Flood Plain Not Disclosed (sale, HOA, insurance)

[tarheel7777]

Hi there,

I am closing on the sale of my condo on Thursday and found out today that the buyer's mortgage company is refusing to provide financing because the unit is in a flood plain. I contacted Wake County Environmental Services (who were VERY helpful) and found out that yes, it is indeed in a flood plain. And evidently always has been.

This was NOT disclosed to me when I purchased the condo. Everything says it is not in a flood plain.

What kind of recourse is available in situations like these? This could completely derail the closing, which would then impact my purchase planned for the 16th!!

Thoughts?

[MikeJaquish]

Originally Posted by tarheel7777

Hi there,

I am closing on the sale of my condo on Thursday and found out today that the buyer's mortgage company is refusing to provide financing because the unit is in a flood plain. I contacted Wake County Environmental Services (who were VERY helpful) and found out that yes, it is indeed in a flood plain. And evidently always has been.

This was NOT disclosed to me when I purchased the condo. Everything says it is not in a flood plain.

What kind of recourse is available in situations like these? This could completely derail the closing, which would then impact my purchase planned for the 16th!!

Thoughts?

Ouch. That stinks. Bad way to end 2007.

What does your agent say?
If not using an agent, I suggest you get a consultation from a RE attorney.
Do you have all documentation from when you bought the condo to support the misrepresentation?

[tarheel7777]

My agent is off communicating with the buyer's agent to find out how this can be resolved. We have both left multiple messages with the property management company that handles our HOA to find out if we even have flood insurance, and I'm guessing they're off today for the holiday. I haven't heard back from them.

I do have all of the paperwork from my original purchase, so I can back up my claims.

[VickiR]

Sometimes the flood plains do change so perhaps your condo wasn't in a flood plain when you purchased it.

Sometimes even when a property is in a flood plain, depending on the elevation of the house, flood insurance is not required.

Alot depends on the information you get as to whether or not the buyer's mortgage company has a valid issue or not.

Vicki

[surv1234]

The solution to this type of problem lies in having a reputable surveyor perform an "Elevation Certificate". The EC will determine a) what zone the property is in. b) if the property is really in the zone. c) if the building is above the base flood elevation. Once you have this information you can find out how much flood insurance will be and the buyer can decide whether to close or not. If the building and utilities (such as a/c unit) are above the base flood elevation then flood insurance is fairly cheap. Perhaps you can pay for the coverage for a year as incentive. I have seen that done. There is also a possibility that if the elevation of your property is completely above the BFE, that you could get the property removed from the floodplain, again consult a knowledgeable surveyor.

[tarheel7777]

Thanks everyone for your responses. I am sure that there is a solution to this issue. Other condos in my same complex have sold within the past 6 months who are also in the same flood plain, so there has to be an answer. Hopefully I can get it tomorrow, and the closing won't be delayed because of it.

Happy New Year Everyone!!