Buyers have so many questions about prospective homes. What school do the kids attend? How many bedrooms and what’s the square footage? When were mechanical systems like heating and air conditioning last updated?
Sellers and seller’s agents provide answers. And federal and state laws require sellers to answer some questions that might not be asked.
For example, federal law requires sellers to disclose whether a home built before 1978 has lead-based paint. States have their own laws that require disclosure of material defects. This includes things like:
Structural defects such as foundation issues;
Presence of mold;
Termite or other pest infestation or damage.
However, states do not uniformly require disclosure of a home’s flooding history or even if the home is in a flood plain. That’s a real problem. And changes to the National Flood Insurance Program (NFIP) in the coming months are about to make it an even bigger problem.
A Tale of Three States
The lack of uniform reporting requirements can be particularly confusing for buyers that move from state to state. For example, let’s look at what buyers in three different states will know about the flooding and their potential purchase.
Robert and Regina are buying a home in Alabama.
The state of Alabama has no statutory requirement for a seller to disclose any information about flooding. Robert and Regina aren’t required to be notified that the home is in a flood zone and the only way they will find out is if they obtain a mortgage to finance the purchase. Even then, it’s the mortgage lender that will make the notification – when they tell them they must buy flood insurance! Sellers are not required to disclose prior flooding events or flooding risks. The Alabama Association of Realtors created a voluntary disclosure form for sellers to use, but it is voluntary.
Stephen and Samantha are buying a home in Texas.
Texas has some of the most stringent flood disclosure laws in the United States. It’s the complete opposite of Alabama. Stephen and Samantha will learn some information about the property’s history of flooding. In Texas, a seller must disclose by law:
If the home was previously damaged by a natural flood;
If there was a previous flood due to failure of a reservoir or an emergency release of water from a reservoir;
If the property or any part of the property is in a 100- or 500-year floodplain;
If the seller ever filed a claim for flood damage with any insurance provider;
If the property is currently covered by flood insurance;
If the seller ever received FEMA or SBA assistance for flood damage.
Now, if Stephen and Samantha sell their Texas home and move to Alabama, they will probably expect the same level of disclosure. And the lack of disclosure might lead them to believe that flooding isn’t a relevant concern. See the problem?
Dennis and Cheryl are buying a home in Ohio.
Ohio does an average job in the flood disclosure category. There is no mandatory requirement to disclose that the property must be covered by flood insurance. But the state has a mandatory seller disclosure form that requires the seller to disclose to the buyer:
Knowledge of any water or moisture-related damage to floors, walls, or ceiling caused by a flooding event;
If the property is in a designated floodplain;
Knowledge of any prior or current flooding problems with the property.
So, three sets of buyers in three different states receive three different levels of disclosure. And they are all missing one important question that will make a big difference in their rates once FEMA 2.0 goes into effect.
Always Ask “How Many Flood Claims Have Been Filed in the Last 20 Years?”
Once FEMA 2.0 goes into effect on October 1, 2021, the rules about prior claims are going to change drastically.
Initially, all premium penalties for prior claims will be wiped away. Yay!
Hold your excitement because things are about to get worse. And unsuspecting homeowners are going to be hit with some incredible premium increases based on the prior experience they don’t even know about.
That’s because FEMA 2.0 will initiate a 20-year rolling time frame for prior NFIP claim penalties. And the penalty only goes into effect after the homeowner makes the first claim under FEMA 2.0.
Imagine this potential situation:
A homeowner in Alabama, Florida, Missouri, Connecticut or any of the other states that don’t require flood disclosure buys a home in 2021. In 2025, they experience a flood and file a claim. Now, when their policy renews in 2026, they are hit with a huge prior claim penalty. “What?” they say, “we’ve never had a flood before. How can we have prior claims?”
Well, they discover claims were filed by previous owners in 2010 and 2015. Maybe the people that sold them the property didn’t know it had flooded. It doesn’t matter, the current owners not only face recovering from devastating flood damage, but they must contend with the financial impact of being assessed for a total of 3 flood events (1 while they owned the home and 2 before they purchased).
Had these homeowners known about the flooding in 2010 and 2015, they might not have purchased the property.
They should have asked, “How many flood insurance claims have been filed in the last 20 years?”
As a matter of fact, EVERY buyer in every state should start asking this question.
How To Determine Prior Flood Claim History
Flood claim information is considered private information. You can’t go online and look up the flood claim history for a property the way you can find out about taxes and assessments.
And potential buyers can’t ask FEMA about claim history for a property they don’t own. Well, they can ask away, but FEMA won’t provide the answer.
Only the current property owner can inquire about prior NFIP claim history. They can call (877) 336-2627 and request this information from FEMA. Property owners can find out about claims filed even when they didn’t own the property.
There’s no reason for sellers not to disclose the flood insurance claim history over the last 20 years. And any home buyer that doesn’t ask this question is playing with fire. Well, more like water – but water is the most damaging force on Earth. And flooding is the costliest natural disaster in the US.
Below is what FEMA has on their website in how to get this information
You asked the FEMA Mapping and Insurance eXchange to e-mail you instructions on how to request a free loss history report.
Due to federal privacy laws, FEMA’s National Flood Insurance Program (NFIP) is only permitted to provide the paid loss history reported on a property location to the current property owner(s) or to the person(s) whose name(s) appear on file as the insured and/or claimant. Current property owners, or the claimant as reported on a previous loss, may request such data in writing with a signed statement of ownership either notarized or submitted verifying identity under 28 U.S.C. 1746, a law that permits statements to be made under penalty of perjury as a substitute for notarization.
To submit a flood loss history request, the following information must be printed or provided in a letter complete with required items and signed statement.
Name (owner/tenant/policy holder):
Full Property Location Address:
Return Address for Response (if different from property location):
Statement (Must be Notarized/Certified):
Provide a written statement in the space below that you are the current owner of the property location for which the data is being requested or an insured tenant at the property location, or a claimant as reported on a previous loss for the property location (if a tenant, please state they are a tenant and provide the property owner’s name(s)):
I, _________________________________(printed full name), certify under penalty of perjury that the foregoing is true and correct. Executed on ___________ (mm/dd/yyyy).
You may submit your request via email by replying to this message and attaching the signed letter. You may also mail your request to the National Flood Insurance Program, FEMA Mapping and Insurance eXchange, 3601 Eisenhower Avenue, Suite 500, Alexandria, VA 22304-6426. Paid loss history requests are processed in the order they are received. Most requests are completed within 7-10 business days. Please note this timeframe depends on whether additional research of the location is required.