ask george & chuck
Nov. 5, 2007

Closing costs, flood zone areas ...
Answers to real estate questions as appearing
in the Houston Chronicle

Dear George: I understand that several closing fees, such as title, are regulated by the state. Could you please point me to a simple guide for closing costs so I can determine what's normal and reasonable?

Answer: Unfortunately, there is no guide for closing costs. However, an example of typical closing costs can be found in Section 12 of the Texas Real Estate Commission One to Four Family Residential Contract (Resale). The owner's title insurance policy premiums are typically paid by the seller; the title insurance premium issued to the lender is usually paid by the buyer. Check out this sample rate sheet that provides the owner (mortgagor) and lender (mortgagee) title policy rates.

Dear George: Two weeks ago, I signed a contract on a new house. I desposited the earnest money and paid an appraisal fee to the bank. I also initialed Texas Association of REALTORS® form 1414, Information About Special Flood Hazard Areas. My agent tells me she just found out that my home is in a flood zone. There are 11 new houses on the same block as mine, some of which must also be in the same flood zone. I believe that the builder knew that this house was in the flood zone. Doesn't the builder have to disclose that the house is in a flood zone?

Answer: Visit the Federal Emergency Management Agency's Web site to learn about flood zones and special hazard areas. Before a builder can begin construction, there is a lengthy permitting process; one of the permits involves elevation and whether or not the construction site is in an area that has been designated by FEMA as a high risk of flooding area. Before you purchase any home, you should, as Texas Association of REALTORS® form 1414 states, consult with your insurance agent to determine if the home is in an area designated as a Flood Zone V or A; both are special flood hazard areas.

Texas REALTORS® are not qualified to provide interpretations of flood zone maps. They should discuss potential flooding issues with you and provide form 1414. Your REALTOR® apparently included the form as part of the representation agreement and may have also discussed the possibility of flooding with you. The builder has no obligation to disclose flooding issues to you as long as he obtained all necessary permits. However, the builder or his representative should answer direct questions regarding the various flood zone designations.