Even though it is not supposed to be done, home theaters or other such improvements are sometimes found on the ground floors of newer waterfront mansions. Such improvements below the base flood elevation (BFE) of a home, such as in the high-risk “Velocity” zone, where rushing water could be expected during a storm surge, violate FEMA regulations. Any subsequent damage would not be covered by flood insurance.
But does it matter if a wealthy homeowner puts expensive things on his ground floor, and, in the event of a flood, pays out of his own pocket to replace them? Real estate editor Harold Bubil discussed flood insurance issues with Sarasota attorney David Levin, who specializes in waterfront property issues.
Q: What do buyers of waterfront properties need to know about flood insurance, other than the 30-day waiting period before it becomes effective, and the $250,000 damage limit?
A: I always require an elevation certificate as part of the inspection period . . . to determine if the property is conforming or nonconforming. If it is nonconforming, is it legally nonconforming (if the house was built before 1975, when the FEMA flood regulations went into effect) or illegally nonconforming? A lot of modifications to houses have been made without the benefit of permits.
When remodeling, if the existing structures along the beach do not meet FEMA elevation requirements, they would be subject to FEMA’s “50-percent rule.” (The cost of) any proposed improvement would be limited to 50 percent of the market value of the structure before improvements.
Q: Can owners get flood insurance for the ground-floor spaces?
A: If the house is legally nonconforming, the ground floor may be insurable, but at a higher premium.
Q: What legally can be placed on the ground floor of newer waterfront homes in “V” or “A” flood zones?
A: FEMA requires that any space that is below base flood elevation be used solely for storage, open space, parking space or limited access. If an owner has converted that space to a recreation room, a theater or even a bedroom, that could be an illegally nonconforming space. I advise my client what that could mean if they purchase the house. There could be a penalty.
In Sarasota County, if the ground-floor space was converted to living space, in violation of the county’s FEMA requirements, the county could require that the space be converted back to the permissible uses.
If there have been improvements, such as putting in non-flood-resistant materials, the county could require those materials to be removed and restored to be flood-resistant. Partitions would be a violation, and would be required to be removed. If work is done without the required building permits, that would also be a violation and would require removal, and fines imposed.
Q: What is wrong with homeowners “self-insuring,” or covering their own losses for items placed below the BFE?
A: I would argue that property owners ought to be allowed to self-insure, and take risks if they can afford it. But for Sarasota County to participate in the National Flood Insurance Program, it is required to enforce its FEMA-based flood regulations, even if a property owner is able to self-insure.
Q: What do you tell home buyers if they are considering the purchase of a house in which a home theater, guest room or other improvements are below BFE?
A: When I have clients who are buying a piece of property where the ground floor has been illegally converted to inappropriate uses, I let them know that if they are not paying value for that area, and understand the risk they are taking, that at some point there may be a day of reckoning with the county. Or, at the time they sell, they are going to have to disclose the status of that property.
Many of my clients will take the risk as long as they know about it. The problem is that most real estate lawyers aren’t aware of those requirements and are not in a position to advise clients as to the risks.
