Realtor® associations have long been a driving force behind seller disclosure requirements across the country. As a result of these campaigns for the use of property condition disclosure laws, a majority of states now require property condition disclosure forms from sellers and listing brokers. In those where they are not required, they are still commonly used. The goal of these efforts was to reduce lawsuits by buyers against sellers and listing brokers for non-disclosure of material conditions of the properties being sold. In fact, a study of insurance claims against real estate brokers showed that most of these claims were related to the condition of the property being sold and they were more frequent in states without voluntary or mandatory property condition disclosure. With that in mind, property condition disclosures reduce the likelihood of a brokerage receiving errors and omissions claims when properly used. Brokers must continually engage in other ongoing risk management practices in order to minimize claims. Professional associations for agents and brokers believe that an additional risk management practice that brokers and sellers in all 50 states should consider providing (where not already required) are natural hazard disclosure risks to real estate. States like California have made natural hazard disclosures (NHD) mandatory. California’s NHD Law requires sellers and listing brokers to disclose whether a property is within a special flood hazard area, a dam failure inundation area, a seismic hazard zone, an official earthquake fault zone, a very high fire-hazard severity zone, or a wildland forest fire-risk zone.
On local and national levels, real estate associations are encouraging sellers and their brokers in all states be proactive with the inclusion of natural hazard risks. Since, in practice, it would be difficult and time-consuming for sellers and listing brokers to obtain this information on their own, specialized NHD companies can do the disclosure work for sellers and brokers by gathering and detailing environmental hazard information. Some association-sponsored companies have developed a very comprehensive national report for sellers and their brokers for use that would disclose natural hazards such as whether a property is located in a: FEMA flood hazard area, wildfire hazard area, sinkhole hazard area, tsunami hazard area, tornado risk area, hurricane risk area, hail risk area, and lightning risk zone. The disclosure report can also include information about the risks of lead-based paint and mold. Additional information in this comprehensive report can include property and owner details, and the proximity of assigned schools, fire stations, police stations, hospitals, and libraries. Sellers and brokers who hire a natural hazard disclosure company to provide a comprehensive report for their real property sales can receive both financial protection and peace of mind.
With over 33 years in the Real Estate Industry, Eric Spitz, has been on the forefront of providing Natural Hazard Disclosure reports since 1994 and created an industry legend before selling it to an institutional organization in 2005.
As his non-compete expired, he realized there was a better way to produce Natural Hazard Disclosure Reports and MyNHD was started in 2010.
Initially used as a risk management product to take liability off the seller and agents while providing important information for a buyers due diligence, NHD's became a required disclosure on all real estate transactions in California as of 1998.
As the natural hazard climate continues to be a major topic throughout the US, buyers should have this Natural Hazard infowhile making important decisions on their purchase. Eric continues to advocate this important info to perspective buyers while reducing liability to brokers, agents and sellers.
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