Many States Lack Flood Risk Disclosure Laws for Homebuyers

March 8, 2021

Homebuyers in nearly half of the states including hurricane-prone Florida can be left in the dark about the flood risks to their new house.

The Natural Resources Defense Council (NRDC) has released an updated scorecard that shows which states have the best and worst disclosure requirements to protect home buyers.

Louisiana, which also suffers more than its share of storms, has one of the stronger disclosure laws.

More than 41 million Americans live in flood zones and climate change is increasing flood risks for millions more.

“The deck is stacked against homebuyers, leaving millions of people investing their life savings in risky properties without knowing it,” says Joel Scata, an attorney with NRDC. “With flood risks rising throughout the country, we need to strengthen these disclosure rules across the board.”

The updated scorecard details each state’s provisions, including:

  • Florida and Virginia, where tens of thousands of properties are flood prone, have no statutory or regulatory requirement that a seller disclose past flood damages;
  • In New York, sellers can pay $500 to not disclose previous flooding;
  • Texas, on the other hand, put in place a top-notch disclosure requirement after Hurricane Harvey;
  • South Carolina improved its rules following a series of stories detailing the problem in the Charleston Post and Courier.

Disclosure doesn’t affect federal flood insurance requirements or rates; it just alerts a buyer to the risks.

NRDC said it is working with states to strengthen these requirements.

In addition, lawmakers in Congress have proposed including a nationwide standard in legislation to reauthorize the National Flood Insurance Program.

NRDC supports a homeowners a “right to know” about their property’s past history of flood insurance coverage, damage claims paid, and whether there is a legal requirement to purchase flood insurance because of past owners’ receipt of federal disaster aid.