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 likely can offer it. But one thing we have that nobody wants are 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, others are not. One example known by most is that homeowners who purchase a home or construct a new home with the assistance of a bank or other institutional lending facility, will be required to purchase flood insurance. However, there is one rule, which is often referred to as the 50% rule, that is less well known and can often lead to costly mistakes for the homeowner looking to remodel.

The 50% rule comes from the National Flood Insurance Program (NFIP) which is administered by the Federal Emergency management Agency (FEMA). Put simply, the 50% rule stipulates that any reconstruction, rehabilitation, addition, or other improvement 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. In order to comply with the 50% rule, a homeowner must be aware of what the value of their home is – 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.

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 master bathroom, guest bathrooms, the kitchen, and the back-patio area for a total cost of $50,000. 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. Let’s say that of the $350,000 the buyer paid for the home, the land was worth $250,000 and the structure itself was worth $100,000. Now the $50,000 budget for remodeling is 50% of the value of the home. The buyer (if they follow through with the remodel) will now have to bring the entire structure into compliance with current building code requirements for the flood zone the home is located in. Bringing the home into compliance with current building codes could be substantially more costly than what the buyer budgeted for the remodel, and could even be more than the value of the home itself, for example, if the home needs to be raised and placed on piling because the base flood elevation has been raised in the years since the house was constructed.

The above example may seem unlikely and maybe even be outlandish, but this does happen, and it happens more often than you would think. That is why it is so important to hire a licensed contractor who is experienced in construction and remodeling within flood zones if you decide to remodel your home.


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, evictions and estate planning. Contact Cameron at cawoodward@wpl-legal.com.

Read this article in SWFL Health & Wellness Magazine

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