Are you considering purchasing a property in a high risk flood zone with the intention of renovation/repair? Are you aware of the FEMA, state and local requirements in order for you to get your permits?
If the cost of your renovation or repair project exceeds 50% of the assessed value of the building (not including the land) it becomes a “substantial improvement”. THIS THRESHOLD IS VERY SIGNIFICANT. If the threshold is exceeded, the entire structure must comply with the most current regulations for its specific flood zone. This could mean the structure must be completely elevated.
You are permitted to have a professional appraisal completed on the property to determine the value of the structure (not including the land). This appraisal valuation will be a current market value, more accurate and typically higher value than the town assessed value.
My example is a property in Scituate across the street from the ocean. The buyers would prefer not to elevate the building. They would like to renovate and repair instead.
In order to qualify for the building permit the buyer must abide by the 50% assessed value requirement. The town assessed value of the building (not including the land) at $54,700. A building permit will only be issued for work not to exceed $27,350 (50% of assessed value). Quotes from licensed professionals are required to support the cost of renovation and repair. The problem: $27,350 will not be enough to cover the cost of the renovation and repair.
The buyer paid for a professional appraisal to be done on the building (not including the land). The appraised value is $152,000. With the appraisal, the buyer now qualifies for a permit with work not to exceed $76,000. This will allow the buyer enough funds to make the necessary renovations and repairs.
The buyer plans to also make flood mitigation improvements to the structure while renovating. Flood openings will be added to the foundation and utilities relocated to the second floor. A much better situation for potential flooding. Happy new homeowner and a more protected structure!
*Buyer beware!! When purchasing property in a flood zone, the regulations are complex and specific. Consult experienced professionals and refer to your building department for guidance
