Coastal property owners in the path of the massive oil leak in the Gulf of Mexico could have a hard time getting compensated for loss of value from insurers, or BP. In a disaster that dwarfs even hurricane destruction, Florida has already declared a state of emergency, while developers debate how to deal with the mess. See the following article from Property Wire for more on this.
Millions of property owners along the southern coast of the US are hoping that attempts by oil giant BP to cap the leak in the Gulf of Mexico will work as it is feared that the sludge threatening the shores could wreak long term damage on real estate that borders the shore.
Those in Florida are particularly worried where the price of a property that includes beach front could be badly hit. Florida Governor Charlie Crist has extended a state of emergency to 13 coastal counties as far south as Sarasota.
If the oil, which is leaking at an estimated pace of 5,000 barrels a day, comes ashore it will hit an area where real estate values depend on access to white sandy beaches. Other states are in a similar state of concern.
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‘I’ve been through Hurricane Camille, Hurricane Frederick and Hurricane Katrina but they all pale in comparison to this,’ said Greg Miller, owner of Fort Morgan Realty and Development in Gulf Shores, Alabama. Miller points out that people are also canceling holiday accommodation that they have booked.
Property owners are also trying to find out if they will be entitled to compensation if they are affected by the massive slick. BP has said it would pay ‘all necessary and appropriate clean up costs’ but it is not clear if this will cover private property.
‘We’ll determine the legitimacy of claims on a case by case basis,’ said Curtis Thomas, a BP spokesman, when asked about its potential effect on property values.
Some property owners, including Miller, are already preparing legal cases saying that they are already suffering rental cancellations although it’s too soon to estimate long term damage. One lawyer, Robert Cunningham of Cunningham Bounds is preparing to file suits on behalf of property owners in Alabama and Florida. ‘There are questions of diminution of value, clean up costs and all kinds of issues for the population and condo owners,’ he said.
Insurance will not necessarily cover all the potential losses, according to Robert Hartwig, president and economist for the Insurance Information Institute, an industry research center in New York. Standard commercial or home insurance policies usually cover only property damage, not claims for lost value, he said.
Developers are also concerned. The St. Joe Company has 578,000 acres in the Florida panhandle, said it is preparing a clean up plan. ‘As of this time, we have not experienced any direct impact from the oil spill but we are in a position to execute an expedited cleanup of our beaches in the event it is necessary,’ St. Joe’s president Britt Greene in a statement. It has eight communities along the Gulf Coast including WaterColor, a 499 acre planned development with a 60 room boutique hotel.
David Head Junior, whose company Head Companies developed four Gulf Coast golf course communities in Florida and Alabama, said he’s concerned about their 1,400 home sites and condominiums. ‘What we sell and market is a lifestyle. As a developer, we’re very concerned about longstanding effects,’ he explained.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.