RI Real Estate Transactions Require Flood Insurance Addendum
The changes in the flood maps in 2013 in Rhode Island have had an impact on flood zones in RI coastal real estate. As residents of this ocean state, we love our waterfront and scenic properties. However, they now all come at a cost as flood plains have changed and been extended around and along the coast line.
RI real estate flood addendum
Elevation certificates will be required of sellers by insurance companies prior to selling a property in order to determine the cost of flood insurance for a buyer of a condo or home. It is based on a base flood elevation (BFE) determination by a licensed surveyor. What a seller pays for insurance currently is not necessarily what a home buyer will pay. In most cases, the flood insurance cost has increased substantially and some homes can not get flood insurance in their current location (i.e. require being elevated up as well as moved back from the water). Understand that flood insurance is separate and apart from homeowners insurance. Flood insurance is part of the FEMA National flood insurance program and is administered through them. Call your homeowner’s insurance company and they can give you the price quotes.
In addition, homeowners who have lived in the highest risk flood zones ( AE and VE) for a long period of time and have no mortgages may not even carry flood insurance on their residences.
However, being unaware of this coverage is dangerous for any homeowner as losses from Hurricane Sandy have shown us in the past.
To ensure that RI agents properly disclose flood insurance costs to potential home buyers, a flood insurance addendum is now required to be completed on every Rhode Island property sale as of October 2013. This form automatically prints out with the purchase and sales agreement for all RI real estate agents completing a purchase and sales agreement.
So home buyers and condo buyers, please ensure that your real estate agent is having you review it and sign it. It is up to the potential buyer to do their own research on the property’s flood map and flood insurance cost within the 10 day home inspection time frame contingency. Time is of the essence here. Due diligence people is what it is all about. It means you are the responsible party in this purchase and relying on your agent who says they are taking care of it, especially if you are a cash buyer, is not wise. It is the buyer’s responsibility.
This addendum refers to section 16 within the RI purchase and sales agreement. Understand that a lender will not provide a mortgage on any property that requires flood insurance without a flood policy in force. An insurance company can not give you a quote of the cost of a flood policy on the home you intend to buy without an elevation certificate. So I hope this is clearer to you as a buyer.
You do not need to be just on the ocean perimeter to require flood insurance. Many inland areas near or by streams, rivers and ponds also may now require flood insurance. Maintaining flood insurance, when required by your lender, is part of your responsibility in maintaining your mortgage in good stead with your lender. Any default on your flood insurance coverage is in violation of the terms of your mortgage and can result in the bank taking action to foreclose on your home. It is a serious matter and one that deserves scrutiny and understanding.
I have attached a copy of the flood insurance addendum that is now in use for your review. As always I am here to help you if you are considering selling your home and can guide you well through this process. My main goal here has been to ensure you have the knowledge you need in your home sale process. A flood insurance addendum will always be part of your home buying or sale process now.
RI Real Estate Transactions Require Flood Insurance Addendum
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Ginny Lacey Gorman is your go to Rhode Island waterfront real estate listing agent for North Kingstown RI real estate and beyond…knowing the geographic area, schools, happenings and important tidbits of local information. Email her at ginny@RiHouseHunt.com to make an appointment to find the home of your dreams too!
Waterfront, oceanfront, luxury and coastal Rhode Island real estate are my specialty but all of RI is my backyard. When you are in need of a real estate specialist for your buying, selling or relocating needs and an internet savvy real estate agent who sells houses in this real estate market call Ginny at 401.529.
Hi Ginny: Great flood insurance information.
I am thinking of our own California coastal communities. I lived in Humboldt County for a few years and many of the small towns have tsunami warning areas. Now I live back in the San Francisco Bay Area, and notice we have some areas along our coast that also have these warnings. Insurance for Flooding is still a concern and disclosures and addendum necessary here too. I like how your article shared this topic and is very informative, although applying to Rhode Island coastal real estate. It brings attention to Realtor’s where ever we are selling real estate that if this applies, we need to be sure to educate and bring the proper forms and disclosures to our buyers and sellers attention and follow through that all is read, received and approved in our real estate transactions.
While living there, it was my first experience to live where tsunami communities were where I was selling real estate. I did sell a home in one such location, and I wanted to be sure my clients who were buying knew how to be prepared in the event of a tsunami warning. I attended a earthquake and tsunami class put on by the Red Cross and it was so informative. I had good disclosures with a company I use here in the bay area too I also used in Eureka, called Property I.D. The disclosure report is very informative and nicely presented. Buyer’s informed and happy with confidence to close their purchase. They bought their home across from the ocean, and just a walk across the street to walk the beach for their daily strolls.
Thank you again.
Sincerely,
Saundra Allman
CalBRE#01188528
Realtor
Keller Williams Benchmark Properties, Fremont