Failure to disclose flood zone

**jlivengo** · 06-12-2009, 01:34 AM

I purchased in a new development last year, closing in february 2008. The property was built by a developer located in Hawaii. At the time of closing the disclosure agreement states the property is not located in a flood zone. I am trying to refinance the property and the bank is saying I am indeed in a flood zone and require flood insurance. The flood zone has not changed and when I questioned the developer they said they submitted a letter of map revision to FEMA and are waiting for the approval. Here are their exact words;

“The developer is presently working with the appropriate governmental agencies to address the flood zone designations for the Kamalii Alayna project. Please remember, the developer must work through several governmental departments to resolve this problem, i.e., County, State and Federal, all of which are autonomous and move at their own pace. The developer is making every possible effort to resolve this problem in a timely manner; however, we anticipate that it will be several months before there will be any resolution to this matter."

This doesn't seem right. They should be required to disclose the property is in a flood zone. We would not have bought the property if it was in a flood zone. Given their timeframe, the property will have been in a flood zone for at least 2 years before FEMA would adjust the maps and I have no idea if FEMA will even approve the change in zoning. Is this fraud or an intent to misrepresent the facts? Is there anything I can do?

**Greg** · 06-12-2009, 06:42 AM

The first thing you need to do is find out if you are really in a flood zone and what type of flood zone it is. Not all flood zones are bad and if the construction took the flood zone into account then the effect should be minimal.

Get an "elevation certificate" done by a licensed surveyor. This will tell you what flood zone you are in and what the elevation of the property is. If the property was built with enough elevation to satisfy the FEMA requirements for your flood zone the cost to you might only be $400 to $500 a year.

Until you do this you really don't have any damages to claim against the developer.

Here on the Outer Banks, everything is in a flood zone and it is not a big deal.

**jlivengo** · 06-12-2009, 05:37 PM

I have the elevation certificate that was provided by the mortgage agent signed and dated a week before closing and it's listed as flood zone A0. They sumbitted a conditional letter of map revision (CLOMR) for zone X a few years ago, however that does not constitute a change in the NFIP. They submitted a LOMR 2 weeks prior to closing that would eventually change the flood zone designation if approved by FEMA. The property, according to the bank and updated FEMA maps is located in zone A0. It isn't that bad but I have 3 days left on my refinance rate lock and have the potential to lose the rate which would save me $400 a month, or $4,800 a year. I'm near the shoreline which will likely put the insurance around $1,200 a year as well.

**obxmls** · 06-13-2009, 04:44 AM

1200 in the interim is not a bad investment to save 4800. Once you complete your refinance, work on the other problem. Flood Maps are interpreted by a service for lenders. They call up and verify a flood zone and the independent service uses satellite services to verify location. You can request a manual mapping procedure as apposed to a stab by some satellite. They are wrong despite technologies available.

I handled a manual mapping location for a past client and saved him 1600 per year. The insurance firms are attempting to re-look at things since the Army Corp redid all US Maps in 2006. When they re-look, they are seemingly really looking to increase revenues. My clients was moved by satellite to an AE from an X where he was paying a voluntary nominal amount for flood insurance.

[COLOR=black][FONT=Verdana]Work through the problem and stay on the builder/developer. This should have been properly disclosed back when

**jlivengo** · 12-11-2009, 11:23 AM

Update to the situation. The property is confirmed to be in the flood zone, the developer won't work with me. Only thing left to do is a lawsuit.

Is there a model out there that describes the loss in value to the property in a flood zone vs. the property out of a flood zone? If I'm going after them, I need a dollar figure to place on the loss. I'm not sure how to do that.

Thanks

**caseyzeman** · 12-11-2009, 03:23 PM

did you purchase the property with a Realtor or straight through the developer??

**Greg** · 12-12-2009, 12:04 PM

Save your money. You won't win the lawsuit. You had an elevation certificate stating the property was in a flood zone before you bought the property so nothing was hidden from you and you knew it was in a flood zone before you bought it.

"I have the elevation certificate that was provided by the mortgage agent signed and dated a week before closing and it's listed as flood zone A0."

**jlivengo** · 12-13-2009, 12:29 PM

Originally Posted by Greg

Save your money. You won't win the lawsuit. You had an elevation certificate stating the property was in a flood zone before you bought the property so nothing was hidden from you and you knew it was in a flood zone before you bought it.

"I have the elevation certificate that was provided by the mortgage agent signed and dated a week before closing and it's listed as flood zone A0."

I didn't get the elevation certificate until I started to investigate the flood zone issue a year later. It was never provided to me or the realtor or the appraiser.

**jlivengo** · 12-13-2009, 12:32 PM

Originally Posted by caseyzeman

did you purchase the property with a Realtor or straight through the developer??

I purchased through my realtor who can confirm my side of the story. She has never seen anything like this however and will support any way she can. Unfortunately she's not much help outside of a witness.