[TheBank]

There is a property that has 3 buildings, the applicant’s home, a detached structure/barn that does not serve as a residence and is not used for commercial purpose, and a residential duplex. Only the barn is in a SFHA. Can we use the detached structure exemption for the barn? If the lot had the home only on it, then I think it would definitely meet the exemption for the barn. However, there is a duplex on the property as well, which would be for commercial purpose, so that makes me question if we can use the detached structure exemption for the barn.

Would the customer flood notice be required if we are able to use the detached structure exemption?

[rcooper]

I don’t think the duplex would preclude you from using the detached structure exemption since it is a residential structure used for personal, family, household purposes. Is the barn used for an agricultural purpose? If so, that would disqualify it from the exemption. Also consider the bank may want/need to insure the barn to protect the collateral or the customer may choose to insure it to protect their property.

The notice would be required.
“Notice requirement. When an FDIC-supervised institution makes, increases, extends, or renews a loan secured by a building or a mobile home located or to be located in a special flood hazard area, the FDIC-supervised institution shall mail or deliver a written notice to the borrower and to the servicer in all cases whether or not flood insurance is available under the Act for the collateral securing the loan.”

[Author]

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