FEMA and its 50% Rule:

Florida may be the home of sun, sand, and surf but unfortunately, we have to deal with those catastrophic storms as well. If you live in a flood zone, you may run into issues with construction and repairs.

The FEMA 50% Rule is a regulation, issued by the National Flood Insurance Program (NFIP). It requires any Substantial Improvements or repairs to Substantial Damage to be compliant with today’s flood regulations.

A Substantial Improvement is any remodel, addition, or other improvement that costs 50% or more of the structure’s unimproved market value. Substantial Damage is any damage that would cost more than 50% of the structure’s undamaged value to repair..

Depending on the structure, this could include installing more drainage, elevating the building, or even rebuilding it with new materials. All buildings which are located in flood zones and are not elevated to current Base Flood Elevation (BFE) might fall under the 50% FEMA Rule, depending on proposed improvements, renovations, or required repairs.

The basic FEMA rule states:

If the cost of improvements (including additions) OR if the cost to repair a building to its pre-damage condition equals or exceeds 50% of the market value, the structure must be brought up to current floodplain management standards.

Cost of repair/renovation/addition = under or over 50%

Depreciated Value of home

Market Value Estimation:
The first step in the process is to determine the current market value of the structure to be improved. An excellent source for market value is for the property owner to submit an appraisal conducted by a state-licensed real estate appraiser. That’s where we come in!

 
More Helpful Tidbits:
In the following examples, the cost of improvements does not apply to the 50% Rule:  

• Any project for improvement of a building required to correct existing health, sanitary, or safety code violations identified by the building official and that are the minimum necessary to assure safe living conditions. This does not apply to structures that are considered “Substantially Damaged.”  

• Any repair, rehabilitation or addition constituting substantial improvement to a designated historic structure may be exempt, but the owner must receive in writing approval from the Florida Division of Historic Resources office that the structure will maintain its historical integrity and historical classification.  

• Costs of alterations or improvements whose express purpose is the mitigation of future storm damage, provided the costs of such measures, plus the costs of any other improvements, do not exceed 50% of the market value of the structure over any one-year period; examples of such mitigation include the installation of storm shutters or impact resistant glass, strengthening of roof attachments, floors, or walls, and minor measures to reduce flood damage. Mitigation improvements may be made in the same year as other improvements, but the total cost of both types of improvements may not exceed 50% of the market value of the structure.  

• Costs related to the development of plans and specifications, surveys, and permits.

A property owner should plan their specific projects in flood zones carefully and in the following order:

1.    Contact a licensed contractor to estimate the cost for repair/renovation.

2.    Order a 50% FEMA appraisal from a licensed appraiser who specializes in 50% FEMA appraisals to establish the “Depreciated Value”.

3.    Calculate these costs to verify if the repair/renovation is under or over the 50% threshold and factor this into decisions.

4.    Contact the building department for a permit. The community will review cost estimates and market value appraisals and make the official determination.

Let us help you bring your property into compliance with a residential appraisal. Please contact us at any time with questions you may have about the FEMA rules and regulations!