Buying Topsail Island Real Estate Q/A

1. What are several reasons to purchase coastal property?

#1 is the right for enjoyment, long weekends, week vacations at the beach with the family. Coastal Property is also limited therefore it is a great investment as even with short "lulls" in the market, your property is sure to appreciate. Some coastal properties are ideal for the vacation rental market which can help to subsidize your mortgage payments somewhat. Also speak with your accountant about the tax breaks that may be available through second home ownership.

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2. Is Topsail Island prone to storms?

No, no one location is prone to more storms than another, it is not meteorologically possible. Topsail Island went almost fifty years without a direct landfall of a hurricane until the late 1990's. Topsail Island has not had a significant storm make landfall since, although other areas have. Weather patterns change, thus storm tracks change. Furthermore, most areas have natural disasters of some kind. You should although always prepare for a storm by maintaining your insurance policies and your property just as you would against fire or theft in your primary residence.

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3. Are there concepts or items that I need to be aware of before buying coastal real estate?

Yes, there are, many of which are on this page of our site. We also advise you to talk with your insurance agent and mortgage company before making a purchase decision. Also ask for a copy of this brochure (Buying Coastal Real Estate) to better inform yourself. Our agents are very familiar with coastal property, owning their own coastal property, and are obligated to inform you during the purchase process.

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4. Can I get insurance for damage resulting from erosion and flooding?

Possibly. You may be able to purchase a flood insurance policy which is usually separate from a standard homeowner’s policy. The National Flood Insurance Program was established by Congress to make flood insurance available nationwide to eligible properties. Policies issued under the National Flood Insurance Program include conditions and costs dictated by federal requirements. The federal government in turn guarantees to pitch in if losses occur—thus encouraging private companies to write affordable policies for areas that might normally be considered too risky. Large discounts on premiums often are available for buildings constructed above minimum standards. For example, discounts are available for buildings elevated on pilings higher than required to avoid storm surge flooding. There is a limit to single-family home coverage under the NFIP. Owners should inquire about these limits. If the owner wishes to purchase excess flood coverage, or if the property is not eligible for the NFIP, the owner may be able to procure flood insurance coverage from a private insurer. Private insurers regularly reassess whether or not to offer coverage.

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5. Is flood insurance mandatory for coastal property?

No law requires that an owner buy or maintain flood insurance. However, federally insured lenders,
including mortgage companies, banks and savings and loan associations require flood insurance for the life of their lien if the property is in an identified flood prone area. Failure to maintain coverage may permit the lender to declare the balance of the loan due and payable. Flood-prone areas are identified on Flood Insurance Rate Maps, which should be available at the local building official’s office. If your building is not in a flood-prone area or you haven’t secured a mortgage to purchase your property, flood insurance is optional. However, when building or buying near the ocean, flood insurance is always a good idea, even if it’s not required..

[For information about flood insurance and discounts, contact your local building official, insurance agent, N.C. Department of Insurance or the federal Flood Insurance Program.]

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6. What are the limitations of flood insurance?

Federal flood insurance covers only structural damage—including damage from waves—caused by flooding. As a rule, damage caused by chronic, long-term erosion is not covered. However, since most erosion that causes structural damage is associated with coastal storms, coverage is often available. Furthermore, a federally-backed flood insurance policy covers only damage to the insured structure. It does not cover damage to land caused by flood, wave or erosion. And, it does not cover damage from other events, such as hurricane-related winds. These same limitations may apply to privately underwritten insurance. When a structure is so badly damaged that it cannot be repaired or rebuilt, an owner may receive all benefits under the flood insurance policy and discover the coverage is inadequate to cover the cost of removing the structure and/or repaying the loan. In addition, the value of any remaining land may decline significantly if the land is declared “unbuildable.”

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7. Can I get insurance for wind damage to coastal property?

Many privately underwritten homeowner policies cover wind damage and water damage caused by wind; e.g. wind damage to a roof resulting in leaks. However, because of the high risk in coastal areas, some private insurance companies are excluding coverage for wind damage. For that reason, the N.C. Department of Insurance has established an insurance pool known as the “Beach Plan” to provide wind coverage in areas where it is not otherwise available.

[For more information about the Beach Plan or homeowner’s policy coverage, contact your insurance agent or the N.C. Department of Insurance.]

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8. Can I rebuild or repair my structure if it is damaged by a hurricane or other coastal storm?

It depends upon the extent of the damage. If damage is less than 50 percent of the building’s value, you may be able to repair it at its original location. But if the building is more than 50 percent damaged, repairs are considered substantial and must meet both new setback requirements and other new building code requirements. Rebuilding is prohibited if erosion has left insufficient space on the lot to construct landward of the setback.

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9. Do North Carolina’s ocean beaches experience “long-term” erosion?

Yes. Long-term erosion can be caused by a variety of factors, including rising sea levels. The ocean has risen about 6 inches during the last century, causing North Carolina’s barrier islands to migrate landward. Although this process can cause erosion along the entire oceanfront, areas adjacent to inlets are often the most profoundly affected. Some “migrating inlets” are constantly moving in one direction. Others may stay in the same general location but expand and contract constantly. These inlets are often called “oscillating inlets.” In addition to its natural causes, erosion can be set in motion by human activities. For example, a jetty constructed to stabilize an inlet or a structure built to stabilize a beach can trap sand on one side but increase erosion on the other. Such erosion will continue until the structure is removed or the beach adjusts.

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10. Will I automatically be informed about erosion and erosion rates?

Not necessarily. Although the original developers of oceanfront property are informed of erosion hazards when they apply for a building permit, North Carolina law does not specifically require that the information be disclosed to subsequent buyers. Purchasers should be sure to research coastal hazards. If you are working with a licensed real estate agent, the agent has a duty to disclose material facts that the agent knows or reasonably should know. Although real estate agents may not always know the erosion rates for particular oceanfront properties, they should advise you of the possibility of erosion and direct you to available sources of information. If the agent knows the erosion rate of a particular property, the agent must disclose it to you.

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11. If I purchase undeveloped oceanfront property, where should I build on the lot?

North Carolina requires that new construction be a certain distance from the ocean. However, because the state’s ocean shoreline is volatile, it may be in your best interest to build farther landward than the minimum distances allowed. The Coastal Area Management Act (CAMA) authorizes the Division of Coastal Management to establish oceanfront setback lines for all development.
The setback is measured landward from the line of stable natural vegetation nearest the sea, usually near the base of the frontal dune system. All single-family homes and buildings of 5000 square feet or less, and their septic systems, must be located 30 times the historical, long-term erosion rate from this line, with a minimum setback of 60 feet. For example, if the long-term erosion rate is 3 feet per year for the shoreline of a particular lot, then the setback would be 90 feet (3 x 30) from the first line of vegetation. For large buildings (over 5,000 square feet), the setback is 60 times the long-term erosion rate or 30 times the erosion rate plus 105 feet, whichever is closer to the ocean. For such structures, the minimum setback is 120 feet. Other requirements may also apply. Local building officials are familiar with these and can locate the minimum setbacks on your lot. Please note that the required setback does not guarantee a safe location. In fact, it implies that if erosion occurs as expected, a building could be destroyed in 30 years—or about the time the structure is paid for under a traditional 30-year mortgage. If possible, it is generally wise to build well landward of the state’s minimum setback requirements.

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