In the wake of Hurricane Debbie, Hurricane Helene, and now Hurricane Milton, which have left widespread devastation in southwest Florida, there is no storage shortage of property owners dealing with the aftermath of flooding. As remediation begins, a common question is the FEMA 50% rule. The 50% rule, while always applicable to home improvements or renovations, is also applicable when those repairs or improvements are being made in relation to a natural disaster or other unexpected event.

What is the 50% rule?

The FEMA 50% rule is a National Flood Insurance Program (NFIP) regulation that limits property improvements to under 50% of a property’s market value before imposing additional requirements on the owner for standards of improving the property.

Who does it apply to?

This rule applies to all properties located in a Special Flood Hazard Area (SFHA). In the event that the damage to the structure is less than 50% of the market value, then an owner can make all of their desired repairs as planned. If the cost exceeds 50% of the market value, the structure is deemed to have substantial damage, and an owner may be required to ensure that the entire structure is updated as needed to meet current flood regulations.

How is market value calculated?

Market value is calculated differently in different jurisdictions, it is always recommended to consult with your local building department to ensure you have the appropriate calculation. Generally speaking, the value is tied to the building value assigned to the structure on your tax bill with an adjustment. For example, in Sarasota County, it is the building value + 20%.

How is the cost of repairs calculated?

The costs are calculated to include all costs for items being purchased including appliances, repairs to other parts of the structure occurring at the same time, costs for materials, and labor. Costs for surveys, development plans, and specifications, as well as the permits themselves, are excluded from the calculation.

So the 50% rule applies, now what?

One option is to reduce the scope of work so that it is less than 50% of market value and avoid triggering the rule. This option may not be practical in instances where you are remediating damage, in which case it is important to work with your local building department to ensure you understand what additional items outside the scope of your original plan may be required – these could include additional steps like elevating the structure above the base flood elevation, using floodproofing, etc.

Ultimately, the goal of the rule is to ensure that as structures are repaired or rebuilt, they are being made more “floodproof” to help mitigate future damage. Should you have any questions about the applicability of the 50% rule to your property, please contact your local trusted real estate attorney.