ABC Surveying was retained by a property owner to prepare a survey for a lot of undeveloped land and stake out the foundation for a house. The lot passed through several hands until it reached a developer who also retained ABC Surveying to provide a plat of the survey. The survey showed the lot was in a modified flood plain and used grading plans from a previous engineer. ABC Surveying assumed the engineer had already placed fill to raise the site for construction above the flood plain.1
A few months later, the lot was sold to a family who purchased it to build a new home. The contractor the family hired refused to build the house on the lot because he claimed it was in the flood plain. The family ultimately decided to stake the foundation for the house in another location that was still in the flood plain but had received a variance from the local authorities that did not require the homeowner to purchase flood insurance.
The homeowner filed suit against a number of parties, including the developer, who third-partied ABC Surveying, claiming diminished property value by $37,500 as well as other damages.
The claim was settled in mediation for a total indemnity payment of $46,900, with ABC Surveying responsible for $29,900 and the developer responsible for $17,000.
Had the parties gone to trial, ABC Surveying would likely be found 80-90 percent responsible for any plaintiff awarded damages. This was due to the fact that the grading plan used by ABC Surveying was not recorded with or approved by any governmental entity and there were no fill permits to prove the work was completed. Even if ABC Surveying had proof the fill was placed, it would not have been a sufficient enough to alter the flood plain line. The flood plain delineation is determined by the Federal Emergency Management Agency (FEMA) and should not have been ignored.2
Risk Factor #1
Firms should be careful when relying on information or services provided by other professionals and in some cases may need to recreate the information themselves. Such information should be verified, and when reliance is crucial, the agreement should clearly state that the professional is entitled to rely on the accuracy of information provide by others.
Risk Factor #2
Like building codes that have to be followed when providing professional services, it is important that restrictions on property such as easement, setback and Federally established flood plans should be acknowledged when providing professional services.