Home Remodeling in a Flood Zone: The 50% Rule

By Cameron Grant Woodward, Esq.

business people looking at a flood zone planWhen it comes to living in Southwest Florida, we have it pretty good:  beaches, golf, boating, you name it, Southwest Florida can likely offer it. But one thing we have that nobody wants is flood zones. Living within a flood zone has its own set of rules and regulations that every homeowner should be aware of. Some are basic and known by most, and others are not. One example known by most is that homeowners who purchase or construct a new home with the assistance of a bank or other institutional lending facility will be required to buy flood insurance. However, one rule, often referred to as the 50% rule, is less well-known and can often lead to costly mistakes for homeowners looking to remodel.

The 50 Percent Rule in Home Remodeling in Florida

The 50% rule comes from the National Flood Insurance Program (NFIP) administered by the Federal Emergency Management Agency (FEMA). Put simply, the 50% rule stipulates that any reconstruction, rehabilitation, addition, or other improvements of a structure that equals or exceeds 50% of the value of the structure prior to the start of the construction constitutes a “substantial improvement” requiring the structure to be brought into compliance with current NFIP standards. Sounds simple, right?

Unfortunately, it is deceptively simple, resulting in many homeowners running afoul of the rule. To comply with the 50% rule, a homeowner must know the value of their home – home means the actual structure, not the structure and the land – and how much their planned remodel will cost. The below example should help put this into perspective.

Example of the 50% Rule

A buyer purchases an older single-family home for $350,000.00 in a good neighborhood that happens to be in a flood zone and wants to remodel. After some discussion, the buyer decides to upgrade the main bathroom, guest bathrooms, the kitchen, and the back patio area for a total cost of $50,000. It seems like a reasonable idea that will add value to the home, right? Yes, but there may be a pitfall lurking that will catch the homeowner by surprise and cost tens of thousands more than expected. For example, let’s say that of the $350,000 the buyer paid for the home, the land was worth $250,000, and the structure was worth $100,000. Now the $50,000 budget for remodeling is 50% of the home’s value.

However, the buyer (if they follow through with the remodel) will have to bring the entire structure into compliance with current building code requirements for the flood zone in which the home is located. Getting the home into compliance with current building codes could be substantially more costly than what the buyer budgeted for the remodeling and could even be more than the value of the home itself. For example, if the home needs to be placed on piling because the base flood elevation has been raised in the years since the house was constructed.

Contact a Collier County Flood Zone Attorney

The above example may seem unlikely and maybe even outlandish, but this does happen, and it happens more often than you would think. That is why it is essential to hire a licensed contractor experienced in construction and remodeling within flood zones if you decide to remodel your home. Contact an attorney at Woodward, Pires & Lombardo (www.wpl-legal.com) today for assistance with questions as to remodeling in a flood zone.

Cameron G. Woodward, Florida Attorney

Cameron G. Woodward, Esq.

Cameron Grant Woodward, associate attorney at Woodward, Pires & Lombardo, P.A., is a Naples native who graduated from Naples High School before attending Stetson University in Deland, Florida, and then Ave Maria School of Law in Naples. Cameron proudly joins his father, Mark J. Woodward, Esq., and his uncle Craig R. Woodward, Esq. at the firm and focuses his law practice on real estate law, local government law, land use, evictions and estate planning. Contact Cameron at CAwoodward@wpl-legal.com.

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