No one desires to buy a home that has flooded repeatedly. When a house floods, waterlogged dry-wall, warped floors, damaged mechanical systems, and potential mold infestations can be expected. Worse, a home that flooded in the past is likely to flood again in the future. And learning whether a home has flooded previously is not easy. The Hale family from West Ashley, South Carolina only learned of their home’s propensity to flood after suffering through multiple flood disasters. If the Hale family had known their home had flooded repeatedly before buying, they likely would have made a different decision.
Unfortunately, the Hale family’s story is common throughout the country. Many prospective homeowners are completely unaware of a property’s history with flooding. Twenty-one states require absolutely no disclosure of flood hazards during a real estate transaction. The other twenty-nine have varying degrees of disclosure, creating a hodgepodge of state and local policies that hinder transparency of flood risk.
The result: many Americans have no knowledge whether a house has flooded and, therefore, likely to flood again before making one of the biggest financial investments of their lives. This is all due to a lack of information — information that the previous owner may have and, if previous owners had flood insurance through the National Flood Insurance Program (NFIP), that FEMA would have too.
Luckily, a bill to reauthorize the NFIP, currently before the House of Representatives, stands to be a game changer regarding greater flood risk disclosure and transparency. The 21st Century Flood Reform Act (HR 2874) as amended, contains multiple proposals that would provide current and prospective homeowners with a right to know if the property in question has a history of flooding. The bill also provides the broader public, which would include federal, state, and local officials responsible for hazard mitigation, a right to NFIP data related to assessing flood risk. The more information a current or prospective homeowners have about flooding, the better equipped they are for avoiding or mitigating the next potential flood, a benefit for both them and the NFIP in terms of avoided flood insurance payouts.
The 21st Century Flood Reform Act
Better flood risk mitigation and transparency is required to achieve meaningful NFIP reform. The following sections from the 21st Century Flood Reform Act are an important step in this direction:
Section 108 – Disclosure of Flood Risk Information Upon Transfer of Property
Congressman Ed Royce, has put forward a proposal that would require sellers of a house to disclose past flood damages to potential buyers. This proposal would have an impact nationwide as states would be required to enact sufficient flood disclosure laws in order to remain in NFIP.
Nationwide disclosure requirements are not uncommon. The federal government uses a similar mechanism to ensure that states require that sellers to disclose other health and safety risks, like the presence of lead-based paint. As flooding is the most common natural disaster in the United States, disclosure of flood risk makes sense both from a public safety standpoint and a fiscal standpoint.
Section 107 – Availability of Flood Insurance Information Upon Request
Per this section, Congressman Sean Duffy has sought to provide homeowners a “right to know” about their property’s past flood insurance claim payments and flood damages. In addition, a homeowner could find out whether they may be required to purchase flood insurance due to receipt of federal disaster assistance for their home by a previous owner. Providing property owners better access to their property’s flood history could help encourage homeowners to consider purchasing and maintaining flood insurance or undertaking mitigation actions to lower their property’s flood risk. The potential for encouraging better decision-making is why NRDC has long called for requiring a homeowner “right to know” provision to be a part of the NFIP.
Section 202 – Public Availability of Program Information
Congressman Duffy also has proposed requiring FEMA create a public, open-data system to share information related to a community or region’s flood risk. Respecting privacy rights, any member of the public would have access to FEMA’s NFIP data, including information on property-specific claims and policy history. The open-data system would also inform the public whether NFIP-participating communities are complying with the requirements of the program.
Greater accessibility and transparency of NFIP data is crucial to accurately informing homeowners, the broader public (including researchers, other government agencies) and members of Congress about flood risk. Access to and transparency of NFIP data also ensures accountability at the federal, state, and local levels. Taken together, this information would provide a better understanding of flood risk and the exposure faced by the NFIP, especially important, as sea levels rise and extreme rain storms become more common, exacerbating flooding nationwide.
Greater Transparency of Flood Risks Better Protects People and Property
Flood risks are increasing for many regions of the United States. As the NFIP is currently $24.6 billion in debt, any reforms must focus on spurring mitigation, in addition to moving the program toward full risk-based rates, to achieve lasting stability for the program. Greater disclosure of flood risk, including accessibility and transparency of NFIP data, will be key to encouraging homeowners to be more risk adverse when deciding whether to live or remain in a floodplain. Congressmen Royce and Duffy are on the right path with their proposals.