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Full disclosure on flood damages
Listen to this articleThe Natural Resources Defense Council reports that the sale of homes that have been damaged by floods can become financially ruinous to the buyers. This is because a house once damaged is likely to flood again.
A requirement that a seller disclose flood damage to a prospective buyer would solve this problem, but Maryland fails to impose on a home seller the obligation to fully disclose flood damage.
As the law is now written, a seller is only required to disclose whether the home is in a flood zone and whether water stands on the property for more than 2 days following a heavy rainstorm. That is not enough information for a knowledgeable buyer to make an informed decision. Many Maryland homes that have flooded are not even located in a flood zone.
Maryland is not alone in failing to require that a seller provides information regarding whether and when the prospective house flooded, the costs of repair, the insurance maintained relating to water risks and other information that many buyers, and some of their agents, don’t know to ask for.
It is a serious problem. A study by the actuarial consulting firm, Millman, estimated that nearly 7 percent of all houses sold in 2021 in New York, New Jersey and North Carolina had been flooded, and sold following repairs.
Millman further estimated that for North Carolina homes the average buyer of a previously flooded home would incur subsequent flood related costs of $18,164 over 15 years and $36,328 over 30 years. For houses in New Jersey, those future expenditures rose to $32,707 and $50,756.
FEMA has weighed in on the need for disclosure of flood damage, writing that such disclosure is a “timely and effective way to enable the (buyer) to make better risk-informed investment decisions.” We agree.
Yet, inexplicably, Maryland’s disclosure laws, in a state that has thousands of miles of waterfront, are not effective to protect a buyer. In a recent scoring of states’ flood disclosure requirements by NRDC, Maryland garnered a grade of D, representing “inadequate” to protect a buyer.
Texas, New York, South Carolina and New Jersey each earned an A for their required disclosures of prior flood damage.
Buying a house that once flooded can be a financial albatross, or worse, and this is an area where Maryland homebuyers need the state to help them. Access to critical information can prevent these disasters from occurring.
We urge the legislature to carefully examine this problem and act this year to fix it. Disclosure is a remedy that spends no taxpayer money, but can save much as taxpayers often pay for the repair of flooded homes.
Caveat emptor should not apply to flood disclosures.
Editorial Advisory Board Member Arthur F. Fergenson did not participate in this opinion.
EDITORIAL ADVISORY BOARD MEMBERS
James B. Astrachan, Chair
James K. Archibald
Gary E. Bair
Andre M. Davis
Eric Easton
Arthur F. Fergenson
Nancy Forster
Susan Francis
Leigh Goodmark
Julie C. Janofsky
Ericka N. King
Susan F. Martielli
Angela W. Russell
Debra G. Schubert
H. Mark Stichel
The Daily Record Editorial Advisory Board is composed of members of the legal profession who serve voluntarily and are independent of The Daily Record. Through their ongoing exchange of views, members of the board attempt to develop consensus on issues of importance to the bench, bar and public. When their minds meet, unsigned opinions will result. When they differ, or if a conflict exists, majority views and the names of members who do not participate will appear. Members of the community are invited to contribute letters to the editor and/or columns about opinions expressed by the Editorial Advisory Board.
