In March of 1998, concerned authorities decided that the prospective buyer of any property being sold must be presented with a “Natural Hazard Disclosure Statement” by the sellers. Repetitive disasters and unforeseen events including floods, earthquakes, and fires spurred the introduction of NHD statements.
State legislators mandated that sellers should provide more information to the prospective buyers about the property conditions.
Here, we will discuss the requirements and the need to fulfill Natural Hazard Disclosure statements.
A. Natural Hazard Disclosure Statement
On top of the normal Transfer Disclosure Statement mandated by Civil Code Section 1102.6, a person selling a property or their agent must present a separate “Natural Hazard Disclosure (NHD) Statement” to the buyer in case the property is located one or several of the six areas statutorily specified, including:
- An area marked for flood hazard by the Federal Emergency Management Agency
- Areas with a potential threat of flooding because of a dam failure as identified by the state Office of Emergency Services
- Areas with high of fire hazard severity nominated by the California Department of Forestry and Fire Protection
- Any area that has considerable forest fire risks associated designated by the State Board of Forestry
- Any zone prone to earthquakes, marked by the State Geologist
- An area with the hazard of seismic disasters elected by the State Geologist
“These hazards may limit your ability to develop real property, to obtain insurance, or to receive assistance after a disaster,” the NHD statement warns all prospective buyers. It further says that the buyers “may wish to obtain professional advice regarding those hazards.”
B. Different Situations Triggering Disclosure Obligation
The legal language which requires revelation for areas with any or all of the six natural hazards given above contains conditions that may or may not activate a disclosure.
For example, a disclosure is needed for special flood hazard areas, and areas with risk of potential flooding is mandatory if the agents of the sellers or the sellers have “actual knowledge” about the property being hazardous or that the area has been listed in the list of the affected packages and displayed an informative notice made by a local agency.
If you are hunting for a house, the person whose property you are considering is liable to present a Natural Hazard Disclosure Statement as a checklist. It is your right to ask the seller or their agent if the area the property is located in is hazardous in any way. As a buyer, you can and should also ask your agent if the area you are considering has been marked hazardous in any lists or on the maps.