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Flood insurance and disclosure obligations

Flood insurance and disclosure obligations. Virginia Residential Property Disclosure Act. Va. Code § 55-519 (B)(10)*

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Flood insurance and disclosure obligations

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  1. Flood insurance and disclosure obligations

  2. Virginia Residential Property Disclosure Act Va. Code § 55-519 (B)(10)* 10. The owner makes no representations with respect to whether the property is located in one or more special flood hazard areas and purchasers are advised to exercise whatever due diligence they deem necessary, including (i) obtaining a flood certification or mortgage lender determination of whether the property is located in one or more special flood hazard areas, (ii) reviewing any map depicting special flood hazard areas, (iii) contacting the Federal Emergency Management Agency (FEMA) or visiting the website for FEMA's National Flood Insurance Program or for the Virginia Department of Conservation and Recreation's Flood Risk Information System, and (iv) determining whether flood insurance is required, in accordance with terms and conditions as may be contained in the real estate purchase contract, but in any event, prior to settlement pursuant to such contract; * Updated language in effect as of 7/1/2019

  3. Listing Agent Disclosure obligations • Property is in a special flood hazard area • Property requires flood insurance • Actual, non-remediated flood damage • Ongoing flooding that cannot be remediated

  4. Flood Insurance Requirements

  5. Federal Flood Legislation

  6. Best Practices

  7. Help your clients and yourself:Put it in Writing! Buyers • Use Form 600F – Homeowner’s Insurance Addendum – to make sale contingent on obtaining insurance. Sellers • If your clients agree to disclose flood insurance requirement, get it in writing.

  8. Questions and answers

  9. Q&AIs the seller legally obligated to disclose that a portion of the residence lies in the 100-year flood plain? Is the listing Agent? • No. Neither the seller nor the listing agent are required to disclose that any part of the property is located in a Special Flood Hazard Area/100-year flood plain. • The need for flood insurance is not an “adverse fact pertaining to the physical condition of the property.”

  10. Q&AIs the listing agent obligated to disclose ongoing flooding, of which the agent has knowledge? • It depends. If the ongoing flooding cannot be remediated, because the property lies in a floodplain, the agent may be obligated to disclose this as an “adverse fact pertaining to the physical condition of the property.”

  11. Q&ACan a buyer terminate a contract if he discovers later that the property is in a Special Flood hazard Area and requires flood insurance? • No. There is no right of termination for this purpose alone. Is there a scenario in which the buyer could terminate the contract? • Under the financing contingency, if the cost with insurance exceeds the buyer’s approved amount. • Under the Homeowner’s Insurance Addendum, (Form 600F) if included.

  12. QUESTIONS?

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