NAR Reveals Survey of Flood Disclosure Policies

The National Association of REALTORS®  has unveiled a state flood disclosure tracker. The association worked with the Legal Research Center to survey existing state disclosure requirements. This tracker aims to educate the public and Congress as it considers the Federal Emergency Management Administration’s (FEMA) legislative proposals to reform the National Flood Insurance Program (NFIP).

Under the proposed legislation, to qualify for the NFIP, NAR shared that states would be required to mandate a real estate-related disclosure form with specific flood-related questions.

Based on the research done by the Legal Research Center, all fifty states and D.C. already require the disclosure of known material property conditions or facts, including prior flood damage, according to a release. Most states have added flood-related disclosure forms and requirements developed by local authorities.

“America’s 1.5 million REALTORS® are in the business of streamlining processes to best serve all current and future homeowners across this country,” said Tracy Kasper, president of NAR. “The proposed legislation would add unnecessary red tape to an already complex purchasing and selling process. Our research has found that every single state has flood disclosure requirements, and there is no need to have federal government involvement in a practice that each state knows how to handle best. The proposed FEMA form would not be useful to buyers and duplicative for sellers, virtually having them check the same box on a different form.” 

NAR stated they asked the Legal Research Center to complete two tasks. (1). to identify all flood disclosure requirements not identified in FEMA’s study supporting this proposal. (2). To evaluate state disclosure laws using three guiding principles: is it useful information for buyers, is it reasonable for sellers to provide, and is it feasible for states to administer and enforce? The findings underscored that FEMA’s proposal would require another disclosure form that does not provide useful information to buyers, duplicates form questions, will be difficult for sellers to complete fully, and could create new opportunities for frivolous lawsuits and technical paperwork “I-gotchas.”

“Our research reveals that states have a long history of tailoring and enforcing their respective disclosure requirements to meet state-specific flooding concerns. The FEMA study solely considers whether specific questions are asked on a required disclosure form and ignores existing state laws, regulations, and court rulings addressing flood disclosure requirements. A one-size-fits-all approach of a federally-required form fails to address local needs,” said Kevin Ritchey, CEO of the Legal Research Center.   

While opposing FEMA’s disclosure form proposal, NAR stated they do agree that the federal government can and should do more to help inform property buyers and renters as part of broader NFIP reform legislation. For example, NAR supports the Flood History Information Act, which requires FEMA to disclose its NFIP claims and disaster aid data directly to property buyers and renters. Property buyers and renters have the right to know, and the legislation would confirm FEMA’s authority to disclose this information under the Privacy Act.

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