Recently many Lake Martin area homeowners are getting letters from their lenders demanding flood insurance.  A little research revealed that FEMA has redrawn the flood maps and therefore many properties are now included in different zones that lenders feel require flood insurance.

This is puzzling to many, since Lake Martin has been around since the late 1920s, and FEMA is just now making this determination.  It is also confusing to me personally that a home that sits five feet above the top of Martin Dam would be considered at risk.  If there is five feet of flood waters pouring over the top of Martin Dam, the dam would wash away and suddenly there would be a 90 foot drop in the water.

If you are looking for common sense answers to the above questions, this post is not the answer.  Below I have copied over a handout that was written up by FEMA for the meeting and presentation they did to the Lake Martin Area Association of Realtors.  I was there.  They read these answers out and I guess it was helpful.  Later on I will post my thoughts, and a little more boiled down, practical guide of what to do if you get a demand for flood insurance from your lender.

If you have any questions on this, feel free to contact the two people listed at the bottom, one is from FEMA, the other fom the State of Alabama.

They opened the meeting by saying that they would not be debating FEMA policy and procedures and they were not here to comment specifically about Lake Martin.  I wondered, then why are you here?  At any rate, here is their handout:

***************************************

HANDOUT FROM FEMA:

FAQ Hand Out

Date: February 18, 2009

Presenters: Janice Mitchell, Federal Emergency Management Agency (FEMA), Region 4, Insurance Program Specialist

James K. Meredith, NFIP State Coordinator, ADECA

Subject: NFIP and Flood Insurance Requirements

Audience: Realtors, Home owners, Lake Martin Recreational Association, Lake Martin Home Owners & Boat Owners Association, Alabama Power Company personnel, Office of Water Resources personnel

Background

The U. S. Congress established the (National Flood Insurance Program (NFIP) on August 1, 1968, with the passage of the National Flood Insurance Act of 1968. This Act enables property owners or renters in participating communities to purchase insurance protection against losses from flooding.

Participation in the NFIP is voluntary. It is based on an agreement between local communities and the Federal Government that states if a community will adopt and enforce a floodplain management ordinance to reduce future flood risks to new construction in Special Flood Hazard Areas (SFHA), the Federal Government will make flood insurance available within the community. FEMA identifies the SFHA on the Flood Hazard Boundary Map (FHBM) or the Flood Insurance Rate Map (FIRM) as determined by the hydrologic and hydraulic studies developed for the flooding sources within that community.

The NFIP was broadened and modified with the passage of the Flood Disaster Protection Act of 1973 and other legislative measures. This act established the Mandatory Purchase Guidelines. These guidelines mandate that any federally regulated lender could not make, increase extend, or renew any loan secured by improved real property located in an SFHA in a participating community unless the secured building and any personal property securing the loan were covered for the life of the loan by a flood insurance policy.

The Act was further modified by the National Flood Insurance Reform Act of 1994 and the Flood Insurance Reform Act of 2004. These established requirements to escrow flood insurance premiums when escrowing for other purposes, grants authority for lenders and servicers to force place coverage if needed, enhanced flood hazard notice requirements, established fines for lenders found not be in compliance with the guidelines, established a 30-day waiting period for the policy to become effective unless connected to a loan closing and grants authority to the lender to charge reasonable fees for determination of flood zone.

1. What triggers a review by a lender of their mortgage portfolio?
Review due to flood map change
Review due to lender review policy
Review due to economic conditions
Review due to refinancing request
Review due to equity loan request
Review due to sale of structure/property

2. Who makes the determination concerning flood exposure to property?

The lender is responsible for making a determination based on the location of the structure in relation to the special flood hazard area as shown on the Flood Insurance Rate Map (FIRM). The lender also has the right to hire a third party determination company to make these determinations. The lender or the determination company is then responsible for completing the Standard Flood Hazard Determination Form showing their determination.

3.  Who is the final authority on requirement for flood insurance?

The lender is the final authority. If the structure is located within the special flood hazard area (SFHA) on the currently effective FIRM, they must require flood insurance if they have an insurable interest in that structure. If the lenders regulatory authorities perform a review of their files and find that they do not have flood insurance policies for structures located within the SFHA, that lender can face fines up to $100,000 a year.

4. What is the only government agency with the authority to “waive” flood insurance requirements?

There are only two reasons for waiving the flood insurance requirement:

a. FEMA has issued a new FIRM that is now effective and changes the zone designation to X, removing the mandatory purchase requirement; or

b. A LOMA or LOMR has been issued by FEMA changing the zone designation to X, removing the mandatory purchase requirement.

5. What is the only government agency with the authority to change a flood map?

FEMA

6. What is a “45 Day Letter”?

If during the course of a loan, the lender determines that the structure is located within the SFHA and flood insurance is now required they are required to provide written notification to the borrower that flood insurance is now required and proof of having a flood policy must be provided to the lender within 45 days.

If proof is not shown within the 45 day period, the lender can then force place a flood policy to protect their interest.

7. What should you do when you receive a “45 Day Letter”?

Contact your insurance agent to obtain a flood policy and provide a copy of the declaration page to the lender to prevent the force placement of insurance at a much higher premium.

If you feel that you should not be classified as being within the SFHA, you then have time to apply for a Letter of Map Amendment (LOMA) if the property is all natural grade or a Letter of Map Revision based on Fill, (LOMR-F) if fill dirt has been used to elevate the structure. If you are granted the LOMA or LOMR-F AND IF your lender agrees to accept the letter to waive the flood insurance requirement, you may then cancel the flood policy and obtain a full refund of the current policy year.

8. Why should the owner get his policy rather than letting the lender force place it?

The force placed policy will be at a much higher premium and is often difficult to cancel.

9. How does the home owner/business owner request a waiver from FEMA?

Re quests for a waiver are made through the LOMA or LOMR-F process using the MT-1 application form for single lot or structure requests. Multi-lot or multi structure requests also use the MT-1 application package. Once the application package and all the required supporting technical data are received, FEMA will compare the lowest ground elevation touching the structure to the base flood elevation for that location. If the lowest adjacent ground (LAG) elevation is at or above the base flood elevation, FEMA is issue the LOMA or LOMR-F changing the zone designation.

10. How long does this process take?

Single lot or structure request take approximately 4 weeks one all data is received. Multi-lot or multi-structure request take approximately 8 weeks to complete. This is provided that a new hydrology or hydraulic study was not required to develop base flood elevations. If a study is submitted, the review will take longer.

11. How long will the LOMA/LOMR-F cover the structure?

The LOMA/LOMR-F will follow the structure and remain effective until such time as a new hydrologic or hydraulic study shows that the base flood elevation is now lower for that particular area.

12.  What happens if FEMA does not issue a waiver?

If you have a mortgage and do not provide proof of a flood policy, the lender will force place a policy.

13. Can you avoid buying flood insurance?

Yes, pay off the mortgage

14. Will this requirement come up again if I pay off my mortgage?

Yes. If you sell the home and the buyers are taking out a mortgage, a determination will have to be made. They would have to purchase a flood insurance policy before they could close on the loan. This may cause potential buyers to have second thoughts.

15. If FEMA waives the flood insurance requirement, can the lender still require flood insurance?

Yes, the lender has the right to require flood insurance regardless of what flood zone the structure is located.

16. What is a Preferred Risk policy?

The Preferred Risk Policy (PRP) is low-cost coverage available for eligible buildings located in the moderate-risk B, C, and X zones in NFIP Regular Program communities.

The structure must be within the B, C, or X zone on the current effective FIRM.

17. What is the annual premium for an average Preferred Risk Policy?

PRP average premium is around $300. Renters may also purchase contents coverage under the PRP starting as low as $39 for $8000 worth of coverage.

18. What is the Grandfather Clause pertaining to insurance coverage?

To recognize policyholders who have built in compliance with the Flood Insurance Rate Map (FIRM) and/or remained loyal customers of the NFIP by maintaining continuous coverage, FEMA has established the “Grandfather Rule”. For such buildings, the insured would have the option of using the current rating criteria for the property or having the premium rate determined by using the BFE and/or flood zone on the FIRM (old map) in effect when the building was originally constructed, for those built in compliance, or when coverage was first obtained for those with continuous coverage.

19. If there has been a new FIRM issued for the community, there are conditions that must be met to qualify under the “Grandfathering Rule”.

1. For those properties with a policy in place, it will be renewed at the same rate so long as the referenced level floor has not been altered to be below the base flood elevation. Example – unfinished basement altered into living space.

2. New Business – May be rated based on the FIRM zone and base flood elevation on the old map in effect on the date of construction, provided that:

a. The building was build in compliance with the map in effect at the time of construction; and

b. The building has not been altered in any way that has resulted in a lowering of the elevation of the rated floor; and

c. The structure has not been substantially improved.

The property owner must provide proper documentation to the insurance provider writing the policy. The documentation must show: the date of the FIRM; the zone on that FIRM in which the property is located; the base flood elevation, if any, for that zone; a copy of the map panel showing the location of the building and the rating element that is to be grandfathered. A letter from a community official verifying this information or an Elevation Certificate is acceptable.

20. Who is qualified in the State of Alabama to execute an elevation certificate and file a LOMA or LOMR-F?

In the State of Alabama, the elevation certificate must be completed by a licensed, registered professional surveyor or a licensed professional engineer that has the authority to complete field surveys.

The Letter of Map Amendment (LOMA) or Letter of Map Revision based on Fill (LOMR-F) may be submitted by the property owner, developer, city, county, surveyor, engineer, lender or flood-search company.

The technical documentation (elevation certificate, boundary survey, site plans, etc.) attached to the LOMA or LOMR-F package must be certified by a licensed professional surveyor or engineer.

21.  Would additional documentation be helpful in the LOMA filing process?

The completed MT-1 application package is required. The additional required documentation is:

Copy of the legal description shown recordation information
Copy of a subdivision plat or tax assessors map showing recordation information.
Certified boundary survey or site plan showing the locations of the structure.
Certified elevation certificate or the certified Elevation Information Form for multi-lots.
Copy of the FIRM marked to indicate the approximate location of the property in question. A FIRMETTE is acceptable.
If the property is in an approximate Zone A where the base flood elevation has not been established by FEMA, a base flood elevation developed by a professional engineer using FEMA approved methodologies will need to be developed and submitted. This could be a study developed using FEMA’s Quick-2 software which is available on our web site – www.fema.gov. It could be a study for the area that has not been submitted to FEMA and the community is using as “best available data” for compliance purposes.

22. What information, if any, could the Power Company provide to assist the home owner with application for a LOMA?

If a study developing the base flood elevations was produced on the lake or water source, the Power Company could provide the base flood elevation relevant to the property in question. If a study was not developed, historical flooding information, top of spillway or other information might be of assistance in developing a base flood elevation for the site.

23.  Why is the Power Company easement contour line not the same as FEMA’s 1% chance of flood contour delineation?

Many of the lakes developed by the Power Company were developed before the passage of the National Flood Insurance Act of 1968 or before there was any regulations to determine the base flood elevation. In most cases, some type of study was done by the Power Company, but it was normally based on flood events smaller than the 1% chance storm (i.e., 10% or 2% chance) which is what the FEMA designated SFHAs are based on. The 1% chance storm is a much larger event which means the easement line and the floodplain lines would not be the same.

24.  Does the Power Company easement contour line have any impact on flood insurance requirements?

The Power Company easement line gives the Power Company the right to use the land between the line and the water source for flood control purposes as needed. If the area is designated as a SFHA on the Flood Insurance Rate Map, the easement area is also considered to be a floodplain and/or floodway. This means it is still subject to all the rules and regulations adopted by the participating community. Permits are required for all development – building of docks, piers, structures, grading, paving, etc. Residential structures would have to be elevated to or above the base flood elevation as adopted by the community and would have to be equipped with the appropriate flood openings.

25.  Will FEMA insure houses built completely over water?

Buildings entirely over water or principally below ground, gas and liquid storage tanks, animals, fish, aircraft, wharves, piers, bulkheads, growing crops, shrubbery, land, livestock, roads, machinery or equipment in the open, and most motor vehicles are not insurable.

26.  What about other structures built over water?

If the structure is partially on land and partially over water it is insurable, but there may be some limitations on coverage.

27.  Do FEMA flood regulations (44 CFR) have any regulatory authority over recreational use of water resources within the State of Alabama?

FEMA regulations found in 44 CFR Part 60.3 through Part 70 applies to the development of the land within the special flood hazard areas. It does not apply to the recreational use of the water resource. That authority would depend on the “ownership” of the water source.

Contact Information

Janice Mitchell
Insurance Program Specialist
FEMA, Region 4
Phone 770-220-5441
Cell 404-694-5279
Fax 770-220-3117

Ken Meredith
NFIP State Coordinator
State of Alabama
401 Adams Avenue
P.O. Drawer 5690
Montgomery, Alabama 36103-5690
Office: (334) 353-0853
Fax: (334) 242-0776
BlackBerry: (334) 590-4756

A reader in the Lake Martin dot com forum posed this question:

Is there a shoreline zone owned by Alabama Power from the 491 level of Lake Martin to the start of private ownership? This is the case with some reservoirs.  If so, what is the distance?

There were some good answers in the thread, and I thought I would throw in a word or two here.  A copy of my answer is below, I thought Lake Martin Voice blog readers might be interested:

Watch your real estate definitions.

Easement – a granted right of one party to another, different from ownership. Like if you owned a 100 acre plot of land that has a power line going through it, you own the dirt, but the power company has been granted an easement to put a power line across it. A Lake Martin example would be where Alabama Power owns the dirt of the floor of the lake, but they give you an easement to build a dock over it, subject to their restrictions.

Setback – a rule that says even though you own the dirt, you can’t build / alter it in a specified zone.  The 30 foot rule on most of Lake Martin’s shoreline is a setback. Alabama Power (in a deeded lot, more than likely) doesn’t own the dirt, they just tell you (via deed restrictions) that you can’t build NEW CONSTRUCTION in this zone. Same deal with lot lines with your neighbor, perhaps enforced by the county or your subdivision. Again, you own the dirt, but are deed restricted (via the deed, set forth in conditions that you agreed to when you bought it) by this.

Shoreline – just because the water on Lake Martin is there doesn’t mean you necessarily own up to it. I have seen all sorts of things here. Sometimes you are in a subdivision that describes the lot as “lot x in the recorded plat of Y neighborhood” which means you then go to the plat at the courthouse (Tallapoosa, Elmore, or Coosa) to figure it out. Also I have seen “metes and bounds” descriptions where someone has gotten a surveyor to plot the shoreline, foot by foot, turn by turn. Also I have seen really old ones that just describe the shoreline side of the lot in such juicily ambiguous terms as the “shore of Lake Martin.”

The key here is that every lot on Lake Martin COULD be different. I have also seen lots that are so old or oddly recorded that the above easement and setback rules don’t apply.

Bottom line – ALWAYS get a professional (lawyer or closing agent) to do a very thorough deed / title search to know EXACTLY what you are getting when you buy. Get a survey, too. Before you build or alter anything, this will give you a good understanding of what the deal is. On Lake Martin the dirt is the most expensive thing, usually, so it pays to be sure about the dirt and the associated easements, setbacks, and other restrictions.

Lots of people enjoy Lake Martin by taking their RV to or camping in Wind Creek State Park. It has lots of sites on the waterfront, and is really a pretty park. As you can imagine, it can get crowded on the summer weekends with camping spots in high demand.

Recently this was a topic of discussion on the Lakes Online forum that is dedicated to Lake Martin. You can read the posts’ thread here. The general consensus was one of wishing for more options to RV or camp on the water, and why there aren’t more places like that around Lake Martin.

I chimed in on the thread, saying:

“this is a generalization, but usually land on the water is so expensive it is hard to make the numbers work for an RV park. Plus it is hard to find land on the water that doesn’t have a deed or neighborhood restriction against commercial use like an RV park.That said, there is plenty of land that is close to the lake that you could do it on. Maybe you could have the park, then boaters could go put in at a public ramp.

There are also some parcels here and there that are on or near the water that you might could do homes to rent and also park and RV. Just depends what you want to do. Email me if you would like specifics.”

Then someone emailed me anonymously (through the Lakes Online) and asked me the following questions:

“So do you have property on the water for sale? Everyone I talk to says sewer is the issue. You can pump sewer up hill to make it work. Thanks. ”

My response was:

“someone emailed me thru lakes online as an anonymous visitor, and asked the below question, I really don’t know how to email them back, so I will answer them here. Their questions:‘So do you have property on the water for sale? Everyone I talk to says sewer is the issue. You can pump sewer up hill to make it work. Thanks. ‘

Sewer / septic might be the issue in that you might have a hard time getting a system approved, but that is only on a lot by lot basis. It’s hard to make a call on the septic because it’s only approved by the county when you turn in a plan for that specific lot.That to me is the lowest of three hurdles for a project like this. the highest would be cost. If you were to buy a lot for $300,000, and it was only an acre, how many RV spots could you fit in there, 7, 8? If you can charge $50 a night, even if you rented it every possible night, would that be enough to float the debt on the $300,000, plus operating costs? Maybe you supplement by other income, I don’t know.

Second hurdle is zoning. The lot / land you buy would have to be approved for this use. Not saying it can’t happen, but it is a consideration.

Third hurdle is septic. Do you have enough land for a proper area for field lines, based on the amount of waste that will be discharging? Just a matter of math and money.

Again, I am not saying it can’t happen. There are a few spots around the lake that maybe, possibly, could work. You don’t know until you get into the details.

As to me sending you info on possibilities, please email me from your real account so that I can reply, or just call me.

I thought it might help to post the same to Lake Martin Voice, maybe other readers have the same question.

One final thought regarding Wind Creek: I have never tried this, so I disclaim all potential legal and ethical liability, but it seems that, in general, in theory, hypothetically, sometimes when you have a scarce product (like RV lots) that are monitored by salaried personnel (like Wind Creek employees) it seems that it helps to TIP the folks? Ha! Only kidding, of course.

Related Post:

5 Questions and Answers: Alabama Power Leased Lots on Lake Martin

Right now there is no one set of zoning rules that covers the entire Lake Martin area.  Why?  For starters, it stretches over three different counties, and most of the shoreline is not inside any cities’ limits.  It’s an old lake, developed in a rural area.  But, as things change, prices rise, and high end developments are created, more people start talking about a zoning plan that would control the entire Lake Martin area.

I have been hearing a lot of local and industry talk about this lately.  It seems that some mysterious document has appeared on the internets (insert grain of salt here) that purports to be a proposed bill for the Alabama legislature and would create a Lake Martin Planning Commission.  The Commission would create and regulate zoning for all of the Lake Martin waterfront and surrounding area.  You can see a copy of the document here on savelakemartin.com.

Is it for real?  Is it a hoax?  Who knows.  I certainly don’t.  Judge for yourself.  But it got my puzzler puzzling, ‘til my puzzler was sore.  Can “they” really do something like that?  Ain’t this America? If something like the Lake Martin Planning Commission was done, how would “they” do it?  If “they” could do it, would it be good or bad for Lake Martin?

I am no expert on zoning laws or Alabama lawmaking, so I talked to someone that is.  My resource had these interesting observations:

1.  Currently there is no proposed bill to create a Lake Martin Planning Commission or some such other Lake Martin zoning entity.  If you would like to search pending or proposed legislation, click here for the Alabama Legislature search site.  I can’t find one right now.  Maybe it’s being crafted right now and will pop up there tomorrow, but at this writing, there is no such bill.

2.  A Lake Martin Planning Commission as proposed would more than likely originate at the County Commissioners’ levels.  Since Coosa, Tallapoosa, and Elmore Counties would be ceding their right to zone and control part of their land, each county’s commissioners would have to agree on it, vote on it, pass it, and petition the State first before it would go before the legislature.

3.  Such an action would probably take more than one legislative session to approve.  Since there are so many moving parts, things like this take time.  So the public could have two chances at input, once at the county level and once at the state.

4,  There might be many opponents at the state level that might lobby heavily against it.  In the past, when other rural counties in the state have tried to set up special zoning for unincorporated areas, large insurance type companies have opposed it on the premise of looking out for the little guy.   

Disclaimer:  I do not have a crystal ball to predict the future.  I don’t have x-ray vision to pierce the proverbial smoke filled rooms of politicians.  “I am lowly priest from Honan province.”  I am not even saying that such zoning would be bad.  Part of me cringes at the mere mention of Orwellian sounding “commissions.”  But practically speaking, if the two landowners that control 99% of the undeveloped land around Lake Martin want to voluntarily limit themselves, well….  And it may very well be beneficial in the long run.  Who knows.  Whether this turns out to be true or a hoax, I doubt it will be the last time the subject comes up.

Lake Martin waterfront property owners are in one of three counties – Tallapoosa County, Elmore County, or Coosa County.  If you’re considering buying on Lake Martin, and are curious about property taxes, you would need to research all three counties to cover  of your bases.

There are some similarities, however, in that they all are governed by the state of Alabama’s property tax laws.   The property tax fiscal year in Alabama runs October 1 – September 30 every year. So the property taxes you would pay by December 31, 2007, were generated based on a snapshot of value taken on October 1, 2006.   Here is some info for further research:

Tallapoosa County – Click here for a link to the Tallapoosa County Tax Assessor.  The office number is 256–825–1046.  Click here for an online calculator for Tallapoosa County taxes.  It is a really good tutorial of how to translate assessment and millage rates to the actual taxes you might pay.  They use an example of a $100,000 single family home, not in city limits, which yields a tax of $300.00 per year.

Elmore County – Click here for a link to the Elmore County Tax Assessor.  The office number is 334–567–1184.   Click here for a link to their explanation of rates and here for the millage rates.

Coosa County – At this writing, Coosa County does not have its own website.  Click here for info.  The Revenue Commissioner is Charlie Luker, and is a heckofa nice guy.  His number is 256–377–4916.  Their rates may be a tad different from Tallapoosa and Elmore, but for planning purposes, they are about equal.

Online Research

All three counties employ third party websites to publish their property tax map and owner information.  The online sites are very useful, but take caution. The best way to determine current ownership is to do a deed search at the courthouse. Also, most of the time the lot lines are generally correct. But the best way to know your lot lines is to get a professional survey.

Many times the info online will only give you who was the owner on the previous October 1.   That said, sometimes the counties update a sale as the year goes along. Consider if John Doe owned a property at 10-1-07 and sold on 1–10–08 to Bob Smith. Many times I have seen where the will leave John Doe as the owner but have Bob Smith’s name and mailing address in the mailing address slot. Then when the next year rolls around, they bump John Doe off and Bob Smith is property owner. But this is only a case by case observation.

Need Help?

If you are thinking about buying waterfront property on Lake Martin, and need some help in sifting through all of the Counties, school districts, and tax zones, I would be glad to help you estimate what your annual property taxes might be.  As compared to other states, property taxes in Alabama are pretty low, so hopefully it will be a nice surprise.  Email me, come by my Kowaliga office,  or call my number at the top of this page.  I would be glad to help you out.

Alabama Power has leased waterfront lots on Lake Martin for decades.  Yet, so much rumor, speculation, and innuendo surrounds the topic it remains mysterious to many people, real estate agents included.

Allow me to try to bust the myth on this subject.

Why are there leased lots on Lake Martin?

Lake Martin was created in 1923 when the Southern Company (Alabama Power) built Martin Dam on the Tallapoosa River.  They bought up all of the eventual waterfront at the elevation of 490 feet above sea level.  Since old Mr. Ben Russell (founder of Russell Mills), already owned the damming rights to the Tallapoosa, the Power Company swapped him those rights for one half of the waterfront.  Pretty much every inch of the 700 miles of waterfront of Lake Martin at one time or another was owned by either Alabama Power or Old Mr. Ben.

When did Alabama Power begin to lease lots on Lake Martin?

Sometime around in the 1960s, Alabama Power allowed people to build homes on the waterfront, but they retained ownership of the land underneath the home.  The people own the sticks and bricks, the company owns the dirt.  The people paid a monthly lease to do so.  Over the years, depending on the opinions of officers at Alabama Power, the homeowners were given the chance to buy the dirt under their homes.  No rhyme or reason to it, some years they would decide to sell, other years they would institute leases.  That policy continues today.  Who knows, they may decide to start selling lots to leaseholders tomorrow.  They might not.

How does a lot lease work on Lake Martin?

These days, when Alabama Power leases a waterfront lot to homeowners, they have a written lease, just like you would for an apartment.  The lease specifies the monthly rate (currently around $400), the length of the lease (currently twenty years), and the yearly increase of the rate.  The key here is that every lot is different, so if you’re concerned, consult a lawyer.  Alabama Power assigns the lease amount when they offer new lots for lease.  They offer the lots in a bid system, meaning, the homeowners bid offers of cash to pay for the privilege of entering the lease.  If you are the top bidder, then you must pay the monthly lease rate on top of that.

What happens at the lease end?

Again, you must examine each lease to be sure of how it works.  But generally speaking, at the end of the lease, one of 4 things can happen:

1.  Alabama Power renews the lease
2.  Alabama Power sells you the lot
3.  Alabama Power buys the house from you
4.  You pick up the house and leave.

My family has been selling real estate in the Lake Martin area since 1953.  We have never heard of Alabama Power buying a house, or making someone move their house away.  Not that it is impossible, but it is, in my opinion, highly, highly, improbable.  Most of the time they either renew the lease or sell you the lot.  Once again, if in doubt, talk to a lawyer.

Can you sell a leased lot home?

One word answer – YES.  There are plenty of great leased lot homes for sale now (like this one) on Lake Martin and many that have sold in the past.  Generally speaking, you can get more house or view for your money on a leased lot house than you can on a deeded lot home, because of the existence of the lease. The transaction works just like a deeded lot sale, except you have the added step of transferring the lease to the new owner.  Alabama Power must approve this transfer, but usually it’s just a matter of paperwork.

Can you finance a leased lot home?

YES – easily.  I almost always recommend that Lake Martin buyers use lenders from around the lake.  Not because I am related to any many of them, but because lake financing is usually a bit different than your standard McHouse in McSuburbia.  Local lenders are especially handy when it comes to financing a leased lot home.  They are familiar with all of the documentation, so it’s a lot easier to work with them.

Do you own a leased lot home and have some advice to add?  Or maybe you have questions that I haven’t answered here.  If so, please comment on this post and I will do my best to answer anything else.

Related posts:

When Does The Water Level Go Down On Lake Martin?

When does the water go down?  Does this house have water year round?  

I hear this a lot.  When people are looking for homes or a lot on Lake Martin, they soon learn that the lake’s water level fluctuates.  Depending on your preferences, this might affect where on the lake you choose to be.  If you are not aware of the lake level’s changes, it may affect how happy you are with your purchase.  If you want to be able to take a New Year’s Eve boat ride, you will be disappointed if you are high and dry with no water in the winter.  Or, maybe you prefer a quiet cove off of the main thoroughfare.  In that case, don’t over pay for a place that doesn’t fit your needs.  You need to learn a little about Lake Martin in order to make the right decision. 

Why does the lake level go up and down?  First, you need to know that Lake Martin was created back in then 1920s when the company that is now Alabama Power dammed the Tallapoosa River.  The Tallapoosa River joins the Coosa River to form the Alabama River near Montgomery.  The Alabama flows all the way to Mobile Bay, and is a navigable river. The Alabama River must maintain a certain level so that barges can move up and down it.   

So, part of the reason the Martin Dam exists is to ensure that the Alabama has a certain amount of water flow.  Since Alabama Power owns the dam, they (with permission of the Federal Energy Regulatory Commission) decide how to regulate the water level.  So how does this affect your lake house?

Read the rest of this entry »