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Natural hazard disclosure is a document that informs buyers if a property is located in an area prone to natural disasters. It is mandatory in some US states, including California, which has a comprehensive disclosure law. Failure to report potential disaster areas is considered fraud, and sellers may be held liable for damage caused during a natural disaster. Qualified experts, such as licensed contractors, geologists, engineers, and surveyors, are responsible for reporting natural hazards.
A natural hazard disclosure is a document provided by the seller of a real estate property to the buyer, indicating whether the property is located in an area known to be prone to natural disasters, such as floods, earthquakes, hurricanes, or tornadoes. It is designed to protect buyers from unknowingly purchasing properties that could suffer damage from natural disasters simply due to the property’s location in a naturally dangerous area. The disclosure document is usually prepared by a third party to the transaction to prevent disclosure fraud.
In the United States, there is no federal mandate that requires sellers to provide natural hazards information to buyers during a transaction. However, some states have created their own disclosure regulations. Among them are Alaska, California, Florida, Hawaii, Idaho and Washington, all high-risk states for different natural hazards. Other states have no natural hazard disclosure regulations and still operate under caveat emptor, which is also known as a careful buyer to sell.
California, in particular, has one of the most comprehensive natural hazard disclosure laws. In 1998, the state legislature created a standardized disclosure form that detailed a variety of natural hazards known to the state. Vendors are required to report information on known fire zones; seismic zones, including landslide zones; flood plains; and seismic fault zones.
Natural hazards disclosure usually indicates whether a property buyer has legal permission to develop or modify the property in any way. It could also specify if the property is subject to special insurance requirements or if the owner is eligible for federal assistance following a natural disaster. In some cases, disclosure of natural hazards may not be sufficient to absolve a seller’s liability in a property. Locations requiring disclosure may also specify that if a vendor knows of a natural hazard that isn’t on a standard form, they still have an obligation to report it, as well as make any special flags or obtain any relevant maps documenting the risk.
Failure to report potential disaster areas is known as natural hazard disclosure fraud. If the seller is found to have intentionally withheld information about natural hazards affecting a property in order to advance a sale, he may be held liable for damage done to the property during a natural disaster. Sellers are generally not responsible for errors or omissions in natural disaster forms if the information obtained was obtained from a government agency or qualified expert and was reported in good faith. The term “qualified experts” for legal real estate purposes usually includes licensed contractors, geologists, engineers and surveyors.
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