Posted: Sat Jul 30, 2011 2:02 pm?? ?Post subject: Elevation certificates for flood insurance in florida
We're scheduled to close on our (first) home purchase this Thursday. It's been one snag after another but we managed to keep the deal alive. The house is on a canal in south dade county florida, in the AE flood zone (high risk) in which federal flood insurance is required. I maintained an awareness of flood zones when shopping for homes and was reassured by the fact that the seller's only paid about $900 per year for flood insurance (wind on the other hand is several thousand). I saw a copy of their policy and elevation certificate, which is only a year old. The base flood plane elevation is 10 feet. The house is at 11 feet, 1 foot above base, which determines the rate.
My bank (wells) required a new elevation certificate as part of the survey before we can close. I was waiting for this new certification before buying flood insurance. When I looked at it, it places the elevation a 9 feet, or 1 foot below base flood plane. Flood insurance in this case is more like $5000-6000 a year. A potential deal breaker. The new survey company used a different benchmark than the seller's survey company, and stands by their result.
Because the seller's elevation certificate is only a little over a year old, it is still valid. I simply obtained flood insurance using their certificate. The insurance agent (I am using seller's agent) never questioned it at all. There is nothing illegal about using seller's elevation, according to another insurance agent I talked to. But, the bank will be able to spot the difference if they look closely at my elevation certificate and compare it to the flood insurance policy.
Does anyone see any problems with this? I feel like its something that's always going to be in the back of my mind for the next few decades.
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imagardener
Joined: 28 Dec 2009 Posts: 348
Posted: Sat Jul 30, 2011 2:47 pm?? ?Post subject:
The problem is many fold. First the value of the property is lowered quite a bit by lowered elevation and increased flood potential, affecting mortgage coverage current value and future sale value.
No lender wants to over-lend for an overvalued property.
You should get to the bottom of why the elevation changed. I've heard that some flood maps were re-drawn and made large areas previously not needing flood coverage now requiring it for mortgage purposes.
This change would shake me in my boots pre-purchase but I'd rather know now than after closing. Did the sellers know of the change in flood elevation?
It doesn't sound like you want out of the purchase but realistically the facts are no longer the same.
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LadyGeek
Joined: 20 Dec 2008 Posts: 2797 Location: Philly suburb
Posted: Sat Jul 30, 2011 3:25 pm?? ?Post subject:
I went through this process. My mortgage lender required flood insurance because an edge of my property touched the AE flood zone. However, my house was up a hill, more than 25 feet above the flood plane.
I got a licensed surveyor (someone who knows how to deal with FEMA flood maps) to document that the lowest point of my basement is more than 25 feet above the AE zone, which put it out of all flood zones. We submitted the package to FEMA as a Letter Of Map Amendment. The amendment was approved, which is documented as an LOMC (Letter Of Map Change). I submitted this amendment to the mortgage lender and got approved to remove the requirement for flood insurance.
You need to do some research. Go online to FEMA's flood map web site and find your location. Unless you can prove that the map is incorrect, or that you are well above the flood plain, you will need flood insurance. FEMA is the only recognized authority to make this determination. Your mortgage company will abide by FEMA decisions.
How to request a flood map change for your property: Letter of Map Amendment (LOMA) and Letter of Map Revision-Based on Fill (LOMR-F) Process
Assume that the bank will catch the discrepancy. If they don't spot it now, they will in a few years. By that time, you will be in a much tougher situation - pay the flood insurance or lose your homeowners insurance. Homeowners insurance requires you to be compliant with your mortgage lender's requirements. No flood insurance, no coverage. _________________ Link to the Wiki, Wiki Videos
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charityneedshelp
Joined: 30 Jul 2011 Posts: 5
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3CT_Paddler
Joined: 04 Feb 2009 Posts: 1936 Location: Marietta, GA
Posted: Sat Jul 30, 2011 7:48 pm?? ?Post subject: Re: Elevation certificates for flood insurance in florida
diasurfer wrote:
We're scheduled to close on our (first) home purchase this Thursday. It's been one snag after another but we managed to keep the deal alive. The house is on a canal in south dade county florida, in the AE flood zone (high risk) in which federal flood insurance is required. I maintained an awareness of flood zones when shopping for homes and was reassured by the fact that the seller's only paid about $900 per year for flood insurance (wind on the other hand is several thousand). I saw a copy of their policy and elevation certificate, which is only a year old. The base flood plane elevation is 10 feet. The house is at 11 feet, 1 foot above base, which determines the rate.
My bank (wells) required a new elevation certificate as part of the survey before we can close. I was waiting for this new certification before buying flood insurance. When I looked at it, it places the elevation a 9 feet, or 1 foot below base flood plane. Flood insurance in this case is more like $5000-6000 a year. A potential deal breaker. The new survey company used a different benchmark than the seller's survey company, and stands by their result.
Because the seller's elevation certificate is only a little over a year old, it is still valid. I simply obtained flood insurance using their certificate. The insurance agent (I am using seller's agent) never questioned it at all. There is nothing illegal about using seller's elevation, according to another insurance agent I talked to. But, the bank will be able to spot the difference if they look closely at my elevation certificate and compare it to the flood insurance policy.
Does anyone see any problems with this? I feel like its something that's always going to be in the back of my mind for the next few decades.
Hey DiaSurfer, I thought that was strange they required a new elevation certificate when the old one was fairly recent. I don't have much experience with the actual insurance side of things, but I do perform floodplain studies for cities and counties.
The fact that there is a 2' difference between the two different surveys means that someone has seriously messed up the survey. One thing I would double check is that both the surveyed elevation and the floodplain are on the same elevation datum. Also did the surveyors shoot different parts of the house for the lowest finished floor? Either way I would get another surveyor for the elevation certificate.
Someone else mentioned this, an additional issue is when you go to sell. You may be able to get away with the old survey when you live there, but if they old survey is wrong, that may affect resale value when you go to sell.
The problem is many fold. First the value of the property is lowered quite a bit by lowered elevation and increased flood potential, affecting mortgage coverage current value and future sale value.
No lender wants to over-lend for an overvalued property.
You should get to the bottom of why the elevation changed. I've heard that some flood maps were re-drawn and made large areas previously not needing flood coverage now requiring it for mortgage purposes.
This change would shake me in my boots pre-purchase but I'd rather know now than after closing. Did the sellers know of the change in flood elevation?
It doesn't sound like you want out of the purchase but realistically the facts are no longer the same.
No, the seller's don't know of the change in elevation. The survey was only done thursday afternoon, and it was done for us (or more specifically for Wells Fargo). Everything about this deal has had snags so it took awhile to get to the point of surveying.
I don't think it would change value radically. yes, flood maps/zones did change but both seller's cert and ours used the most recent 2009 map. Either way (meaning with either elevation certificate), we are in the AE flood zone. The zones vary in this neighborhood but I never saw much correlation with home value. The home appraised for sale price, and flood zone is a consideration in the appraisal. I never saw anything in an appraisal that stated how much above or below the base elevation of a flood zone a house was.
I think it is a good idea to get to the bottom of it. Maybe I should get a third survey. The surveyor from Thursday said he went back and double checked in Friday, but I don't know if I believe him.
I went through this process. My mortgage lender required flood insurance because an edge of my property touched the AE flood zone. However, my house was up a hill, more than 25 feet above the flood plane.
I got a licensed surveyor (someone who knows how to deal with FEMA flood maps) to document that the lowest point of my basement is more than 25 feet above the AE zone, which put it out of all flood zones. We submitted the package to FEMA as a Letter Of Map Amendment. The amendment was approved, which is documented as an LOMC (Letter Of Map Change). I submitted this amendment to the mortgage lender and got approved to remove the requirement for flood insurance.
You need to do some research. Go online to FEMA's flood map web site and find your location. Unless you can prove that the map is incorrect, or that you are well above the flood plain, you will need flood insurance. FEMA is the only recognized authority to make this determination. Your mortgage company will abide by FEMA decisions.
How to request a flood map change for your property: Letter of Map Amendment (LOMA) and Letter of Map Revision-Based on Fill (LOMR-F) Process
Assume that the bank will catch the discrepancy. If they don't spot it now, they will in a few years. By that time, you will be in a much tougher situation - pay the flood insurance or lose your homeowners insurance. Homeowners insurance requires you to be compliant with your mortgage lender's requirements. No flood insurance, no coverage.
Thanks for the input, but you misunderstand my issue. There is no question that I am in the AE flood zone, and need flood insurance. I have it. It's done. I paid $850 for it on friday. This is the rate for if you are 1 foot above the base elevation of your AE flood zone. In my case, the base elevation is 10 feet and I used the seller's elevation certificate showing that I am at 11 feet, so 1 foot above.
I never got a quote but I saw a calculator online that showed if you are 1 foot BELOW base elevation (in my case 10 - 1 = 9) then your rate goes from $850 to about $5500. This would be the price if I used the elevation certificate I got thursday.
As far as I can tell, I have applied by all FEMA rules. I bought the required insurance using a valid elevation certificate. My insurance agent never gave it a second thought.
Joined: 20 Dec 2008 Posts: 2797 Location: Philly suburb
Posted: Sat Jul 30, 2011 9:46 pm?? ?Post subject: Re: Elevation certificates for flood insurance in florida
diasurfer wrote:
... the seller's only paid about $900 per year for flood insurance (wind on the other hand is several thousand)...
The insurance agent (I am using seller's agent) never questioned it at all. There is nothing illegal about using seller's elevation, according to another insurance agent I talked to. But, the bank will be able to spot the difference if they look closely at my elevation certificate and compare it to the flood insurance policy.
Wait a sec. This is the seller's agent? Remember the incentives here. Do you think they will give you an objective opinion? Perhaps ignore evidence that might cause you to trigger the "walk if flood insurance is greater than $1,000 clause". There's a nice big commission riding on this sale.
Your next real concern: Invest 91. By Tuesday, it's forecasted for hurricane strength. Settlement on Thursday? Show that to your wife and consider what everyone is saying. _________________ Link to the Wiki, Wiki Videos
Last edited by LadyGeek on Sat Jul 30, 2011 9:50 pm; edited 1 time in total
Posted: Sat Jul 30, 2011 9:48 pm?? ?Post subject: Re: Elevation certificates for flood insurance in florida
3CT_Paddler wrote:
Hey DiaSurfer, I thought that was strange they required a new elevation certificate when the old one was fairly recent. I don't have much experience with the actual insurance side of things, but I do perform floodplain studies for cities and counties.
The fact that there is a 2' difference between the two different surveys means that someone has seriously messed up the survey. One thing I would double check is that both the surveyed elevation and the floodplain are on the same elevation datum. Also did the surveyors shoot different parts of the house for the lowest finished floor? Either way I would get another surveyor for the elevation certificate.
Someone else mentioned this, an additional issue is when you go to sell. You may be able to get away with the old survey when you live there, but if they old survey is wrong, that may affect resale value when you go to sell.
I think it was just standard that they require a survey and elevation certificate as part of it. Maybe if I had asked them to look at my particular case I could have gotten them to waive it, but I didn't for two reasons. One, my wife's relocation package is paying for it. Two, I hoped maybe our flood insurance premiums would go down (due to changing flood zones as mentioned above). Guess that cuts both ways. Doh!
Both surveyors used the same elevation datum. However, they used different benchmarks. One used a nearby bridge, another used one down the street. The elevation difference between them is a few feet. Of course, if done correctly, it shouldn't matter.
The difference isn't due to shooting different parts of the house. The certificates have 4 different elevations on them, and all of them are off by about 2 feet.
I think it would be reassuring to get a third survey, but I'm not still not sure how I would act on the information.
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LadyGeek
Joined: 20 Dec 2008 Posts: 2797 Location: Philly suburb
Posted: Sat Jul 30, 2011 9:58 pm?? ?Post subject: Re: Elevation certificates for flood insurance in florida
LadyGeek wrote:
diasurfer wrote:
... the seller's only paid about $900 per year for flood insurance (wind on the other hand is several thousand)...
The insurance agent (I am using seller's agent) never questioned it at all. There is nothing illegal about using seller's elevation, according to another insurance agent I talked to. But, the bank will be able to spot the difference if they look closely at my elevation certificate and compare it to the flood insurance policy.
Wait a sec. This is the seller's agent? Remember the incentives here. Do you think they will give you an objective opinion? Perhaps ignore evidence that might cause you to trigger the "walk if flood insurance is greater than $1,000 clause". There's a nice big commission riding on this sale.
Your next real concern: Invest 91. By Tuesday, it's forecasted for hurricane strength. Settlement on Thursday? Show that to your wife and consider what everyone is saying.
The "agent" I am talking about is the seller's INSURANCE agent. They don't get much commission from an flood policy. I also talked to another neutral insurance agent not getting my business but just for advice, and they said just use the seller's elevation certificate.
Ah, the joys of living in south florida. This house doesn't have hurricane shutters, only plywood. It was going to be the first thing I did. This could shape up to be a hell of a week! We just moved (back) to Miami. I lived here in the 90's for graduate school. Hurricane Andrew hit two weeks after I moved here. History repeats!
Posted: Sat Jul 30, 2011 10:02 pm?? ?Post subject:
Uninvested wrote:
OP, I think you are very mistaken thinking that the flood zone situation doesn't effect home value. If I were to look at 2 houses, one with $600 and the other $5000 of flood insurance, I wouldn't go near the $5000. And God forbid you ever get a flood, even if you have insurance, you may never be able to sell it. Your wife may be in love with the house, but I would have her consider this issue.
Fair enough. I certainly would have passed it by if I knew it was going to be $5000. Of course, they showed me there policy showing it was only $850, and their elevation certificate. When I sell, I can do the same thing, showing a valid certificate at my time of purchase and a valid flood insurance policy with a $850 premium. Of course, if/when they do their own survey ...
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rotorhead
Joined: 17 Mar 2010 Posts: 12 Location: Florida
Posted: Sat Jul 30, 2011 10:03 pm?? ?Post subject:
OP, I would run, not walk away from this deal until the issue of elevation can be fully satisfied in your favor. There are hundreds, yea thousands, of very nice homes in Florida for sale at bargain prices right now. Don't fall in love with the house to the exclusion of good judgement.
I live in Palm Beach County, about 1/2 mile from the Intracoastal Waterway, and on the line for Cat 2 / Cat 3 hurricane mandatory evacuation. The finished floor elevation survey for my house is 10 feet. That puts us in Flood Zone B category - one chance in a hundred years; or something like that. My Flood insurance premium with USAA for 2011/ 2012 will be $365.
Having said that, in 1995, when Hurricane Roxanne was going round in circles in the Gulf of Mexico for several days; and feeding a low pressure trough going over South Florida, we got 27 inches of rain in one week, with 20 inches on the day that water came up to our back door step, and about 5 feet into the garage. Needless to say we were not amused!
Posted: Sat Jul 30, 2011 10:09 pm?? ?Post subject:
LadyGeek wrote:
Does the relocation package say anything about keeping the house in good condition? Are the settlement funds coming directly from the relocation package or is there a waiting period for you to get reimbursed?
IOW, If you settle on Thursday and the house is flooded on Friday, what happens?
I don't think the relocation says anything about house condition. The settlement funds are coming directly from the relocation package. (We have only to pay for owner's title policy - a story in itself).
I have an online receipt from the National Flood Insurance Program for paid premium. I asked the insurance agent, and we are covered beginning with closing date. But it does take 30 days to get policies issued. It's a bit scary, but I'm assured by the fact that the bank is going to own 80% of this house right off the bat and if it takes 30 days to get covered then they would require insurance 30 days before closing, and they don't.
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3CT_Paddler
Joined: 04 Feb 2009 Posts: 1936 Location: Marietta, GA
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LadyGeek
Joined: 20 Dec 2008 Posts: 2797 Location: Philly suburb
Posted: Sat Jul 30, 2011 10:28 pm?? ?Post subject:
diasurfer wrote:
I have an online receipt from the National Flood Insurance Program for paid premium. I asked the insurance agent, and we are covered beginning with closing date. But it does take 30 days to get policies issued. It's a bit scary, but I'm assured by the fact that the bank is going to own 80% of this house right off the bat and if it takes 30 days to get covered then they would require insurance 30 days before closing, and they don't.
The bank doesn't care about coverage prior to settlement, only what's in effect on the day of settlement. I would go back and ask your flood insurance salesman to prove that coverage starts at settlement. Don't assume that the mortgage company will read all the documentation. If you don't have flood insurance for the first 30 days, you are at risk. I'd bring this up at settlement, with the bank rep present. (If you decide to settle.)
Maybe you can get a binder to cover the first 30 days. I found a definition on the FEMA site. Let your agent figure out what to do.
Binder or Certificate of Insurance--A temporary agreement between company, producer, and insured that the policy is in effect. The NFIP does not recognize binders. However, the NFIP recognizes Certificates of Insurance for renewal policies. _________________ Link to the Wiki, Wiki Videos
Last edited by LadyGeek on Sat Jul 30, 2011 10:29 pm; edited 1 time in total
Posted: Sat Jul 30, 2011 10:28 pm?? ?Post subject: Re: Elevation certificates for flood insurance in florida
3CT_Paddler wrote:
diasurfer wrote:
Both surveyors used the same elevation datum. However, they used different benchmarks. One used a nearby bridge, another used one down the street. The elevation difference between them is a few feet. Of course, if done correctly, it shouldn't matter.
Just one more question... which elevation survey was higher, the one referencing the bridge or the one referencing the street? The different benchmarks should be in almost perfect agreement.
I believe the one referencing the bridge was the one done a year ago and came in higher.
Posted: Sat Jul 30, 2011 10:33 pm?? ?Post subject:
LadyGeek wrote:
diasurfer wrote:
I have an online receipt from the National Flood Insurance Program for paid premium. I asked the insurance agent, and we are covered beginning with closing date. But it does take 30 days to get policies issued. It's a bit scary, but I'm assured by the fact that the bank is going to own 80% of this house right off the bat and if it takes 30 days to get covered then they would require insurance 30 days before closing, and they don't.
The bank doesn't care about coverage prior to settlement, only what's in effect on the day of settlement. I would go back and ask your flood insurance salesman to prove that coverage starts at settlement. Don't assume that the mortgage company will read all the documentation. If you don't have flood insurance for the first 30 days, you are at risk. I'd bring this up at settlement, with the bank rep present. (If you decide to settle.)
Maybe you can get a binder to cover the first 30 days. I found a definition on the FEMA site. Let your agent figure out what to do.
Binder or Certificate of Insurance--A temporary agreement between company, producer, and insured that the policy is in effect. The NFIP does not recognize binders. However, the NFIP recognizes Certificates of Insurance for renewal policies.
I was told that I would be getting a Certificate of Insurance. I don't have it yet, but I was only in the office Friday so I assume I'll get it Monday. I'll be asking for it first thing in the morning.
But you're right. I'm going to research this further to be absolutely convinced I am covered for the first 30 days.
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