After Superstorm Sandy, Gov. Chris Christie said, “I’m never gonna use the phrase ‘hundred-year storm’ again because we’ve had three of those, three hundred-year storms, in the past three years.” Considering the recent flooding our state has endured, many New Jerseyans would agree with Gov. Christie’s sentiments. One effect of the recent storms is a heightened awareness of the importance of flood insurance by owners of property on or near areas prone to flooding and by financial institutions whose loans are secured by those properties.
Given our state’s topography, transactions involving properties located in flood zones are inevitable for most New Jersey real estate attorneys. Flood searches are a routine part of most loan transactions involving real estate, and flood insurance coverage is a standard closing requirement when the mortgaged property is in a flood zone. This is because most lenders are required by federal law to both determine whether a building offered as security is in a high-risk flood zone and, if so, to require the borrower to secure at least a minimum amount of flood insurance.
