We have a commercial loan secured by an apartment complex on 12 acres that includes 24 separate buildings. The SFHD states that the address listed for the apartment complex is not located in a flood zone. However, the appraisal showed that one of the apartment buildings is located in a flood zone. We required the borrower to obtain flood insurance on the one building. We need the borrower to sign the flood notice, however, the flood notice states that the property is not in a flood zone. In this situation, do we even need the borrower to sign the flood notice? Has anyone ever run across this situation, and if so, how did you handle it?

You cannot rely on a flood hazard determination that you got in an appraisal as a third-party provider because the appraiser does not give you an indemnification or guarantee of accuracy. You need to go back and get a redetermination from your normal FHD vendor and have them use the legal description and not an address. I would personally also be looking for aerial overlays with the flood zone map.

I agree with Randy that you can't rely on a determination in an appraisal. That said, you always have the right to require flood insurance for safety and soundness reasons - if you want to. For me, the determination in your appraisal would raise a flag that would have me going back to my flood vendor to manually review this (or I would do it myself). Any time there is a discrepancy, I would want my team to figure out who is right, as someone is wrong. As Randy explained, some flood determination vendors rely on an address which isn't as accurate as looking at a map and the location of all structures. Reviewing the maps wherever there is a discrepancy will help you to understand whether the structure is actually in a high-risk flood zone or not.