The National Association of Realtors (NAR) has launched a state flood disclosure tracker, which the trade group promoted as helping 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), including the unnecessary and misguided disclosure form proposal.”
NAR collaborated with the Legal Research Center to compile data on existing state disclosure requirements, adding its creation was in response to the legislative proposal forcing states to “mandate a real estate-related disclosure form with specific flood-related questions” in order to qualify for the NFIP. NAR added that “all but one state would be required to make significant amendments to its laws and regulations, significantly increasing states’ administrative and enforcement burden for a limited benefit to homeowners, buyers, or renters.”
NAR cited data from the Legal Research Center that determined all 50 states and the District of Columbia already require the disclosure of known material property conditions or facts, including prior flood damage.
NAR also stressed that although it opposed FEMA’s disclosure form proposal, it supported the Flood History Information Act that would require FEMA to disclose its NFIP claims and disaster aid data directly to property buyers and renters.
“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 NAR President Tracy Kasper. “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.”
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I think it is a good idea. The state of Illinois disclosure form requires sellers to disclose if they are required to have flood insurance. If they do not have a loan, they may NOT be required to have flood insurance, but a potential buyer with a loan will. This would remove the guesswork out of flood insurance requirements. Sometimes the lender does not even know if and at what cost the flood insurance would be until a few days before closing. At that point, it’s too late for the buyer to have any benefit of this knowledge other than to know their homeownership costs will rise. More disclosure is always better. Especially if there have been multiple flood claims.