There is no doubt that the topic of flood insurance has become a hot issue over the last few years. With ever-increasing homeowner’s and flood insurance costs, buyers and their agents alike are often in the dark when it comes to this crucial topic. This fact places an immense burden on the Buyer to do their own due diligence on this increasingly vital topic. Currently, both versions of the FAR/BAR Contract contain language that places the onus on the Buyer to verify “by elevation certificate which flood zone the Property is in, whether flood insurance is required by Buyer’s lender, and what restrictions apply to improving the Property and rebuilding in the event of a casualty.” With this in mind, House Bill 1049 was recently passed and goes into effect on October 1st, 2024, which places additional disclosure requirements for the Seller.
The Requirements: Florida’s New Flood Disclosure
The purpose of House Bill 1049 (HB1049) is to require sellers to disclose to prospective purchasers, at or before the execution of a contract, certain information as it pertains to past flood insurance claims. Beginning October 1st, 2024, Sellers will be required to disclose whether they have filed a claim with an insurance provider or received any federal assistance for flood damage to the property. It is important to note that this disclosure is required on all residential real property transactions, including new construction and condominiums, and does not differentiate between improved or vacant land. Rentals and commercial properties are not impacted by this legislative change. It is important to note that this disclosure only relates to the filing of a claim or assistance received. Any damage that the property received as a result of flooding must still be disclosed if it causes a material defect or materially affects the property and is not readily observable in accordance with Johnson v. Davis. For more information regarding Johnson v. Davis, see our previous blogs on the topic.
The Disclosure: Florida’s New Flood Disclosure
The new Flood Disclosure is available now and will be required on all residential transactions with an effective date of October 1st, 2024, or later. The disclosure contains the statutorily required language, which allows the Seller to easily select whether a claim has been made or assistance has been received.
Flood Insurance:
Homeowner’s insurance policies do not include coverage for damage resulting from floods. Buyer is encouraged to discuss the need to purchase separate flood insurance coverage with Buyer’s insurance agent.
(1) Seller has OR has not filed a claim with an insurance provider relating to flood damage on the property, including, but not limited to, a claim with the National Flood Insurance Program.
(2) Seller has OR has not received federal assistance for flood damage to the property, including, but not limited to, assistance from the Federal Emergency Management Agency.
(3) For purposes of this disclosure, the term “flooding” means a general or temporary condition of partial or complete inundation of the property caused by any of the following:
a. The overflow of inland or tidal waters.
b.The unusual and rapid accumulation of runoff or surface waters from any established water source, such as a river, stream, or drainage ditch.
c. Sustained periods of standing water resulting from rainfall.
Beginning October 1st, 2024, it will be imperative that listing agents discuss these new requirements with their sellers so they are prepared to properly disclose prior insurance claims and federal assistance received with any potential buyers. For existing listings, the triggering event is contract formation. These disclosures will likewise need to be kept up to date. If a disclosure is completed at the listing of the property and a covered event occurs during the life of the listing, the disclosure must be updated. By making these newly required disclosures, buyers will be able to make a more informed decision when it comes to potential flood hazards of properties they are interested in. If you have any questions regarding this topic, please reach out to your local trusted real estate attorney.
