North Carolina Advances Right to Know Flood Disclosure
Smart action by the North Carolina Real Estate Commission will empower home buyers to make fully informed decisions about where to live and how to best protect their families.
The North Carolina Real Estate Commission approved a petition that grants North Carolina home buyers the right to know their flood risk. This smart action will empower North Carolina home buyers to make fully informed decisions about where to live and how to best protect their families.
Historically, North Carolina’s disclosure requirements have denied home buyers access to crucial information about flood risk, leaving them with inadequate information about one of their most important financial decisions. Due to the current law’s inadequate requirements, North Carolina receives a “D” for its flood risk disclosure transparency when compared with other state policies across the country .
Providing potential home buyers with information about a home’s flood risk is crucial for ensuring buyers can take appropriate steps to mitigate flood damages, including purchasing flood insurance. The following proposed additions to the North Carolina Disclosure Statement will equip buyers to make better-informed decisions, leading to more transparent real estate transactions.
- Has the property experienced any 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? If yes, provide the amount received.
- Is there current flood insurance on the property? If yes, provide the annual premium amount.
- Have you or any previous owner received assistance from FEMA, the US Small Business Administration, or any other federal disaster flood assistance for flood damage to the property? [NOTE: For properties that have received disaster assistance, the requirement to obtain flood insurance passes down to all future owners. Failure to obtain flood insurance can result in an owner being ineligible for future assistance].
- Is there a FEMA elevation certificate for the property?
Floods and storm-related costs can be financially devastating for North Carolinians. A recent NRDC-commissioned research study by Milliman, an independent actuarial consulting firm, found that the buyer of a previously flooded home can incur tens of thousands of dollars in new flood damage costs over the course of their mortgage. Homes that have flooded are more likely to flood again, and the average damage associated with previously flooded homes is significantly higher than with homes without flooding history.
The study found that over the life of a 15-year mortgage, the average buyer of a previously flooded home in North Carolina can expect to incur $18,164 in additional flood damages over the lifetime of the mortgage. Home buyers with 30-year mortgages incur $36,328 in additional costs over the lifetime of the mortgage compared to owners of homes without a history of flooding.
Climate change will only exacerbate flood damage costs in North Carolina. As shown below, these costs are significant: a homeowner with a 15-year mortgage faces increased costs of $22,009 in the medium climate scenario and $30,512 in the high climate scenario. The same homeowner with a 30-year mortgage faces $44,018 in expected costs under the medium climate scenario and $61,025 under the high climate scenario.
These proposed additional questions to the Disclosure Statement will give all future home buyers in North Carolina adequate information to make a better-informed decision.