Plan on buying a home in NC soon?
You’ll get more information about its flood history
Home buyers in North Carolina will receive detailed information about a property’s flood history later this year, after the N.C. Real Estate Commission approved changes to the standard disclosure form property owners must fill out.
The changes will provide buyers with crucial information that will help them decide not only whether to move forward with a purchase but also what to do after moving in, said supporters of the changes. They will also help people know whether they need to carry flood insurance to be eligible for disaster relief.
“It definitely encourages buyers to make a betterinformed decision about the purchase they’re going to make. It helps prevent the potential dream home from becoming a flooding nightmare,” said Joel Scata, a senior attorney on environmental health issues at the Natural Resources Defense Council.
The NRDC petitioned for the change, along with MDC Inc., N.C. Disaster Recovery and Resilience School, N.C. Field, the N.C. Justice Center and the Robeson County Church and Community Center. The Southern Environmental Law Center represented the groups.
The new questions include:
■ Has the property experienced damage due to flooding, water seepage or pooled water attributable to a natural event such as heavy rainfall, coastal storm surge, tidal inundation, or river overflow?
■ Have you ever filed a claim for flood damage to the property with any insurance provider, including the National Flood Insurance Program?
■ Is there a current flood insurance policy covering the property?
■ Have you received assistance from FEMA, U.S. Small Business Administration, or any other federal disaster flood assistance for flood damage to the property?
■ Is there a flood or FEMA elevation certificate for the property?
■ The commission also tweaked the wording of a question about whether the property sits in a designated flood hazard zone.
The new disclosure form will be available July 1.
There are two key reasons why knowing a home’s flood history is important.
First, a home’s flood history is one of the best indicators of whether it will flood in the future.
A 2022 report from actuarial consulting firm Milliman prepared for the NRDC found that a North Carolina home that has previously flooded would average $36,328 in flooding damages over the course of a 30-year mortgage, compared with $1,844.70 for a home that has not flooded.
“It’s really important to know a home’s flood history because it could give a good indication of your risk going forward,” Scata said.
Second, if a home sits in a FEMA-designated Special Flood Hazard Area and has been repaired or rebuilt using federal disaster relief aid, its owners need to carry flood insurance to be eligible for assistance in future disasters.
That’s particularly important in a hurricane-prone state like North Carolina.
If someone buys a home without knowing it has been repaired using disaster relief funds and they choose not to purchase flood insurance, their claim during a future flood would be denied.
Brooks Rainey Pearson, a Southern Environmental Law Center lobbyist, said in addition to buying flood insurance, home owners could take steps such as putting important documents on a higher floor or installing better drainage around their home.
“When people know what they’re dealing with, they can make better choices to protect themselves in the case of a natural disaster,” Rainey Pearson said.
The NRDC is giving North Carolina’s new disclosure document an “A” rating, making it the eighth state with one. That’s up from a “D” rating before.
“North Carolina has really joined a growing trend among East Coast states in protecting a home buyer’s right to know a property’s flood risk,” Scata said.
Other states with A ratings include Louisiana, Mississippi, New Jersey, New York, Oklahoma, South Carolina and Texas.
The Southern Environmental Law Center and NRDC are interested in exploring better disclosure for renters. New Jersey and New York have rental disclosures because it was passed in the legislature, Scata said, meaning it was done at the same time as the home buyers’ disclosure.
In North Carolina, Scata said, “That’s a conversation that needs to start.”
Another potential addition would be questions about coastal hazards, which are included in South Carolina’s standard disclosure.
In South Carolina, those extra questions ask whether the property is protected by any erosion control structures like a seawall, sandbags or a bulkhead and require sellers to provide a description of them. Another question asks whether a property has been assessed for a beach nourishment project under its current owner.
SELC was interested in adding those questions to North Carolina’s disclosure form, too, but was worried it would slow or derail the other flooding disclosures.
With those initial changes set to move forward, Rainey Pearson said, “We want to replicate that in North Carolina.”