Flood insurance problem for house sale

Reba

Reba

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Here's the background. Our elderly neighbor died last November. We helped his widow prepare her house for sale. She moved to another state to senior housing in February. We work with her and her realtor to get her house sold. Within a week of being on the market (mid-March), it was under contract. The buyers really want the house. It was inspected, all repairs made, ready to close. The only problem (and it's a big one) is flood insurance.

This is the weirdness. The buyers' insurance company says they MUST get flood insurance for the house. It would cost at least $5,000 per year, in addition to the normal house insurance. That means an additional $461 per month cost for the buyers. They don't accept that, and I don't blame them.

Here's what's weird. No one else in our subdivision neighborhood has this flood insurance. We even looked into flood insurance a couple years ago and were told we weren't eligible for it because we weren't zoned for it. Now, we find out that our next-door neighbor's house needs it! I checked with our subdivision homeowners group, and no one else has flood insurance.

Our houses survived Hurricane Hugo without any flooding. We've lived here over 23 years and have never even been close to flooding.

Out of 500 houses in this subdivision, she has the only house that needs flood insurance?

The realtor told us that he has never experienced such a problem. He lives on the coast, and he sells lots of beach and waterfront houses, and even they don't have such a problem. (They have flood insurance, yes, but not nearly as expensive.)

This is so bizarre! They are supposed to close this Friday but if they can't solve this problem, her house may become unsellable. :(
 
I have no idea. I would suppose that the no flood insurance has already been Grandfathered in. Therefore, if you live there already, no need to get flood insurance. I'm guessing that anyone who wants to buy now will have to get a flood insurance from now on? :dunno2:
 
Sounds like the insurance company erred in identifying your neighbor's home as needing flood insurance......
 
I think it's because y'all were grandfathered in so no flood insurance is required. so I guess the flood insurance is now required for a new buyer
 
That is really really weird, and that price is outrageous btw. The house my husband and I bought was in a flood zone, to get a mortgage we had to have flood insurance on it. But if you are not in a flood zone you can't even get it. We had to get proof, I think it was a surveyor document, I don't even remember what it was called but to even get flood insurance you have to prove that you're in a flood zone. This is very strange stuff, btw our flood insurance for the year was $900.
 
Jiro said:
I think it's because y'all were grandfathered in so no flood insurance is required. so I guess the flood insurance is now required for a new buyer
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Maybe. It must be very recent. Our other three near-by neighbors who bought houses within the last three years didn't have to pay for it either.

If it becomes required for all new sales in this area it will kill home sales. No one wants to pay on-the-beach prices for an inland property.
 
ambrosia said:
That is really really weird, and that price is outrageous btw. The house my husband and I bought was in a flood zone, to get a mortgage we had to have flood insurance on it. But if you are not in a flood zone you can't even get it. We had to get proof, I think it was a surveyor document, I don't even remember what it was called but to even get flood insurance you have to prove that you're in a flood zone. This is very strange stuff, btw our flood insurance for the year was $900.
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That makes sense.

It's called an elevation certificate, done by surveying engineers. Our neighbor got one, and it costs $300+ to do.
 
Reba said:
Maybe. It must be very recent. Our other three near-by neighbors who bought houses within the last three years didn't have to pay for it either.

If it becomes required for all new sales in this area it will kill home sales. No one wants to pay on-the-beach prices for an inland property.
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yea perhaps. it would be best to call the town hall. I'm hoping this is just an erroneous paperwork from insurance company.
 
If its already an identified flood plain, then there shouldn't be those high costs.
 
Jiro said:
yea perhaps. it would be best to call the town hall. I'm hoping this is just an erroneous paperwork from insurance company.
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Apparently, the flood zones are determined at the county level by the Army Corps of Engineers. The town isn't involved.

The realtor is still searching around for answers. He's checking to see if all insurance companies are doing the same thing. If they aren't, then maybe he can convince the buyers that they should change companies.
 
Yes, FEMA is the one that makes decision, unfortunately, they just re-mapped the flood zone just few months ago! It was in the news and a lot of homeowners in my area got pissed off, they never had flood in the last 100 years.

edit: It was January 28, 2013 they redrawn it. Here is link http://www.nytimes.com/2013/01/29/nyregion/homes-in-flood-zone-doubles-in-new-fema-map.html?_r=0 That is why not many are yet aware of this.

FEMA uses 100 years history of flood area to determine the zone. FEMA now is dead broke, and is trying to raise money so they re-zone it. No other insurance carrier will cover flood damage, only FEMA does and the rate isn't cheap, and it is going up right now.

There are no grandfather clause on this one, if they re-mapped and your property falls on it and you have mortgage then your screwed. Only way to avoid this is if house has been paid off Most mortgage companies does the evaluation on property on yearly basis, so, surprises will be awaiting for these unsuspecting homeowners that still have mortgage.

Once again, it is government agency nuthin new about our government.

jonnyghost said:
Does insurance use FEMA flood Maps? Or do they have their own?
https://msc.fema.gov/webapp/wcs/sto...2001&langId=-1&userType=G&type=1&future=false
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For flood coverage, only FEMA, no other insurance companies would cover. Almost all Insurance companies won't cover any flood related damage, know why? When flood strikes, it will hurt insurance dearly. Thats why they won't cover.

LoveBlue said:
Sounds to me like they should get a new insurance company.
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diehardbiker said:
For flood coverage, only FEMA, no other insurance companies would cover. Almost all Insurance companies won't cover any flood related damage, know why? When flood strikes, it will hurt insurance dearly. Thats why they won't cover.
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oh that's different. the one that insurance companies refuse to cover is because the area has a high chance of disaster or repeated disasters but if the government still want people to stay, then they offer insurance coverage.
 
No, when mortgage requires you to get flood insurance after looking at FEMA map, it is like telling private insurance industry that this is very high risk client. Its almost impossible to find private insurance offers "flood coverage" for flood area mapped properties.

FYI, if you own home, and your homeowners insurance that you have will be likely by 99.99% won't cover the flood in their policy. Many assume that private homeowners insurance will cover everything including flood, but in reality nope.

Jiro said:
oh that's different. the one that insurance companies refuse to cover is because the area has a high chance of disaster or repeated disasters but if the government still want people to stay, then they offer insurance coverage.
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There is something going on with the feds and flood insurance- I am sort of effected by it here. On the borough(our county) level they have some kind of tie to the feds FEMA response. We get notices saying we have to do this and we have to do that. I doubt anyone is responding to them. The real handle on us will be at resale time. It involves retroactive permitting and mandatory flood insurance and so on. This area does not flood at all.
A trip in person to a good reputable engineering office in your area to simply ask a few questions about the situation may pay off nicely. They like to sound like experts and solve things for free when they can.
 
diehardbiker said:
No, when mortgage requires you to get flood insurance after looking at FEMA map, it is like telling private insurance industry that this is very high risk client. Its almost impossible to find private insurance offers "flood coverage" for flood area mapped properties.

FYI, if you own home, and your homeowners insurance that you have will be likely by 99.99% won't cover the flood in their policy. Many assume that private homeowners insurance will cover everything including flood, but in reality nope.
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That's what I thought, too, that it was FEMA insurance only. However, we keep hearing that it is the buyers' insurance company that's insisting on flood insurance. It's very confusing.

If they begin forcing everyone here to buy the insurance, then no one will be able to afford living here, and we won't be able to sell our houses. This is bad.
 
goodonya said:
There is something going on with the feds and flood insurance- I am sort of effected by it here. On the borough(our county) level they have some kind of tie to the feds FEMA response. We get notices saying we have to do this and we have to do that. I doubt anyone is responding to them. The real handle on us will be at resale time. It involves retroactive permitting and mandatory flood insurance and so on. This area does not flood at all.
A trip in person to a good reputable engineering office in your area to simply ask a few questions about the situation may pay off nicely. They like to sound like experts and solve things for free when they can.
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Hmmm...something to think about.
 
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