Questions and answers on purchasing coastal real estate in North Carolina

              Questions and Answers on:
PURCHASING
COASTAL
REAL ESTATE IN
NORTH CAROLINA
it must extend beyond the beach in front of a
single property and include long stretches of ocean
shoreline.
( 4) Move my house away from the eroding
shoreline?
A: Yes. House- moving is an allowable and cost-effective
means of getting a structure out of harm’s
way. If space allows, a structure can be moved
landward on the same lot; otherwise, it can be
relocated to new property. Regardless of where
the building is moved, it must meet existing setback
requirements. [ NOTE: As of 1993, new development
permits for oceanfront structures require owners to
move or dismantle buildings threatened by erosion;
i. e., buildings that are less than 20 feet from the line
of stable dune vegetation nearest the sea.]
[ For information on site- specific erosion control
projects, contact your local building official, the
U. S. Army Corps of Engineers or the N. C. Division of
Coastal Management.]
Q: Can I get insurance for damage resulting
from erosion and flooding?
A: Possibly. You may be able to purchase a flood
insurance policy which is usually separate from a
standard homeowner’s policy. The National Flood
Insurance Program was established by Congress to
make flood insurance available nationwide to eligible
properties. Policies issued under the National Flood
Insurance Program include conditions and costs dictated
by federal requirements. The federal government
in turn guarantees to pitch in if losses occur— thus
encouraging private companies to write affordable
policies for areas that might normally be considered too
risky. Large discounts on premiums often are available
for buildings constructed above minimum standards.
For example, discounts are available for buildings
elevated on pilings higher than required to avoid storm-surge
flooding.
There is a limit to single- family home coverage
under the NFIP. Owners should inquire about these
limits. If the owner wishes to purchase excess flood
coverage, or if the property is not eligible for the NFIP,
the owner may be able to procure flood insurance
coverage from a private insurer. Private insurers
regularly reassess whether or not to offer coverage.
Q: Is flood insurance mandatory for coastal
property?
A: No law requires that an owner buy or maintain
flood insurance. However, federally insured lenders,
including mortgage companies, banks and savings and
loan associations require flood insurance for the life
of their lien if the property is in an identified flood-prone
area. Failure to maintain coverage may permit
the lender to declare the balance of the loan due and
payable.
Flood- prone areas are identified on Flood
Insurance Rate Maps, which should be available at the
local building official’s office. If your building is not in
a flood- prone area or you haven’t secured a mortgage
to purchase your property, flood insurance is optional.
However, when building or buying near the ocean,
flood insurance is always a good idea, even if it’s not
required.
[ For information about flood insurance and
discounts, contact your local building official, insurance
agent, N. C. Department of Insurance or the federal Flood
Insurance Program.]
Q: What are the limitations of flood insurance?
A: Federal flood insurance covers only structural
damage— including damage from waves— caused by
flooding. As a rule, damage caused by chronic, long- term
erosion is not covered. However, since most erosion that
causes structural damage is associated with coastal storms,
coverage is often available.
Furthermore, a federally- backed flood insurance
policy covers only damage to the insured structure.
It does not cover damage to land caused by flood, wave
or erosion. And, it does not cover damage from other
events, such as hurricane- related winds. These same
limitations may apply to privately underwritten insurance.
When a structure is so badly damaged that it cannot
be repaired or rebuilt, an owner may receive all benefits
under the flood insurance policy and discover the
coverage is inadequate to cover the cost of removing the
structure and/ or repaying the loan. In addition, the value
of any remaining land may decline significantly if the land
is declared “ unbuildable.”
Q: Can I get insurance for wind damage to coastal
property?
A: Many privately underwritten homeowner policies
cover wind damage and water damage caused by wind;
e. g. wind damage to a roof resulting in leaks. However,
because of the high risk in coastal areas, some private
insurance companies are excluding coverage for wind
damage. For that reason, the N. C. Department of
Insurance has established an insurance pool known
as the “ Beach Plan” to provide wind coverage in areas
where it is not otherwise available.
[ For more information about the Beach Plan or
homeowner’s policy coverage, contact your insurance
agent or the N. C. Department of Insurance.]
Q: Can I rebuild or repair my structure if it is
damaged by a hurricane or other coastal storm?
A: It depends upon the extent of the damage. If damage
is less than 50 percent of the building’s value, you may
be able to repair it at its original location. But if the
building is more than 50 percent damaged, repairs are
considered substantial and must meet both new setback
requirements and other new building code requirements.
Rebuilding is prohibited if erosion has left insufficient
space on the lot to construct landward of the setback.
A D D I T I O N A L I N F O R M A T I O N :
• N. C. Division of Coastal Management
1638 Central Mail Center
Raleigh, NC 27699- 1638
( 919) 733- 2293
www. dcm2. enr. state. nc. us
• N. C. Real Estate Commission
Legal Division
1313 Navaho Drive
P. O. Box 17100
Raleigh, NC 27619- 7100
( 919) 875- 3700
www. ncrec. state. nc. us
• N. C. Department of Insurance
For general information: 1- 800- 546- 5664
“ Beach Plan” information: 1- 800- 662- 7048
• National Flood Insurance Program
1- 800- 638- 6620
• Local Building Officials
Call the local county tax or municipal building
• U. S. Army Corps of Engineers/ Wilmington Branch
P. O. Box 1890
Wilmington, NC 28402- 1890
( 910) 251- 4455
A U T H O R S :
• Walter Clark
North Carolina Sea Grant Coastal Law Specialist
Box 8605
North Carolina State University
Raleigh, NC 27695- 8605
( 919) 515- 1895
walter_ clark@ ncsu. edu
www/ ncsu. edu/ seagrant
• Spencer Rogers
North Carolina Sea Grant Coastal Construction
and Erosion Specialist
5001 Masonboro Loop Rd.
Wilmington, N. C. 28409
910/ 962- 2491
rogerssp@ uncwil. edu
www. ncsu. edu/ seagrant
This work was partially supported by grant NA46RGO087
from the National Sea Grant College Program,
National Oceanic and Atmospheric Administration,
to the North Carolina Sea Grant College Program.
UNC- SG- 96- 10
The North Carolina Real Estate Commission
P. O. Box 17100
Raleigh, North Carolina 27619- 7100
919/ 875- 3700
Web Site: www. ncrec. state. nc. us
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REC 3.35 0/ 0/ 00