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Home Renovation - FEMA 50% Rule

Old 02-14-2020, 06:13 AM
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Default Home Renovation - FEMA 50% Rule

Has anyone on the board run into this issue with the FEMA 50% rule?

I had an old house passed down to me, that is not livable right now. We want to renovate it, and live in it since it's a nice brick house that sits on a very nice piece of property. The cost to renovate the house exceeds the 50% rule, and if we had to bring everything up to code like the county would want the costs would sky rocket.

Hoping to get some information from any contractors, or home owners that have run into this rule and to see if there are any tricks or ways around it?

I'm going to take a Fannie Mae Home Renovation Loan to do the work, so it would not be personal money. If it was my own money, we were going to by pass some permits but unfortunately cannot do this.
Old 02-14-2020, 06:22 AM
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Excuse my ignorance, but what's the 50% rule?
Old 02-14-2020, 06:30 AM
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Originally Posted by Redm2 View Post
Excuse my ignorance, but what's the 50% rule?
No, problem. Below is a broad statement of the rule.

The National Flood Insurance Program requires that if the cost of reconstructing, rehabilitating, adding to, or otherwise improving a structure equals or exceeds 50 percent of the building's assessed or appraised value, then the building must meet the same construction requirements as a new building.
Old 02-14-2020, 06:42 AM
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Maybe I'm misunderstanding your question but,

Was it damaged in a flood or storm?

Are you making a flood claim?

If not and the money is coming out of pocket, then how would the 50 percent rule or FEMA even come into play?



Old 02-14-2020, 06:45 AM
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Most municipalities will make the 50% decision off of tax value versus appraised value. This rule is only a big deal if you want to move quickly with your remodel. Example: If you only do part of your planned remodel right now which happens to be 49% of the value, then one year after completion, you can apply for a permit to do the rest with no problems.
Old 02-14-2020, 06:46 AM
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Originally Posted by bluewaterider View Post
Most municipalities will make the 50% decision off of tax value versus appraised value. This rule is only a big deal if you want to move quickly with your remodel. Example: If you only do part of your planned remodel right now which happens to be 49% of the value, then one year after completion, you can apply for a permit to do the rest with no problems.
This. Can you phase it to get around the rule? I'm sure there are timelines attached to the rule you'd have to look into. Strongly doubt you can just pull a permit, finish that part, then pull another and it will be all honky dory.

Last edited by acme54321; 02-14-2020 at 06:54 AM.
Old 02-14-2020, 06:47 AM
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Originally Posted by CR295 View Post
Maybe I'm misunderstanding your question but,

Was it damaged in a flood or storm?

Are you making a flood claim?

If not and the money is coming out of pocket, then how would the 50 percent rule or FEMA even come into play?
The house was old, nobody lived in it and was ignored for a very long time.

Since the house is in a Floodzone (AE 8), I must adhere to the FEMA rule.
Old 02-14-2020, 06:48 AM
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Do the job in 2 stages. That way you stay under the 50% rule. You can still take all the cash needed at the start but pull permits for some of the work, then when that is finished pull the permit for the remainder.
Old 02-14-2020, 06:48 AM
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The key to solving the problem is having an architect draw up your plans and make sure his estimated value for the work is less than 50% of the value when you apply for the permit. You may have to leave some items off your plans and either add them later or after you've closed out your permit.
Old 02-14-2020, 06:52 AM
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Originally Posted by bluewaterider View Post
Most municipalities will make the 50% decision off of tax value versus appraised value. This rule is only a big deal if you want to move quickly with your remodel. Example: If you only do part of your planned remodel right now which happens to be 49% of the value, then one year after completion, you can apply for a permit to do the rest with no problems.
Unfortunately in Charleston County, the time frame for cumulative substantial improvements is 5 years and not 1 year. We were wanting to be moved in by EOY.

Old 02-14-2020, 06:55 AM
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Originally Posted by Widespread843 View Post
The house was old, nobody lived in it and was ignored for a very long time.

Since the house is in a Floodzone (AE 8), I must adhere to the FEMA rule.

So what is the elevation of the top of your first floor? And what is the freeboard?
Old 02-14-2020, 06:57 AM
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Yes we ran into this issue back in 2006 when we were looking for a home to remodel on the water in St Pete. The regulations had been in effect for a while but didn't start being enforced until after Katrina. We bought the house had to tear it down and built a new foundation above the BFE. There was no way to do a full remodel and stay within the regulations without dragging out the job for years.
Old 02-14-2020, 06:58 AM
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Originally Posted by Widespread843 View Post
Unfortunately in Charleston County, the time frame for cumulative substantial improvements is 5 years and not 1 year. We were wanting to be moved in by EOY.
Exactly, its the govenrment but they aren't completely stupid LOL. Your options are to do it right and comply with the rule ($$$) or do a lower quality remodel to stay under the rule. You can always go back in and do unpermitted interior remodeling a bit after it's done and hope you don't get caught...
Old 02-14-2020, 07:08 AM
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No getting around it. You go and spend money below the amount then the A/C goes out or there is damage to the house and you are out of luck and a bunch of money down the drain. Counties are nuts about this because they can lose their Federal Flood Insurance program for allowing over 50%.
Old 02-14-2020, 07:16 AM
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My father was looking at real estate in FL, and I did a lot of research on this. It seems the other problem is future disasters. 5 years is tougher than one year, but lets say over 6 years you get all your remodels done. Then a hurricane hits and does more than 50% damage to your house. From my understanding your insurance only pays to fix the dwelling, and it surely won't be enough to bring up to modern code. So you leave yourself open for future liability also. They (FEMA) really want these old houses gone and above flood elevation. It does kind of make sense.
Old 02-14-2020, 07:16 AM
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Gotcha now. Obviously its pre-FIRM and its brick so raising it is out of question, despite all the other hurdles, does it presently comply with NFIP elevation standards?

That might be your biggest obstacle for any note will require flood insurance.

I agree, if there is any way to borrow money from friends or family and keep banks, county and NFIP out of it, it would be much simpler. Jumping thru all the hurdles might not be worth it.

Does the county already know its condition? Was it condemned?

Old 02-14-2020, 07:25 AM
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Originally Posted by CR295 View Post
Gotcha now. Obviously its pre-FIRM and its brick so raising it is out of question, despite all the other hurdles, does it presently comply with NFIP elevation standards?

That might be your biggest obstacle for any note will require flood insurance.

I agree, if there is any way to borrow money from friends or family and keep banks, county and NFIP out of it, it would be much simpler. Jumping thru all the hurdles might not be worth it.

Does the county already know its condition? Was it condemned?
Luckily the house doesn't need to be raised. It does currently have flood insurance, and the county doesn't have any idea what the inside condition is like so it isn't condemned.

The biggest cost constraint, is that we have to replace the entire subfloor including joists due to moisture issues over the years and some termite damage. By the time we replace the subfloor, electrical, plumbing, HVAC, Windows, we are pretty close to the 50% rule.

Last edited by Widespread843; 02-14-2020 at 07:33 AM.
Old 02-14-2020, 07:37 AM
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In Hernando County, FL it used to be a 5- year cumulative 50% rule. Some individuals started doing some digging and determined that it wouldn't have a negative impact to the county's rating with FEMA if the rule was changed to a per event basis. After it was explained to commissioners that many of the homes in Hernando Beach weren't being rehabbed/updated due to fear of the 50% rule, the county approved the change to per event. This is a big deal as the way the rule was written prior, say you have a $100K value home and install new impact windows and doors ($15K), maybe update the kitchen ($20K), you would only have a $15K buffer for the remaining period left before the cycle restarts. What if there's a small kitchen fire, plumbing leak and causes damage, etc., you might have to tear down your house to build to current code over something that wasn't even a natural disaster. With the new change, as long as no one event exceeds 50%, it's a non-issue. This may be worth doing some research on your end to see if it's an option. Granted, it probably won't happen overnight.
Old 02-14-2020, 08:01 AM
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Originally Posted by Widespread843 View Post
Has anyone on the board run into this issue with the FEMA 50% rule?

I had an old house passed down to me, that is not livable right now. We want to renovate it, and live in it since it's a nice brick house that sits on a very nice piece of property. The cost to renovate the house exceeds the 50% rule, and if we had to bring everything up to code like the county would want the costs would sky rocket.

Hoping to get some information from any contractors, or home owners that have run into this rule and to see if there are any tricks or ways around it?

I'm going to take a Fannie Mae Home Renovation Loan to do the work, so it would not be personal money. If it was my own money, we were going to by pass some permits but unfortunately cannot do this.
i would also consider any local/laws regs

i think some locales require you to bring things up to code if you make certain types or large scale rennovations
Old 02-14-2020, 08:16 AM
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I've worked in construction here (also Charleston) since 2003 and ran into this numerous times. In a previous life, I was a designer for a very high end pool company here in Charleston. An expensive pool/spa/deck, tied with some other related home improvements would often push these houses over 49%, which would trigger the alarms. The most common two ways around it are to have a contractor "sharpen his pencil" (wink wink) to get the numbers down - that's a very common practice and one that I'm sure the municipalities know about, but seem to look the other way. When filling out permit applications, there is a lot of trust granted that the applicant will state the true value of construction...

The second way is to spread the work over several years. I thought the rule was 3 years, but I noticed you said 5 in a reply. That 5 year thing must be new (I'm still in construction here, just more on the development side now) and haven't dealt with that in several years.. Or - it's always been 3 and I just am confused - I can't really remember.

You can also try and GC the work yourself, which you are legally allowed to do, since you plan on living in the home (requires a form filled out and recorded with the RMC). Contractors aren't cheap right now - if you're capable, know your subs and all - you could likely shave 20-30% off your final tally and that may bring it down.

Getting a loan for this work though, that creates some additional issues, and I don't know that any of these ideas above may be feasible. I would have an honest discussion with your lender and see if they have any ideas. If you plan on staying in the home for many years, 5 years isn't that long in the grand scheme of things, if you could space out the work.


In all, this law sucks for a lot of people (I am also one of them). Most of the time, you hit 50% and it requires bringing it up to code (i.e. raising the house 2+ feet), which often isn't a realistic endeavor. That makes the home nearly worthless and requires the home to be demoed. You have some beautiful old home on some picturesque piece of waterfront and the property is worth more with the house gone. Demo the house, sell the property and some Ohioan or NJ retiree couple with a couple million in the bank snatch it up and build their retirement home on it. I've seen it more times than I can count. It sucks - a perfect storm of what happens when the federal government and the insurance industry get in bed together..

As to me, we purchased a home on a creek in MP a couple of years ago. It's 2' below flood (will be 1' if we ever adopt the new maps) - any larger-scale renovation would require raising the home - or more likely, demo and rebuild. Fortunately for me, we're still pretty deep into a substantial mortgage - the thought of any reno of that scale is out of the question for a few years and our flood insurance isn't so bad that it's a necessity to do anything that drastic at this point.

Sorry I can't be of more help, but I'm well aware of this issue - both as a contractor and as a homeowner. If you have any other questions or anything, let me know.

And cool screenname, btw. Seen WSP more times than I can count.

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