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Building a Shop on Lot in SFHA

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  • #203508
    kwatson
    Participant

    I am working on a consumer real estate loan on an empty lot to build a shop. The empty lot is in special hazard flood area. Since there is not currently a structure on the lot, the insurance company cannot issue a flood policy. However, we are loaning the funds up front. Is it okay to fund the loan without the policy considering there is not yet a building, and just make sure we get the policy as soon as the building is complete, or how should we proceed with this transaction regarding the flood?

    • This topic was modified 1 week ago by kwatson.
    #204301
    jholzknecht
    Keymaster

    It appears that you are making a loan to build a building on property located in a special flood hazard area. Flood insurance is required. If the insurance company doesn’t understand how to insure a construction loan, finding a new insurance company may make sense.

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