After the Flood—Strategies for Protecting the Value of Your Home
During the recent historic flood event, thousands of homes across south Louisiana were inundated with floodwater. For most homeowners, the recovery process has just begun. Information on possible funding, temporary housing, or other assistance is available from FEMA and other organizations. But if you own a flood-impacted home, you face another significant and perhaps more long-term question: What can you do now to protect the value—including the resale value—of your home? The following are a few points to consider and suggestions.
Disclosure of Flood–Related Issues
Louisiana law requires a seller of residential property to complete and provide to the prospective purchaser a property disclosure form prescribed by the Louisiana Real Estate Commission (LREC). The LREC property disclosure form includes the following questions, among many others, that must be answered by the seller:
"Has any flooding, water intrusion, accumulation, or drainage problem been experienced with respect to land? If yes, indicate the nature and frequency of the defect at the end of this section."
"What is/are the flood zone classification(s) of the property?"
"Has any structure on the property ever taken water by flooding (rising water or otherwise)? If yes, give the nature and frequency of the defect at the end of this section."
"Has there been property damage related to the land or the improvements thereon, including, but not limited to, fire, windstorm, flood, hail, lightning, or other property damage? If yes, were all related property damages, defects, and/or conditions repaired?"
"Does the property or any of its structures contain any of the following? Check all that apply and provide the nature and frequency at the end of this section. . . . mold/mildew. . .toxic mold. . .contaminated drywall/Sheetrock."
"Were any additions or alterations made to the property? If yes, were the necessary permits and inspections obtained for all additions or alterations?"
So not only should the seller disclose flood-related issues to the buyer as a matter of good faith, the seller is required to do so by law.
Note also that Louisiana law requires licensed home inspectors to describe in their inspection reports the presence of suspected mold growth if visual evidence of mold is discovered inside the home. A mold inspection is outside the scope of a standard home inspection; however, if the home inspector observes mold, he must say so in the inspection report.
Past flood damage and current mold issues have the potential to negatively impact the value of your home. So what should you do?
Protecting the Value of Your Flood-Impacted Home
A key factor in protecting the value of your home will be how well you can demonstrate to prospective purchasers, appraisers, inspectors, lenders, insurers, and others that the flood-related damage was properly repaired or otherwise addressed. What you do now will impact the future value of your home. The following are a few suggested strategies:
Insurance and FEMA Claims
Involve insurance and FEMA adjusters in the process as early as possible, ideally before conducting demolition, rebuilding, or remodeling work. All FEMA adjusters must be certified through FEMA. If you have flood insurance, the FEMA adjuster likely will not make an adjustment until you have settled on your flood insurance claim. Settling with the flood insurance claim does not preclude the ability to make a FEMA claim.
Insurance coverage for mold damage under homeowners, flood, comprehensive general liability, and other policies will depend on the particular facts and policy language. Certain policies issued in recent years likely contain mold and/or pollution exclusions, although there are indications that these provisions may not exclude coverage under all circumstances.
Do It Right and Document Your Actions
Proper repair of your home will involve a multistep process, including (i) the cleanup phase, (ii) the demolition phase, (iii) the drying–out phase, (iv) the mold assessment and, if necessary, remediation phase, and finally (v) the rebuilding or remodeling phase. Don’t rush. To the extent practicable, proceed step-by-step in the order described below. Take the time to do it right and document the actions you take by keeping a file that includes photographs, purchase orders or invoices, permits, agreements with contractors, and similar documents. The file could also include a summary prepared by you of the actions taken. This file could then be made available, upon future requests, to prospective purchasers and other interested parties.
The CleanUp Phase
Before beginning the demolition phase, remove all of your damaged furniture and other belongings in order to salvage what you can of your personal property and avoid damaging those items in the demolition phase.
The Demolition Phase
The demolition phase will vary depending on the circumstances, but will often include the following actions:
Pull out and remove all carpet.
Pull up and remove all wood flooring.
Pull up and remove all ceramic flooring.
Cut out and remove Sheetrock:
If flooding in your home was below four feet, Sheetrock should be cut out at four feet and below.
If flooding in your home was above four feet, Sheetrock should be removed to the ceiling height of eight-foot ceilings. If ceiling heights are above eight feet and the existing Sheetrock is in eight–foot sections, removal of Sheetrock to eight feet may be sufficient. In some locales, a remodeling permit must be obtained before conducting this work. Check the parish and municipal ordinances. Remove all wet insulation.
Obtain all required permits. In some locales, an electrical permit must be obtained in order to move electrical wiring and outlets if electrical outlets were underwater. Check the parish and municipal ordinances. This may also require the removal of more Sheetrock. Some homes built in the 1970s used gypsum board rather than plywood in the brick veneer process. If your home was built under that protocol, then you may be required to treat the gypsum board; in some cases that could require removing the brick veneer.
Pull out and remove bottoms of cabinets.
Open up tub and shower enclosures to the extent required to determine whether water is trapped behind them. If water is trapped behind these enclosures, remove them.
Pull out door frames and doors.
The Drying–Out Phase
The purpose of this phase is to be sure all of your wood framing is free of moisture. The moisture content in this step is not to be confused with the humidity content referred to below.
Bring in and run dehumidifiers in the home until the moisture content in the wood framing, as shown by a moisture detecting device, is 15 percent or below.
The house should be closed up while the dehumidifiers are running. Once the moisture content of the wood framing is 15 percent or below, move to the mold assessment and remediation phase.
The Mold Assessment and Remediation Phase
There is no single certification that you can obtain to confirm that you have followed the appropriate steps in the demolition and drying–out phases (described above). However, you may not be able to obtain a report from a licensed mold remediation contractor unless the above steps have been properly addressed.
After the above steps have been addressed, an assessment of mold conditions in your home can be obtained. The person who performs the mold assessment is required by law to provide a written report to the homeowner. This report should be retained in your file.
If necessary based on the results of the assessment, mold remediation should be conducted. Before mold is treated by spraying, the humidity in the house should be maintained at 50 percent or below. Louisiana law prohibits the same person from performing a mold assessment and mold remediation on the same property. Mold remediation contractors are required to have a mold remediation license issued by the Louisiana State Licensing Board for Contractors (LSLBC). The LSLBC maintains a list of mold remediation contractors on its website. Also, any person who applies biocides must have a pesticide applicator’s license from the Louisiana Department of Agriculture (DOA). The DOA maintains a list of licensed pesticide professionals on its website. The mold remediation contractor should provide documentation of any remediation it performs, and you should retain this documentation in your file.
The Rebuilding or Remodeling Phase
Generally, you should complete each of the preceding phases before beginning rebuilding or remodeling. In particular, all required permits, including those mentioned above, should be obtained before beginning this work. As noted above, whether all permits were obtained must be disclosed to the prospective purchaser on the property disclosure form. Only licensed contractors should be hired to perform this work.
1 (La. R.S. 9:3198.)
2 The LREC property disclosure form is available here. An amended version of the form will become effective on January 1, 2017; however, the amended form does not change the disclosures discussed in this article.
3 (La. R.S. 37:1478.A.(2).)
4 The Louisiana State Board of Home Inspectors maintains a list of licensed home inspectors on its website.
5 (La. R.S. 37:2187.A).
6 (La. R.S. 37:2187.B.(1).)
7 (La. R.S. 37:2185.)
9 (La. R.S. 3:3243; LAC 7:XXIII.723.)