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New Seller’s Disclosure Notice Protects Buyers of Flood-Prone Property

Potential home buyers should be aware that sellers are required to disclose certain information about their property, especially concerning defects and conditions that are not discoverable through the exercise of due diligence. In Texas, this notification is done by completing an official form called the Seller’s Disclosure Notice. Now, in response to recent instances of deluges caused by severe hurricanes and other events, the form has been amended to require specific disclosures about past or potential flooding.

In 2019 the Texas state legislature added two new questions to the Seller’s Disclosure Notice. The first asks whether the property is located, wholly or in part, within a floodway, flood pool, reservoir or 100-year or 500-year flood plain, the latter of which are designated on flood insurance rate maps as high-risk and moderate-risk respectively. The second question asks whether the seller has ever filed an insurance claim or other request for assistance due to damage caused by flooding. This includes claims filed with the National Flood Insurance Program (NFIP), the U.S. Small Business Administration (SBA) or the Federal Emergency Management Agency (FEMA). If a seller discloses that the property is located within these types of flood areas or that a prior claim was made relating to flooding damage, the seller must provide additional, detailed information to the buyer about the specific problems encountered and repairs performed.

Buyers made aware of potential risks are able to make more educated choices. Initially, buyers who are properly informed of past or potential flooding may be able to renegotiate the price of the property. What’s more, a buyer who purchases a property that was previously damaged due to flooding is more likely to mitigate against future risk by purchasing flood insurance and installing protective equipment like drains, culverts and perimeter walls.

The property code requires the Seller’s Disclosure Notice to be delivered to the buyer prior to entering a sales contract for the property. Furthermore, if a buyer learns of a flood risk after entering into the contract, the buyer is permitted to withdraw from the contract with seven days of receiving the notice.

To learn more about how Hayes, Berry, White & Vanzant, LLP in Denton, Gainesville, Flower Mound and Celina can assist you with your Texas real estate matter, including flooding-related issues, call us at 940-230-2386 or contact us online for a free consultation.

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