Texas Home Sellers Must Disclose More About The Risk Of Flooding

Homeowners in East Austin have seen flood issues become much more serious over the past decades, despite the fact that the city built a flood wall roughly 15 years ago. As climate change has warmed the atmosphere, storms have become more intense, releasing much higher rates of rainfall which has drastically increased the risk of flooding in many Texas neighborhoods. 

Hurricane Harvey ended up being a tipping point for many coastal cities in Texas, it became apparent that development in flood prone areas was no longer a viable option. Hurricane Harvey dumped historic rainfall that flooded thousands of homes in the Houston area, houses that had been built in reservoirs, floodways and other high-risk flood areas. Many Texas homeowners were unaware that their home sat in a floodplain. 

Law Changes Disclosure Requirements

Lawmakers in Texas passed a law that went into effect in September which requires home sellers to disclose more information about the flood risk their house presents.

There are now eleven questions in all on the Seller Disclosure Notice that sellers must fill out and present to potential buyers. A few examples of questions on the form that relate to flood issues:

• Have you ever experienced flooding from a reservoir? 
• Have you ever received emergency flood assistance? 
• Do you presently have flood insurance coverage? 
• Are you located wholly or partly in a 500-year floodplain?

If the answer to any of these questions ends up being “yes” the homeowner will have to provide any additional information that relates to the issue and there is a very good chance they will be listing their house for less than they had hoped. 

“It’s very specific rather than just big, general questions,” said Austin real estate agent Amity Courtois in a recent National Public Radio (NPR) article. Courtois thinks the system will keep home buyers informed about specific flood related issues while also giving sellers the chance to fully explain the issues with their home. 

Despite the fact that environmental, public safety advocates and even the insurance industry have been asking for this type of disclosure for a number of years, many states still do not require this type of information to be disclosed. 

According to data from the Natural Resources Defense Council (NRDC), there are currently 22 states that have no mandatory flood risk disclosure. Several other states have disclosure rules that the NRDC found inadequate.

The lack of disclosure can lead buyers to make bad decisions about purchasing a house as they have no idea they are putting down roots in a flood risk area. Requiring detailed disclosure about a home will allow home buyers to make better decisions about potential homes and also alert them to the fact that they may need to carry flood insurance to fully protect their new home. 

Because the current homeowner is usually the best source of information (floodplain maps can quickly become outdated), these types of disclosure requirements mean that potential buyers are getting the best and most relevant information regarding flood issues. 

Groups Pushing for National Disclosure Requirements

Unfortunately, disclosure requirements are set at the state level, so they vary from state to state. A number of consumer groups have pushed Congress for a federal law that would require strong disclosure (like the ones in Texas) laws in any state that takes part in the National Flood Insurance Program (NFIP). There has been pushback from both real estate agents and real estate developers. 

Their opposition to the law relates back to the fact that strong disclosure laws can make homes in certain areas hard to sell as well as affecting the price that can be asked for these particular houses. 

In 2017, the U.S. House of Representatives included a disclosure provision to the vote to reauthorize the National Flood Insurance Program, but the Senate never took up the bill, so it did not get signed into law. 

However, mandating flood risk disclosure appears popular among the general public. A recent survey from the Pew Charitable Trusts discovered that a whopping 74 percent of Americans support “a national standard requiring home buyers be made aware of repeated property flooding.” The public is also behind laws that require home buyers to purchase flood insurance if the house they are buying has flooded before.