It is a typical requirement, imposed by the lender in a commercial real estate transaction, that the flood zone be determined for properties to be mortgaged. The flood zone designations are defined by FEMA (The Federal Emergency Management Agency) based on studies provided by USGS (The United States Geological Society). The maps prepared by USGS are referenced as FIRM or the Flood Insurance Rate Maps.
Flood Zone Classifications
Flood zone classifications are delineated to depict varying situations. For example, properties residing in Zones V, VE, or V1-30 are at high-risk of coastal flooding from velocity (wave action). Properties that are subject to flooding from an interior waterway such as a lake, river, or stream are defined as A, AE, A1-30, AH, AO, AR, and A99, and are also at high risk for flooding. It is important to know property flood zones, as most lenders require a borrower to purchase flood insurance on properties residing in these zones.
Only about 8% of improved properties will be within these high-risk areas. The remaining properties will reside in Zones B, C or X where flood insurance is not required. One may also find a small number of properties in Zone D where no determinations or studies have been made. For complete definitions of flood zone codes, please refer to page 33 of the NV5 Handbook.
Requesting a Flood Zone Classification
When requesting Optional Table A Item 3 on an ALTA Survey, the surveyor will review the Flood Insurance Rate Map (FIRM), or any state or local equivalent, and report the flood zone classification of the surveyed property based on graphic plotting only. The surveyor is responsible for reporting the zone based upon the CURRENT flood maps. Viewing the maps can be done by visiting the Federal Emergency Management Agency website and completing the following steps:
- Click on “Floods & Maps”
- Select the “National Flood Hazard Layer” option
- Then click the button for “FEMA’s Map Service Center”
- Once prompted to do so, enter a property address with the city and state
- An aerial map showing the property and vicinity in a very large scale will appear
- The property is usually pinned on the map, but it is advised that a novice user look and compare a Google map, tax assessor map, etc. to the Flood Insurance Rate Map to confirm the location of the actual property.
- If the area of the property on the aerial flood map contains no blue shading as indicated in this article’s example and then defined in the legend on the FEMA map page, the property is not within a Special Flood Hazard Area.
- Since the maps are at such a large scale and no roadways are typically labeled, the surveyor carefully plots the property graphically on the map to comply with Table A Item 3.
Multiple Zone Cases
It is common that a property may reside in multiple zones. In these cases, the surveyor should state so on the survey and record on the survey drawing the approximate limits of the multiple zones. The surveyor can only report approximate limits because the scale of these maps is so large. In cases of multiple zones, some lenders will waive the requirement for flood insurance if there is a clear indication that the improvements on the property are free and clear of the high-risk zones. Others require insurance regardless of the location of the improvements on multiple zone properties.
A surveyor can also be engaged to provide an Elevation Certificate in cases of multiple zones or when there are disputes about potential flooding. An Elevation Certificate is a FEMA form completed by the surveyor based on elevation information tied into a benchmark (determined elevation point) within the vicinity of the property. Using the benchmark, the surveyor will determine the elevation of the lowest finished floor of the improvements on the property. The surveyor also reports the base flood information shown on the FEMA Flood Insurance Rate Map (FIRM).
As an example, the surveyor may report the finished floor elevation at 757 feet above sea level. The base flood elevation on the map may be 752 feet. Since the finished floor is 5’ above the flood stage, the requirement for flood insurance may be waived by the lender. The provision of an Elevation Certificate is NOT a Minimum Standard Detail Requirement of the ALTA/NSPS survey requirements. It can however be contracted either as a defined optional Table A Item 20 (the blank item) or as a separate service with the land surveyor. In the initial stages of due diligence matters, if there is any question or concern about whether a property may be in a flood zone, it is cost-effective to consider contracting with the surveyor to simultaneously provide the Elevation Certificate along with the ALTA survey rather than having the surveyor return at a later date to provide it as an additional service.
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For more information regarding Flood Zone Determinations for ALTA Surveys, visit FEMA’s website at www.fema.gov or contact us today.