What is the Natural Hazard Disclosure?
Real estate is filled with lots of acronyms that are, at best, confusing to buyers and sellers, and often meaningless. Here in California we have lots, I mean lots, of forms and disclosures for consumers to wade through as part of any real estate transaction. And they are all identified by acronyms which mean nothing unless you are in the biz. The NHD (Natural Hazards Disclosure Report) is one such item.
When I first started in real estate here in Southern California I was overwhelmed with all the forms, reports, and disclosures that were part of how to buy a home.
Having bought a Carlsbad home before I even got my CA license was helpful exposure to all the documents that buyers and sellers have to cope with, and the purchase process. Plus it gave me a greater appreciation for how confusing this can be when buying and selling.
Now I can spew out all the abbreviations and acronyms of our California forms and disclosures like a pro, but am careful to not do so with clients with “deer in the headlights” expressions when faced with all our paperwork, especially the seller disclosures.
The Natural Hazard Disclosure Report, commonly just called the NHD, is a rather daunting report about San Diego County, commonly around 40 pages or so depending on the particular company that produces the report. There are lots of NHD companies that provide this disclosure, and the seller or the buyer can select which company will be used depending on what’s negotiated in the contract. The NHD is among a number of disclosures
The disclosure of natural hazards is mandated by California civil code, and the seller, and brokers, are required to disclose information to the buyer regarding the property location, if any, within locally mapped or state mapped hazard areas. These mapped zones include a special flood hazard zone, dam inundation (potential flooding), high risk fire, seismic hazard, wildland fire, and earthquake fault zone.
It’s important to note that some sellers may be exempt from the Natural Hazards Disclosure Report in certain real estate transactions (e.g., certain types of trusts), but they are not exempt from the statutory obligation to disclose information about these issues per the CA Civil Code. Due to the challenge of obtaining the appropriate and necessary information required for such disclosure, supplying the NHD Report may be easier in the case of an exemption.
Depending on the property location in any of these areas, homeowner’s insurance may become an issue – it may be more difficult to get, or there may be additional costs because of higher risks (e.g., flood insurance; high risk fire zone). Thus the NHD can provide important information in certain cases that may influence whether a buyer will decide to purchase a property and under what conditions.
The NHD includes maps, resources on related topics in the report, a summary page and receipt (to be signed by both parties as well as their agents) and more detailed descriptions regarding each of the major statutory disclosure items. There is also supplemental information about other statutory disclosures (e.g., former military ordnance, industrial or agricultural area, airport influence area), San Diego County-level NHD determinations, and general advisories (e.g., Registered Sex Offender Database [Megan’s Law]; gas and hazardous liquid transmission pipeline database notice).
As a Carlsbad-area buyer finding your way through the seller disclosures can be quite a process, and a bit daunting for first timers, but it’s an important part of your due diligence so you can be as informed as possible and make decisions about other inspection and investigations you might want to consider.
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