In North Carolina and many other states, sellers don't have to tell home buyers if a house has ever been damaged by flooding. A new study says that lack of disclosure can mean unexpected and costly future damages.
The report for the Natural Resources Defense Council looked at undisclosed flood risk in real estate transactions in New Jersey, New York and North Carolina. They're among a majority of U.S. states that the council says lack adequate flood disclosure laws.
"They all really leave homebuyers in the dark about the risks that you may face from buying a previously flooded home," said Joel Scata, a lawyer with NRDC.
Scata said a house that flooded once is likely to flood again.
"Homebuyers who unwittingly buy a previously flooded home can expect to pay tens of thousands of dollars in damages over the course of their mortgages," Scata said.
He said the risk is heightened in today's real estate market where there's pressure to close deals quickly, sometimes without inspections. And while an inspection might spot water damage, it won't tell you if a house is likely to flood again.
"Homebuyers who unwittingly buy a previously flooded home can expect to pay tens of thousands of dollars in damages over the course of their mortgages."— Joel Scata, a lawyer with NRDC
The report says more than 290,000 single-family homes in North Carolina have past flood damage — both at the coast and near inland lakes and waterways. Last year, more than 13,000 of those were sold in the state, with total past damages estimated at $16 million.
And then there's climate change, which is expected to increase future flood damage through rising seas and more intense storms. The report considers three scenarios, including one where we fail to reduce greenhouse gas emissions fast enough.
"In North Carolina, under the worst-case climate scenario, someone can expect to pay about $61,000 over 30 years," Scata said.
NRDC and other environmental groups are calling on states to adopt stronger disclosure laws.
"NRDC is advocating to ensure that homebuyers in North Carolina have a right to know their flood risk. And we are looking to make sure that those laws are up to date," Scata said.
Sierra Weaver leads the Southern Environmental Law Center's coastal wetlands program. She said the current law in North Carolina has inadequate protections for buyers.
NRDC and other environmental groups are calling on states to adopt stronger disclosure laws.
"North Carolina requires disclosure of 'actual knowledge' of flooding hazards and being located in a federally designated flood hazard area. So, this is sort of the bare minimum of does it appear on a map, which we know are horribly out of date," Weaver said.
And those federal flood maps don't take into account climate change.
"So someone can come in and say, 'I've only owned this home for six months.' They haven't actually been there when a flood has occurred. And the next owner gets no disclosure from that owner," Weaver said. "So, bottom line, we just don't have enough specificity and enough clarity about making sure those risks are disclosed to the new purchasers."
Until the state does improve disclosure rules, Scata said it's important to know what questions to ask sellers. They include:
- Has there been previous damage to a structure from flooding?
- How often and what were those damages?
- Has the seller ever filed a claim for flood damage on the property?
- Was flood insurance required on the property?
"As a buyer, one of the best things to do is just ask questions of the seller, because the seller can't lie to you," Scata said.
