We are making a construction loan secured by a property in a flood zone which has a house on it. The property is to be subdivided, with two houses built on it and the existing house demolished. Would flood insurance be required if the existing house is "carved out" of the collateral securing the loan?

Any responses are greatly appreciated.

Thank you.

Sure - but good luck structuring a deed that carves out a current structure and not future structures - you need to get with your legal counsel. Plus - what happens when this goes south from the get go. You going to have them move their house that you don't own? Sometimes it is just better to comply.