NAR Unveils Flood Disclosure Tracker

FEMA looks to require a flood disclosure form to participate in NFIP, but all 50 states and DC currently require the disclosure of property conditions or facts, including prior flood damage.

WASHINGTON (November 8, 2023) – Today, the National Association of Realtors® unveiled a state flood disclosure tracker. The association worked with the Legal Research Center to conduct a complete, thorough, and accurate survey of existing state disclosure requirements. This tracker aims 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.

Under the proposed legislation, to qualify for the NFIP, states would be required to mandate a real estate-related disclosure form with specific flood-related questions. If passed, 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. Based on the research done by the Legal Research Center, all fifty states and D.C. already require the disclosure of known material property conditions or facts, including prior flood damage. Most states have added flood-related disclosure forms and requirements developed by local authorities with unique knowledge and expertise, benefitted from decades of court decisions and interpretations of common law, and have been tailored to meet state-specific flooding concerns and enforcement.

"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 Tracy Kasper, president of NAR. "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."

NAR engaged the Legal Research Center, which has decades of legal research and real estate expertise, to identify all flood disclosure requirements not identified in FEMA's study supporting this proposal. NAR asked the Legal Research Center to evaluate state disclosure laws using three guiding principles: is it useful information for buyers, is it reasonable for sellers to provide, and is it feasible for states to administer and enforce? The findings underscored that FEMA's proposal would require another disclosure form that does not provide useful information to buyers, duplicates form questions, will be difficult for sellers to complete fully, and could create new opportunities for frivolous lawsuits and technical paperwork "I-gotchas."

"Our research reveals that states have a long history of tailoring and enforcing their respective disclosure requirements to meet state-specific flooding concerns. The FEMA study solely considers whether specific questions are asked on a required disclosure form and ignores existing state laws, regulations, and court rulings addressing flood disclosure requirements. A one-size-fits-all approach of a federally-required form fails to address local needs," said Kevin Ritchey, CEO of the Legal Research Center.

While opposing FEMA's disclosure form proposal, NAR does agree that the federal government can and should do more to help inform property buyers and renters as part of broader NFIP reform legislation. For example, NAR supports the Flood History Information Act, which requires FEMA to disclose its NFIP claims and disaster aid data directly to property buyers and renters. Property buyers and renters have the right to know, and the legislation would confirm FEMA's authority to disclose this information under the Privacy Act.

The National Association of Realtors® is America's largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term Realtor® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of Realtors® and subscribes to its strict Code of Ethics.