Tuesday, February 24, 2015

Look up potential "Natural and Environmental Hazards" in your neighborhood before you buy or sell a home...

Law in the State of California requires that home sellers disclose to home buyers the potential environmental hazards that may affect the property for sale. I find that most home buyers are just excited at the thought of home ownership, and aren't necessarily thinking about this stuff. But it is definitely an important element for buyers to consider when making a decision where to purchase a home.

A resource that buyers can use in advance of starting a home search to locate potential environmental risks is the State of California Emergency Management Agency (CalEMA)'s Hazard Mitigation Portal. At this portal, you can enter an address and use a mapping tool to figure out if the house of your dreams is in or near a flood zone, for example. Or you can enter a zip code and determine what potential hazards an entire neighborhood may face. For example, if you enter my office address (4215 Freeport Blvd, Sacramento, CA 95822), you can see that FEMA maps indicate a potential flood hazard. You can also see that it is not in an Earthquake Fault Zone, not in a Tsunami Hazard Zone, etc. So if a buyer wants to do some research in advance, this is a great tool.

The paragraph (10B) in the current version of the California Residential Purchase Agreement that deals with Natural and Environmental Hazard Disclosures reads, "Within the time specified in paragraph 14A, Seller shall, if required by Law: (i) Deliver to buyer earthquake guide(s) (and questionnaire), environmental hazards booklet, and home energy rating pamphlet; (ii) disclose if the property is located in a Special Flood Hazard Area; Potential Flooding (Inundation) Area; Very High Fire Hazard Zone; State Fire Responsibility Area; Earthquake Fault Zone; and Seismic Hazard Zone; and (iii) disclose any other zone as required by Law and provide any other information required for those zones."

Most sellers will opt to provide a Natural Hazard Disclosure Report -- something Realtors tend to refer to "the NHD." There are a few third party companies that provide them for usually around $75 - $100. Those reports are extremely comprehensive and go well beyond items (i) and (ii) above. There are MANY types of "hazard" zones that are added in that cover item (iii) above as well. Another benefit of obtaining a third party report is most of the companies offer an insurance policy in the event they omit, or misreport a hazard zone. So the seller can shift liability to a third party in many cases...and the buyer has the benefit of a more comprehensive disclosure, as well as the insurance in the event of an omission. So that's generally a win-win.

What are the "other" types of zones? NHD reports cover things like Protected Species and Habitat Zones, Radon Gas Zones, Airport Influence Zones, Naturally Occurring Asbestos Areas, Abandoned Mining Operation Zones, Military Facilities Zones....I could go on and on.

Ultimately, it is important to know what you are buying so you can plan accordingly. It's nearly impossible to find a neighborhood that is free from any and all environmental hazards (this is California, after all!), but you can make an informed decision as to where you purchase your home, and take appropriate steps to protect yourself with additional insurance policies, preventative maintenance to the home, etc.

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