Each state has different requirements regarding a seller’s obligation to disclose sea level rise flooding issues to buyers in a real estate transaction. Not being aware of a state’s seller’s disclosure law can put buyers, sellers and even real estate agents at great risk.
Some states, like Louisiana, are very stringent. Sellers have to tell a buyer if a property floods, the source of the flooding, the type of damage the flooding causes, and whether any flood insurance claims have been filed. The last point is important because there have been cases where buyers have purchased a property and not been aware of a flooding issue. When the property floods and they file a claim, the past claims can be used against them and their insurance rates can skyrocket.
Other states, like Virginia, are pretty much the wild west when it comes to seller’s disclosures. Basically, sellers don’t have to disclose anything, and it’s up to buyers to find out what’s going on.
Florida lies somewhere in the middle. The state requires sellers to disclose defects that they’re aware of that materially affect the value of a property. This could be construed as meaning they’re required to inform buyers if a property experiences flooding. But in all actuality, the language is so non-specific that the state’s insurers are expected to lobby for legislation this year that’s more in line with Louisiana’s detailed level of disclosure.
Strong seller’s disclosure laws protect buyers, sellers, and real estate agents. Buyers, of course, are protected because they’re informed about sea level rise flooding issue BEFORE they make a purchase. Sellers are protected because they will know exactly what’s they’re required to tell the buyer. This can help them to avoid lawsuits for failure to disclose flooding. And real estate agents are protected because they, too, will know what’s expected of them, and they’ll be able to provide better advice to their clients.
A note of caution: Even in states that have strong seller’s disclosure laws, buyers should find out from more than one source if a property or neighborhood floods. Buyers should ask the seller to order a Comprehensive Loss Underwriting Exchange report from their insurer. The report will tell the buyer if any claims have been filed with most insurers in the last 5-7 years. Strolling the neighborhood and asking residents if the property or neighborhood floods can also yield valuable information.
The Natural Resources Defense Council has an excellent online map that features information about each state’s seller’s disclosure law. There’s also more information about this important issue in “7 Sea Level Rise Real Estate Questions.”