Designated Flood Zones May Cause Additional Problems When Purchasing Real Estate in Massachusetts

In a recent Massachusetts case, Witkowski v. Endlar Ins. Agency & First American Title Ins. Co., the judge reversed a previous summary judgment decision for Endlar regarding a certificate of insurance for the plaintiff’s condominium unit.

Plaintiff, Witkowski, purchased a basement unit of a residential condominium in Andover, MA. The condominium is located in a floodplain area designated by the Federal Emergency Management Agency (FEMA) as an area of special flood hazard. Federal law, 42 U.S.C. § 4012a(b)(1) (2006), states that any lending officer or agency shall not approve any financial assistance for acquisition or construction purposes in any area that has been deemed as having special flood hazards, unless the building is covered by flood insurance.

Witkowski discovered that the building was located in a special flood hazard area and that in order to obtain a mortgage he would need to provide proof of flood insurance for the unit as a condition of closing. Endlar provided a certificate including the plaintiff’s name and unit number, as well as the two flood insurance policies in the amounts of $2.5 million and $9.8 million, with a signature confirming the information.

The condominium was damaged by a flood and plaintiff’s unit was completely destroyed. The condominium association told the basement owners that their units were excluded from coverage because of their location, and plaintiff’s unit cannot be rebuilt. Plaintiff is now trying to recover from Endlar for falsely representing the flood insurance coverage of his unit. The case has been remanded to the Massachusetts Superior Court who will further rule on this issue, but it is likely that plaintiff will be able to recover based on the evidence presented and the signed certificate by Endlar ensuring flood insurance.