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#2024293 - 07/01/15 01:50 PM Detached Structure Exemption
Adam F Offline
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VA
(c) Any structure that is a part of any residential property but is detached from the primary residential structure of such property and does not serve as a residence. For purposes of this paragraph (c):

I have a question concerning the detached structure exemption listed above. Does this mean their has to be a primary residence on the property before you can exclude other non residential structures from obtaining flood insurance?

For example: A loan is secured by property at the lake. There is no primary residence, but their are places for campers. There is a shelter on the property that is walled and roofed. The shelter is in the flood zone. Is flood insurance required or not?
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Flood Compliance
#2024301 - 07/01/15 02:00 PM Re: Detached Structure Exemption Adam F
rlcarey Offline
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It does have to be a primary residence, just a residence:

Detached means:

“a structure that is a part of a residential property” is a structure used primarily for personal, family, or household purposes, and not used primarily for agricultural, commercial, industrial, or other business purposes;
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#2024315 - 07/01/15 02:07 PM Re: Detached Structure Exemption Adam F
Adam F Offline
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Okay. So it can be any type of residence.

But if no residence is on the property, even though the property may be zoned as residential property, then we would have to require flood insurance on any walled and roofed structures?
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#2024319 - 07/01/15 02:11 PM Re: Detached Structure Exemption Adam F
rlcarey Offline
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Correct.
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#2024603 - 07/01/15 09:19 PM Re: Detached Structure Exemption Adam F
Red Raiders Offline
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May be a dumb question but did this go into effect with the passing of the act in 2014 or does it become effective in January 2016 like the escrow provision?
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#2024608 - 07/01/15 09:26 PM Re: Detached Structure Exemption Adam F
rlcarey Offline
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It went into effect in 2014, but the actual definitions were just released.
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#2024618 - 07/01/15 09:43 PM Re: Detached Structure Exemption Adam F
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Phew! That's a relief. We did a loan recently where the residence was in Zone X but there was a "man cave" type building (not a residence, although there are a couple of bedrooms in it or does this count as a residence even though it's not used as one????) in Zone AE that we didn't have flood insurance on.
Last edited by raiders; 07/01/15 09:55 PM. Reason: clarify
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#2024633 - 07/02/15 01:14 AM Re: Detached Structure Exemption Adam F
rlcarey Offline
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You need to read the preamble to the regulation. I think you are out on thin ice.
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#2024661 - 07/02/15 01:10 PM Re: Detached Structure Exemption Adam F
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Will do. Thanks for the insight, Randy. My joy was short-lived!
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#2024742 - 07/02/15 04:03 PM Re: Detached Structure Exemption Adam F
Kathleen O. Blanchard Offline

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Actually, if you go to the "exemptions" section of the rule itself it says the following:

"Serves as a residence" shall be based upon the good faith determination of the [national bank or federal savings association - I used the OCC section] that the structure is intended for use or actually used as a residence, which generally includes sleeping, bathroom or kitchen facilities."

So you don't even need the preamble to see it doesn't have to be a full house.
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#2024757 - 07/02/15 04:41 PM Re: Detached Structure Exemption Kathleen O. Blanchard
Adam F Offline
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Does this mean if you have a picnic shed with a bathroom attached to it, that it would be considered serving as residence?
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The answers I give are my opinions. Not legal advice.

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#2024759 - 07/02/15 04:45 PM Re: Detached Structure Exemption Adam F
Kathleen O. Blanchard Offline

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Keep "good faith" in front of you. I would not consider just a bath to cross the line.
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#2024768 - 07/02/15 04:54 PM Re: Detached Structure Exemption Adam F
Kathleen O. Blanchard Offline

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The preamble that Randy mentioned has discussion on the lender's obligation to examine the facts and circumstances to determine if someone could live in the space. Because the "man cave" space has been set up with sleeping space and presumably has at least one bathroom, it likely could serve as a guest house for overflow from the main house. To me, that would take it out of exemptable space.

There is no hard and fast rule; each situation must be reviewed.
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#2024844 - 07/02/15 07:59 PM Re: Detached Structure Exemption Adam F
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I would be hard pressed to consider a man cave with additional sleeping arrangements not being used as part of the residential property. If the guy is a sports nut or his wife gets pissed at him, I can tell you where he will be living. smile
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#2024911 - 07/02/15 10:02 PM Re: Detached Structure Exemption Adam F
Kathleen O. Blanchard Offline

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Yep.
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