Flood Insurance

I live in a small 14 unit condo association. The HOA has never been required to purchase flood insurance due to past and current FEMA zoning. My property insurer, USAA, says flood insurance for me is optional.A new owner, who has lived here for over a year has been told by his lender/mortgage company that he and the HOA need to purchase flood insurance. No other owner has had this issue before. Obvioulsy this would create a huge expense for the HOA and a large increase in dues for everyone if Flood Insurance is purchased AND will affect property values. What are the options here? How can we help this person but not have to buy flood insurance that is not required for 13 other owners?
Thanks.

ps - Checked with city and there is no plan for FEMA to change existing zones.

Thanks Melissa. I know property values are affected if you are rezoned into flood hazard area. Perhaps I assumed that IF we did buy flood insurance perhaps any sale there after might be affected by it.

I did suggest to this person that he take City, FEMA & HOA docs into lender and have a face to face conversation.

Oh my, how this issue has expanded. Since original post I have found out indeed that all the buildings in our HOA have been and are still in a Zone AE which does mean we are required to have flood insurance. I was able to track down surveyor who did flood elevation certificates in 2005 at the request of Board at that time. I did not move in until 2007. I am still in shock that no action was taken at that time to get flood insurance and very dismayed that in present circumstances, because we are not insured, owners probaly could not sell or refinance due to this insurance issue as well as the lapse in FHA certification. We in a sense don't have our "right to transfer" property. What are the penalties for not being compliant with FHA flood insurance requirements and what can I do to get the board to take immediate action to rectify? Our Board is slow as molasses in taking care of business.

Thanks.

If you are in a FEMA flood zone and your board is ignoring that fact your HOA could be liable for the inability of owners to sell/transfer/refinance property. If i were an ower trying to sell and this was holding up my sale I would probably bring a suit against the HOA...real estate is hard enough to move without it being held up.

KP

Is it that each unit must provide their own flood insurance versus the HOA provide such for all units and/or the HOA only provide such for common amenities such as a clubhouse?

My initial blush is that flood insurance be made mandatory but each each unit must pay for their own and the association only pay for shared amenities.

Additionally, per our Decs the HOA is required to purchase flood insurance if Federal agency deems it necessary and they do need to cover the exterior and interior walls and anything attached to walls such as cabinets, as well as floors and utility items like furnace/machinery. Owner only needs to cover contents.

So did the elevation certificate put your HOA at a lower rate? Typically, if you are in a flood zone, but "your" actual property is at a higher elevation and not at a risk of flooding, the insurance can be quite cheap or not needed.

Are you saying there are multiple units within a building?

We have an estimate of $15000 to $20000 anually to insure 3 buildings of multiple units (total 12)that are in a flood hazard zone. Our decs & state law says "the association shall maintain, to the extent reasonably available" insurance required by Federal agency in this case any/all FHA lenders who hold our mortgages.
Is the cost of such insurance to the association "unreasonable". Can it be used for a reason to NOT purchase required flood insurance?
We are a very small HOA and the cost of insurance per owner will mean a increase of $100 per owner on the monthly dues.
Additionally...
If we don't get flood insurance we cannot be FHA certified nor can any owner refi or sell to propective buyer using FHA loan. Our decs also say "Title to any unit shall be freely transferable & no right of first refusal" as well as membership vote needed for HOA to "impose any restriction on a unit owners right to sell or transfer.

My take on all this is that we are required to purchase flood insurance even though it almost doubles are annual expenses - we must raise dues - so HOA is not imposing restriction on owners the sell or refi.

Right, wrong, thoughts?

NFIP..National Flood Insurance Program falls under FEMA.

Not sure if you fit under this program but one part says:

Condominium associations may purchase insurance coverage on a residential
building, including all units, and its commonly owned contents under the
Residential Condominium Building Association Policy (RCBAP). The unit owner
may separately insure personal contents as well as obtain additional building
coverage under the Dwelling Form as long as the unit owner’s share of the RCBAP
and his/her added coverage do not exceed the statutory limits for a single-family
dwelling. The owner of any condominium unit in a non-residential condominium
building may purchase only contents coverage for that unit.

Hope this helps.

And I do agree a full membership vote would be appropriate.

You may not need the vote to have the insurance if mandated. You do if your raising your dues over 3% or whatever your board approval is. A board can raise dues on it's own up to around 5% or less. Anything more than that needs a membership approval. Although NOT all HOA's operate this way. A big increase in dues is usually treated like a special assessment.

A HOA is ONLY funded by it's members FOR it's members...So have to do the fair thing and let everyone have a say...