Elevation Certificates – The What, When, Why, and How
You are about to buy a beautiful home on one of the gorgeous banks of the ridiculously blue St. Clair River (if you’ve seen it you know what I mean). The real estate agents on both sides of the transaction have done a nice job smoothing the way and you are going to get a good rate on the mortgage through your lender. In essence, everything is going fine. Then, about two weeks before the closing, the lender says that there is an additional insurance requirement. According to the flood mapping certification company, the house you are about to buy is in danger of inundation should the 100-year flood event occur. Because of this, they will require that you carry flood insurance. The lender then gives you a list of their preferred providers of this insurance.
On the surface, this sounds like a legitimate idea. I mean, who wouldn’t want their home protected, right? You make the calls to the providers and find out that they are going to charge you $2,000 to $4,000 a year for coverage! For some, when adding the $150 to $350 monthly premium on top of the mortgage payment, the transaction is no longer affordable. Does this mean your dream of living on the water is dead? You might be considering, at this point, nixing the entire transaction right then and there, but there is another option…
The Federal Emergency Management Agency (FEMA) has developed references called Flood Insurance Rate Maps (FIRM). Their purpose is to establish the boundary between land that is affected by a possible one percent (1%) flood and the land unaffected. The area inundated by the one percent risk of a flood event is called the Special Flood Hazard Area (SFHA). These maps are produced using the best available data and flood event modeling. Unfortunately, the best available data is not of the same quality (accuracy and precision) for all areas of the United States. This means that the reference is not infallible. Imperfect though it is, the FIRM is the source cited by lenders suggesting them to require Flood Insurance. Given the unexpected requirement to carry flood insurance, a decision must be made by the homeowner. Do you trust that the FIRM is accurate for your area? If so, then you will have to pay flood insurance for as long as you own the home. Alternatively, would you like an independent verification of the FIRM to determine if the extents of the flood event depicted are correct? If so, then you should hire a Professional Land Surveyor to complete an Elevation Certificate (EC).
The Elevation Certificate is a widely recognized form established by FEMA, which concisely summarizes the real world information needed to determine the quality of the FIRM at a specific point. The surveyor you hire will determine the elevation of various key locations in and around the home, fill out the EC, and then be able to tell you if you might qualify for removal from the Special Flood Hazard Area (SFHA).
BMJ has been helping people to remove the Flood Insurance requirement since the program began in the 1980s. This year alone, 90% of our clients have been successful and have saved themselves quite a bit of money. If you are in St. Clair, Macomb, Sanilac, or Lapeer County and this situation sounds familiar, give us a call or email. Let’s see if we can help!
