Flood zones, flood insurance, and wetlands
Florida has more coastline and low-lying land than almost any state, so flood risk comes up in nearly every transaction. Licensees should know the basic flood zones, when a lender must require flood insurance, and why a buyer cannot wait until a storm is coming to buy a policy.
Special flood hazard areas
The base flood is the flood that has a 1 percent chance of being equaled or exceeded in any given year. It is often called the "100-year flood." The land it would cover is the special flood hazard area (SFHA): land subject to a 1 percent or greater chance of flooding in any year (44 CFR 59.1). SFHAs are shown on FEMA's Flood Insurance Rate Maps.
| Zone | Meaning (44 CFR 64.3) |
|---|---|
| A | SFHA with no base flood elevations determined |
| AE (also A1–A30) | SFHA with base flood elevations determined |
| V | SFHA in a coastal high hazard area with velocity (wave action), no elevations determined |
| VE (also V1–V30) | Coastal high hazard area with velocity, elevations determined |
| X | Outside the SFHA: moderate (formerly B) or minimal (formerly C) hazard |
A coastal high hazard area runs from offshore to the inland limit of a primary frontal dune along an open coast, plus other areas subject to high-velocity waves from storms. Wave action makes V zones more dangerous than A zones, because the water is moving fast as well as rising.
Memory hook: A for "area" of flooding, V for "velocity," the waves. Both are in the SFHA. X is outside it.
When flood insurance is mandatory
Under 42 U.S.C. 4012a(b)(1), a federally regulated lender may not make, increase, extend, or renew a loan secured by improved real estate or a mobile home in an SFHA (where flood insurance is available) unless the property is covered by flood insurance:
- for the term of the loan; and
- in an amount at least equal to the lesser of the outstanding principal balance or the maximum coverage available under the National Flood Insurance Program (NFIP).
Federal agency lenders are under the same rule. There is a small-loan exception, for loans of $5,000 or less with a repayment term of 1 year or less (4012a(c)(2)).
Owners outside an SFHA, or paying cash, are not required by federal law to carry flood insurance, but floods often hit Zone X too. Many buyers are better off buying it anyway.
The 30-day waiting period
A new NFIP policy generally takes effect only after a 30-day waiting period, counted from the date the application and premium are completed (42 U.S.C. 4013(c)(1)). Key exceptions (4013(c)(2)):
- coverage bought in connection with making, increasing, extending, or renewing a loan, which is why a policy bought for closing can start at closing;
- coverage bought within one year after a flood map revision; and
- certain post-wildfire flooding on federal land.
The practical lesson is that a homeowner who already owns the house cannot wait until a hurricane is forecast.
Wetlands
The EPA describes wetlands as areas where water covers the soil, or is present at or near the surface, all year or for parts of the year. They have hydric soils and water-loving plants called hydrophytes. Examples include swamps, marshes, mangroves, and bogs.
Wetlands are regulated at two levels:
- Federal: Section 404 of the Clean Water Act requires a permit to discharge dredged or fill material into waters of the United States, including wetlands. The U.S. Army Corps of Engineers runs the day-to-day program, and EPA oversees it.
- Florida: The Environmental Resource Permit (ERP) program covers dredging and filling in wetlands and other surface waters, and stormwater from new construction. It is administered by the Florida Department of Environmental Protection and the five water management districts.
For buyers, a lot that is partly wetland may have much less buildable area than its size suggests. Filling it without permits can lead to enforcement and restoration costs.