Real Estate & Flood Zones in Dallas, Texas
Natural disasters can happen anywhere. Among the most devastating effects of these disasters is the flooding. Entire homes may be smashed, but even an inch or two of water creeping into a structure can cause shockingly extensive damage. If you’re thinking about buying a home in Dallas metro area, then it’s vital for you to understand flood zones.
Main Types of Flood Zones
The Federal Emergency Management Agency, or FEMA, gives a letter designation to all flood zones. These designations indicate the area’s flooding risk.
If a property is located in an area that has been designated either X or B, then the flood risk is moderate with there being only a 0.2 percent to one percent chance of flooding in any given year.
The chances of flooding in any given year are even less in zones labeled C. None of these zones require flood insurance.
It is the A and V categories that present the most significant risk. Properties in these zones are labeled V, VE or V1-V30. These areas have at least a one percent chance of annual flooding. Over the term of a 30-year mortgage, there is a 26 percent chance of flooding. In these areas, flood insurance is required.
Properties in locations that are categorized as A, AE, AR, A1-A30, A99, AH and AO all have odds of flooding that are similar to that in V zones. In these cases, the flooding is most likely to come from streams, rivers, lakes and ponds. Once again, flood insurance is required in these zones.
Flood Insurance in Texas
Lenders require flood insurance on real estate that is located in certain flood zones. However, it’s sensible for other owners to purchase flood insurance because floods can happen anywhere. While most are caused by extreme weather, flooding also occurs when city crews have a mishap while making road repairs. Even if you live in an area that is unlikely to flood, your property still may be vulnerable.
People living anywhere may purchase flood insurance. Many private insurers offer such policies. However, the National Flood Insurance Program, or NFIP, generally offers the most affordable options. Still, flood insurance can be expensive. Annual prices of $10,000 are not uncommon in high-risk zones, while someone living in a low-risk area may pay only $600.
These insurance premiums are based on the level of risk that the insurer assumes. People buying real estate in high-risk flood zones are far more likely to have to make a claim than people living in low-risk areas. Clearly, insurance companies have good reason for charging more when people live in a flood zone.
The Standard Flood Hazard Determination Form
The Standard Flood Hazard Determination Form (SFHDF) is required for all federally backed loans and is used by lenders to determine the flood risk for their building loans. It is requested by the lenders after buyers have a signed purchase agreement with the seller. Here is a sample SFHDF form
Elevation Certificate For Flood Insurance
If your property is located in a high-risk zone based on the The Standard Flood Hazard Determination Form (SFHDF) provided by the lender and are purchasing flood insurance through the National Flood Insurance Program (NFIP), you will almost certainly be required to provide an elevation certificate to complete your purchase.
An elevation certificate documents important features of your property, including its location, flood zone, building characteristics and, most importantly, the elevation of its lowest floor. The form is issued by the NFIP and used by insurance agents to determine your flood insurance premiums.
Is an Elevation Certificate Required For Every Property?
You will only be required to provide an elevation certificate to your insurer if your property and flood insurance purchases meet all three of the following conditions:
Your property purchase is financed by a mortgage from a federally regulated or insured lender.
Your property is located in a Special Flood Hazard Area, defined by FEMA as an area at high risk for flooding. This is listed in the The Standard Flood Hazard Determination Form (SFHDF) provided by the lender.
You are purchasing a flood insurance policy backed by the NFIP. You should be aware that private insurance companies will often offer flood insurance in their name that is ultimately backed by the government, making it public, rather than private, flood insurance.
If any of these conditions do not apply to you, you will not be required to obtain an elevation certificate. If all these conditions apply to you, an elevation certificate will be necessary to calculate your premium before you purchase flood insurance, with some exceptions.
Changes To Flood Zone Disclosures in Seller's Disclosure in Texas
Starting Sept. 1, 2019, the state of Texas requires homeowners to disclose more information about flood risks and flood history before they sell their property. Previously, sellers in Texas had only been required to disclose whether their home was in a 100-year floodplain - an area, typically along a river or bayou, that has a 1% chance of flooding every year. A recent senate bill signed earlier in 2019 expands that disclosure to include whether the home is located in a 500-year floodplain, a flood pool, in or near a reservoir, and whether the home has flooded before. It's an effort to expand notification after many homes unexpectedly flooded during Hurricane Harvey.
Here is an extract of the relevant section in the new SELLER’S DISCLOSURE NOTICE from Texas Association of Realtors (Form TXR-1406)
How Can You Check Your Flood Zone?
If you already own a home or are considering buying one, then you can find out which flood zone the property is in. Just go to FEMA’s website here. Plug in the property’s address to find out precisely in which flood zone the home is located. This should give you an idea about whether or not you will be required to purchase flood insurance.
What You Need To Know When Buying a Home in a Flood Zone
Buying a home in a flood zone should only be done after careful consideration. Just one inch of water invading a 1,000 square foot home can easily cause more than $10,000 in damage. However, average flood claims amount to about $30,000. Add to these numbers the fact that some 20 percent of flood insurance claims originate in zones where the risk for flooding is only low to moderate, and it becomes clear that protecting yourself just makes sense.
It also pays to be aware that some flood insurance policies only go into effect 30 days after they are initiated. This leaves your real estate unprotected. In many low-risk flood zones, this is not an undue hardship, but it pays to be aware of what your policy covers and when it goes into effect.
If you are in the market for a home and want to know more about flood zones and flood insurance, then contact your local Dallas real estate experts who can answer all of your questions. Before you buy a property, you’ll know in which flood zone it’s located and whether or not flood insurance is mandatory.
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