Flood Insurance – Getting the True Picture
In the wake of the extreme weather events of the past year - most notably hurricanes Harvey, Irma, Maria and Florence - the topic of Flood Insurance is top of mind. Many Lenders have stringent requirements necessitating that a borrower purchase flood insurance on properties residing in zones that are prone to coastal flooding and are classified in Zone V, V-1-V-30 VE, defined as areas within 100-year coastal flood with velocity (wave action). As related to surveying, when requesting Optional Table A Item 3 - Flood Zone Classification, on an ALTA Survey, a surveyor will review Federal Flood Insurance Rate Maps (FIRMs), or any state or local equivalent, and report the flood zone classification of the surveyed property based on graphic plotting only. The surveyor is only responsible for reporting the zone based upon the CURRENT flood maps.
Many flood maps are out-of-date and do not accurately depict the true risk. Beginning in the late 2000s FEMA began the process of updating their maps for regions along populated coastlines including the Atlantic, Pacific, Gulf of Mexico and the Great Lakes. There was an urgent need for updated maps to properly report adjustments due to increased and substantial development of communities along the coasts, the altered circumstances attributed to the devastation of the coastlines from disasters such as Hurricane Sandy in 2012 which can impact the limits and the boundary of a flood zone, as well as major changes in recent years to the National Flood Insurance Rate Program (NFIP) policies and methodologies. Unfortunately, the updating of the Flood Insurance Rate Maps (FIRMs) has not been swift.
Per Table A Option 3, a surveyor ONLY has the responsibility to report the Flood Zone Code from the CURRENT mapping. In some cases, the “current” map may be 20 years old or more. For buyers contemplating a purchase or lenders offering mortgages for properties in coastal regions, it is important to consider the date of the map reflected in the surveyor’s flood note. Should it pre-date any of the previously listed circumstances, it may be worth considering a discussion with FEMA, the municipality or insurance carriers to assess the true and current risk.
We encourage you to visit FEMA’s website at www.fema.gov. for more information. For definitions of flood zone codes, please refer to page 29 of the Bock & Clark Handbook, or visit https://www.fema.gov/floodplain-management/flood-zones.
Standard PCA vs. Equity Based PCA – A Comparison
When it’s time to order a PCA, which is best?
A Standard or Baseline PCA is prepared by a generalist and is the most economical type of Property Condition Assessment. It is appropriate for use by lenders on properties that are newer or not complex. However, stakeholders may wish to request a more in-depth PCA which along with a generalist, can add multiple specialists to the team. The specialists offer a greater level of knowledge on particular issues and therefore provide a deeper insight to the condition of the property.
The type of specialized inspections can be tailored to the client’s risk tolerance and to known issues/specific property needs which can include any/all of the following:
- Mechanical, Electrical, Plumbing (MEP)
- Façade and Roof (Building envelope)
- ADA Accessibility Surveys
- 100% Inspection
- Elevator Assessments
- Termite Assessments
There will be a distinct cost difference between Standard and Equity Based reports but depending on the circumstances and needs of the user, both should be considered.
News and Upcoming Events
- Peggy Henderson will be joining the festivities on October 9th at the Maryland State Bar’s First Annual Real Property Section Dinner. Bock & Clark is proud to be an event sponsor.
- Jeff Echko, President, and Jim Brown, National Director of Business Development, will be on hand to share the wine at MBA of NY’s 70th Anniversary Gala being held at the New York Public Library on October 11th. Come sample our two pours: Ferrari-Carano Reserve Chardonnay and Old Ghost Zinfandel. Bock & Clark is a Silver Level Sponsor of this event.
- It’s not too late. Registration is still open for the CREW Network Convention & Marketplace being held in San Diego October 17-19th. As a Gold Level sponsor of CREW, stop by our booth at the Marketplace on Wednesday evening and say “hello” to Laura Hengle, Cathleen Straffen and Peggy Henderson. Drop in your card for a chance to win a FOUNT luxury leather handbag.
- Bock & Clark will be exhibiting at the Minnesota Real Estate Institute Nov 1-2 being held at the St. Paul RiverCentre. Stop by our booth and meet Lori Gabor.