How can homebuyers protect themselves against buying a house over a sinkhole?
Thursday, July 19, 2018
If you are concerned about unknowingly buying a house over a sinkhole and getting stuck with a huge problem, you are not alone. Florida has the distinction of having more sinkholes than any other state in the nation and, although the Tampa Bay area has the highest incidence of sinkholes, our own Alachua County and the surrounding area have plenty of them popping up—or, more accurately, down—each year.
The increasing millions of gallons of water that are extracted from the underground aquifer annually for our growing population and the agriculture industry are partially to blame. But sinkholes that collapsed thousands of years ago, now filled with towering trees and considered stable, dot our area. Devil’s Millhopper State Park, on the north side of Gainesville, is one of the largest ancient sinkholes. The bowl-shaped cavity is 120 feet deep and visitors that walk the stairs down to the bottom see streams trickling out of crevices in the limestone walls that lead to a miniature rain forest below. Suburban housing developments now surround the park.
The Florida Department of Financial Services has five recommendations for evaluating a property for possible sinkhole activity that you are considering buying. Their brief statements on each are in shown in italics, and we have added further explanatory notes and comments afterwards.
1) Be sure that the house is insurable. A quote from an insurance agent is not a guarantee that you can actually get insurance. “But it is more likely if the agent is savvy enough to ask you a few questions first—like the age of the house, age of the roof, and if there are any known previous claims,” according to Greg Banks, of Banks Insurance Group. Previous claims which were not disclosed that turn up later when an underwriter does a claims database check may cause problems, but that is outside of the buyer’s control.
To learn more about the requirements for seller disclosure, especially as it relates to sinkholes, see our blog post “Should I trust the Seller’s Property Disclosure Statement?”—which also has the story of a sinkhole home near Tampa (shown below) that was patched-up and sold without foundation repair, even though the seller received an insurance settlement for it and did not disclose the problem.
2) Make sure that sinkhole coverage is included in your policy, or in a rider. Ask your agent for details about your coverage. Florida law now requires authorized insurers to provide coverage for “catastrophic ground cover collapse,” but the law’s interpretation of it means that the damage by many sinkholes will not be covered. The law defines a sinkhole as “a land form created by subsidence of soil, sediment, or rock as underlying strata are dissolved by groundwater.”
A “catastrophic ground cover collapse” is defined as “geologic activity that results in all of the following: 1) The abrupt collapse of the ground cover; 2) A depression in the ground cover clearly visible to the naked eye; 3) Structural damage to the building including the foundation; and 4) The insured structure being condemned and ordered vacated by the government agency authorized by law to issue such an order for that structure.” So, in essence, the damage has to be so bad that the house must be abandoned and condemned.
Any lesser damage is not covered unless you buy a sinkhole rider or it is specifically included in the basic policy. All insurance companies licensed in Florida are required to offer sinkhole coverage, usually at an additional premium charge. The insurance company has the option to require testing before binding coverage and, if sinkhole activity is detected on the property or observed within a certain distance, coverage may be declined. See our blog post What are the Florida laws regarding sinkhole insurance? for more details.
3) Hire a home inspector who can help you find signs of potential sinkhole activity. We occasionally examine a house that shows signs of significant structural problems that the homebuyers completely missed until we pointed it out to them, and it is not that we are any more talented at finding signs of structural distress than many other competent home inspectors. It’s just that home inspectors are trained to find these kinds of defects and look at hundreds of houses each year. If you are concerned about potential sinkhole problems, find an experienced home inspector that you trust to look at the home with you. To find out more about what to look for, see our blog post “What are the warning signs of a sinkhole?”
4) Consider sinkhole testing. While infrequent, an insurance company may require you to have this testing done prior to granting you coverage, under certain circumstances. A sinkhole forms when water dissolves a pocket of limestone karst under the top layers of sand and clay soil. As it grows in volume, the cavity may begin to slowly collapse, creating structural defects in the walls and foundation of a home that a home inspector can identify for you. But, in its early stages, there are no above-ground signs of a sinkhole beginning to form. To learn more about sinkhole formation and the different types of sinkholes, go to our blog post “What causes sinkholes?”
Sometimes there are no signs of activity until a major collapse, as in some of the epic sinkholes that open up without any warning and become a dramatic video on the TV evening news. Engineering contractors can locate sinkhole activity that is not yet telegraphing its presence at ground level by using ground-penetrating radar and soil boring samples. It’s not cheap but, if you want to be sure there are no problems looming in the near future, sinkhole testing is a good idea.
5) Your mortgage lender will require you to have the home inspected. Be sure to ask if the inspection addresses possible sinkhole activity, like cracks in the foundation or walls. Actually, our experience has been that only some mortgage lenders will require you to have an inspection. While a home inspector like us can locate and talk to you about cracks and other signs of movement in the structure, it may not be possible for the inspector to determine whether the structural distress is due to sinkhole activity or a vein of clay soil under the home. Also, see our blog post Where are sinkholes most likely to occur in Florida?
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Here’s links to a collection of our other blog posts about SINKHOLES:
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To learn more strategies for getting the best possible home inspection, here’s a few of our other blog posts:
To read about issues related to homes of particular type or one built in a specific decade, visit one of these blog posts:
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