Selling or buying a home is rewarding and can also be an inherently stressful time. California is a great state to live in, but it is does have many natural hazard zones. When you are selling a home, you must disclose the natural hazard zones to a potential buyer. As a buyer, you must review the natural hazard report before purchasing a property. Here is everything you need to know about natural hazards.
What is a Natural Hazard Zone?
A natural hazard zone is an area where homes are at a greater inherent risk for damage or destruction from naturally occurring disasters. These disasters can include:
In California, these natural disasters occur annually. If you are a home seller and the property is in a natural hazard zone, you must provide a Natural Hazard Disclosure before the sale of your home.
Natural Hazard Disclosures (NHD) Report
When you are ready to sell your home, you need a Natural Hazard Disclosure Report. By having this document, you prevent your future buyer from suing you in the event the home is damaged by a natural disaster.
The NHD Report is a required part of California’s Natural Hazard Disclosure Act that was created in 1998. In addition to natural hazards, the report also includes:
- Radon gas in the home
- Noise disturbances i.e. close proximity to an airport
- Anything increasing the cost of insuring the home
The NHD Report allows the buyers to understand there are risks with purchasing this specific property. They must be made away of any issues with the home that may also increase their homeowners’ insurance costs. They may also be required to purchase additional insurance if the home comes with more risks.
What is Included in the NHD Report?
The state of California has six potential hazards that the Natural Hazard Disclosure (NHD) Report discloses.
Special Flood Hazard Area
If your home is located in a Special Flood Hazard Area, it must be detailed in the report. Buyers will then have the option to purchase additional insurance to protect the home from flooding, including extra flood insurance.
Very High Fire Hazard Zone
The Very High Fire Hazard Zone is an area where fires are most prominent and have the highest possibility of destruction to surrounding homes. Homeowner insurance policies may not provide enough coverage in the event the home sits in this area. Buyers can buy high-risk fire insurance through California’s FAIR Plan (Fair Access to Insurance Requirements).
Damn Inundation Zone
If the home sits on a Dam Inundation Zone, an area that is downstream from a built dam structure, it must be included in the report. Should the dam overflow, the home may be flooded. The mention of this location allows the buyer to reconsider investing in more flood insurance to protect their home and assets.
Earthquake Fault Zone
California is notorious for earthquakes. This is the main reason the NHD requires all sellers to disclose if their property is in an earthquake fault zone. These areas are where two fractured spaces continue to drift apart when earthquakes occur. They can easily damage property as time goes on.
You will include any seismic hazard in the NHD. Your buyers can purchase additional insurance to cover damages in the event an earthquake damages the home or belongings therewithin. If buyers opt out of this insurance, they have the option of purchasing earthquake insurance instead.
Wildland Hazard Fire Zone
If the home is located in a wildland area that are at risk of a forest fire, the NHD discloses that buyers need to take precautions (removing debris such as dead leaves)
Other Hazard Zone Types
Other Hazard zones that are not common to California:
The NHD Report Give Peace of Mind
Natural disasters can happen at any moment, so it is imperative to disclose everything possible in the NHD report. This report can prevent both the buyer and the seller from landing in court and paying hefty fees in the future. The NHD Report can also provide peace of mind that the buyer is aware of all the imminent risks of purchasing a specific property. Polaris Realty ensures our sellers provide a comprehensive NHD Report in the disclosure package and we review the NHD Reports with our buyers before they make a purchase.
Need more information about natural hazard zones and reports, contact us today!