Tuesday, December 27, 2011

Is flood zone determination covered by title insurance?

query via email:

Hi, Diane.

I just bumped into your blog on http://titleinsurancetalk.blogspot.com/2007/10/query-how-to-file-claim.html
and would like to ask your opinion on a title insurance problem we are having. 

We have a situation with our property which bought 2 years ago. We are doing the backyard drainage landscape project this year. During the process of applying for permit with our town, it was discovered that our property is in a flood zone, thus imposed some limitations on what we could do on our backyard. The flood determination provided at closing time was wrong by stating the property is not in a flood zone. The mortgage company now also realized the mistake and is requesting us to buy flood insurance on our property.

My question is - with the scale of the matter, should we file claim directly with the title insurance company, or, should we have an attorney represent us to go after the title company?

Thanks a lot!

Hi, G:  I don't think this is a title insurance matter.  Unless your state is different than most, the title insurer doesn't check or insure the status of flood zones.  I would look at your sales agreement with an attorney.  The seller may have been obligated to inform you of the status.  You may also want to look at your HUD-1 Settlement Statement to see who you paid to perform the flood certification.  This is the company who made the error.  There may be an affiliation between the mortgage lender and the flood certification company.  If so, that might give your attorney an angle for negotiation with the lender.  So, your best course is to explore the obligations of the parties to your sales contract and those that provided flood related service as part of the mortgage application process.  Don't forget to use certified mail for all communication and don't be afraid to contact the Attorney General's office for help or the state banking regulator if you feel you are getting stone-walled.  Good luck!


1 comment:

Cena said...

Nice work on you blog