Buying or Selling a Home in a Flood Zone in Santa Clara County
Realtor Tips for Home Buyers and Sellers in Silicon Valley
If you are planning to buy or list a property in Silicon Valley, one of the critical factors to consider is whether the property is in or out of a Flood Zone or in a Special Flood Hazard area (aka SFHA). As unusual as it may seem, many inland areas in South Bay and in Santa Clara County are considered Flood Zones (aka Flood Plains) and will require homeowners to obtain flood insurance.
FEMA defines a Special Flood Hazard Area as any land adjacent to a river, lake or stream that has at least a 1% chance of being inundated by a flood event in any given year.
In February 2014, FEMA issued a revised Flood Insurance Rate Map (aka FIRM) for Santa Clara County. The new flood zone map added many parcels to levee-protected flood zones primarily in Palo Alto (which interestingly is considered almost completely a Flood Zone), Mountain View, Gilroy, Milpitas, Cupertino and Santa Clara. Also some areas in San Jose in Willow Glen and Cambrian were added to 100-year Flood Zones.
Interestingly as well, California requirements state that if any part of a property owned by the Condominium Association or owned by the unit owners is in an area subject to flood, then all units will be included in the Flood zone. However, if a particular unit is not located in the Flood Zone, owners may not be required to purchase flood insurance.
Flood Zone disclosure is a statutory requirement in all real estate transactions in California. Before listing any property, Realtors must provide a Property ID Natural Hazard Report including a Natural Hazard Report and Environmental Geography Report.
If you plan to make an offer on a property that is part of a Flood Zone, the best way to protect your interests is to get an Elevation Certificate from a surveyor before removing the contingencies. In practice, the surveyor will compare the location and elevation of the house to the Flood Plain to determine if the home sits above the risk area.
Lenders will require a certificate of flood insurance from home buyers for any home that sits in a Flood Zone before any loan can be made on the property. However most lenders will not require purchasing flood insurance if the elevation certificate determines that the home is above the Flood Plain.
An important tip for home sellers in the Bay Area: If you believe that your home was inadvertently mapped in a Flood Zone, FEMA provides an electronic process to request a change in the Flood Zone designation for your property. This request is known as a Letter of Map Change (LOMC). If your application is successful, your property will be rezoned (i.e. taken out of the Flood Zone), which is a strong selling point, especially given the cost of flood insurance (up to $3,000 and sometimes more based on how much coverage you want and your deductible).