Expert: Hans Weber, Licensed Broker Associate - 7/20/2004

Question
Mr. Weber:

    I am in the midst of battling with HSBC bank in regards to flood insuranec. I closed on a home on 9-19-02 and the flood map was redone on 8-2-02. There was no notification from the previous owner of the property along with their real estate agent that I was on a flood zone; in fact HSBC at the time time of the closing also stated that I didn't need flood insurance since they told me I was not on a flood zone.
    Twenty months later I received a letter from HSBC stating that they needed an updated copy of my flood insuarnce policy or they will charge me and add it to my escrow account.
    The question I have is this: Does the bank, which is HSBC, need to notify me prior to my closing if I am in a flood zone? And if they must, do they have so many days prior to my closing to notify me? I spoke with a local rep from the NYSDEC who stated that they must notify me within 10 days of my closing as to whether I am in a flood zone because this would be my last chance to negate the sale.
    I understand that there is a clause in my contract that if it is determined in the future that I am in a flood plain, then I will need to purchase the insurance. The problem is that I was never notified of this and it appears that I am now stuck with a "white elephant" since I would not have purchased this property if I knew it was on the flood zone.
    Any info you have on this would be greatly appreciated and thank you for any assistance.

Answer
Dear Allan,

Thank you for your question.

Somebody made a mistake.  When you apply for your mortgage the bank will order a flood zone search which is found on maps prepared by the army corps of engineers.  The bank won't let you close without insurance and the insurance company would be the one to know if you are in a flood zone.  Perhaps you were in contract before the flood map changed and they issued your policy based on the map search before the changes.  You need to ask for a copy of the flood search to see what date it was done.  Then it may become a legal issue between you and the whoever did the floor zone search.
When you find out the date the search was done please tell me so I can check this out again for you.
Hans