood zone or something? what should i try doing to get my rate down?

  13. J Scott says:

    Ryan –

    First, from my understanding, if any portion of the structure sits within the flood plain, FEMA is unlikely to remove the property from the flood zone. And in this case, it sounds like part of the structure (though not the living area) is in a flood plain. I had the same situation with one of my houses…and FEMA wouldn’t remove it.

    As for the new mortgage company requiring additional insurance, this seems weird to me. I’m not saying that it’s not on the up-and-up (I don’t know how these things work), but for a company to buy your own and then put new restrictions on it seems a little weird. I would read through your original loan docs and see if there is anything about the mortgage company (or a new mortgage company) being allowed to imposed new insurance restrictions on you. If not, you may want to speak with an attorney to fight this.

    Unfortunately, though, I don’t know offhand if that’s allowable or not…

  14. ryan says:

    ok, thanx for taking the time to help out!!

  15. Helen Harris says:

    Sorry I do not have a sebsite, but what I would like to know if someone can tell me who to get in touch with concerning false information that was given to my family home. It was told to us we were in a flood area but we are not, we are above what used to be a floor area before the lock and dam were installed in close proximity of our home. If we were in a floor zone my guess is all of Mississippi is in one. Please tell me who I can talk to so this can be straighten out.

  16. J Scott says:

    Hi Helen,

    The first thing you should do is talk to a local surveyor in your area. He should be able to tell you exactly what you need to do, but most likely it will be a two step process:

    1. You’ll have to get an elevation certificate, which is a special type of survey that tells you the exact height of various points of your property. This will tell the surveyor if your house should or shouldn’t be in a flood plain;

    2. If the house shouldn’t be in a flood plain, the surveyor can submit the elevation certificate, along with some paperwork (Letter of Map Amendment, or LOMA) to FEMA and hopefully they will move you out of the flood plain.

    The total cost could be around $600-700, but again, speak with a surveyor to be sure.

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