Real Estate Law: How does FEMA’s 50% rule impact me?
Mr. Feichthaler:
What is FEMA’s 50% Rule and how does it impact my insurance claim from Hurricane Ian?
— Roberto D.
Dear Roberto:
The 50% Rule is a regulation of the National Flood Insurance Program (NFIP) that prohibits improvements to a structure exceeding 50% of its market value unless the entire structure is brought into full compliance with current flood regulations. If a project meets the definition of substantial damage, which is defined by each county and city differently, the entire building must be elevated to or above the Base Flood elevation and otherwise made fully flood compliant.
This can be extremely burdensome to a homeowner as a typical homeowner’s policy only covers replacement value, and a typical flood policy limits efforts to raise the property elevation to $30,000. As regulations change from city to city, the method by which the value is calculated can also change. Most cities use the property appraiser’s assessed value, which can be below market value, but alternate valuation methods can be used. This rule has particular application to many houses in the Yacht Club area and throughout southeast Cape Coral.
In Cape Coral, the city recently has urged homeowners whose homes were built before 1981 to hold off on repairs until Dec. 1, 2022, as the City Council is expediting an ordinance which may remove or amend regulations in order to make it easier on homeowners to fall outside the 50% rule.
It is important that a homeowner speak with counsel to discuss their specific situation and whether or not the 50% rule will apply prior to commencing significant repairs and renovations.
Eric P. Feichthaler has lived in Cape Coral for over 35 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, Cape Coral Museum of History, and Cape Coral Kiwanis. He has been married to his wife, Mary, for over 20 years, and they have four children together. He earned his board certification in Real Estate Law from the Florida Bar. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator. He can be reached at eric@capecoralattorney.com, or 239-542-4733.
This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.