Natural Hazard Disclosure Reports: What You Should Know

When buying a home, you’re thinking about what you can afford, where you want to live, and what type of home you want. But you might not have considered whether the house is in a floodplain or an area prone to landslides. If you live in an area susceptible to high-profile natural disasters like hurricanes, wildfires, or earthquakes, chances are you already know it. But if you’re moving to a new area, you may not be aware of potential natural risks in your new hometown. Plus, not all natural hazard risks are so obvious.

That’s where a natural hazard disclosure (NHD) report comes in. What is a natural hazard report? It’s an official document that states whether a property is within a designated natural hazard area. As a home buyer, an NHD report lets you know what you’re getting into and if you need to consider extra insurance for floods, earthquakes, and fires. As a seller, depending on where you live, an NHD report may be required to disclose natural hazard risks to the buyer and can be helpful in protecting you against future lawsuits.

What Does an NHD Report Include?

In California, which is particularly prone to natural disasters, sellers are required by law to disclose whether a property is in any of the following six areas:

• Flood hazard zone: Also called a Special Flood Hazard Area or sometimes a 100-year flood zone, this area has a 1% chance of flooding each year, as identified by the Federal Emergency Management Agency (FEMA).
• Dam inundation zone: An area likely to be flooded in case of a dam failure.
• Very high fire risk zone: This is the highest classification of California's Fire Hazard Severity Zones. These are areas where the likelihood of fire is highest over a 30-to-50-year period. Other states may have their own method of determining fire hazards.
• Wildland fire areas: Also called State Responsibility Areas in California, these are places where the state or federal government is primarily responsible for preventing and suppressing wildfires.
• Earthquake fault zone: Areas surrounding active earthquake fault lines.
• Seismic hazard area: Areas prone to liquefaction (where soil can behave like a liquid) or earthquake-induced landslides.

Some California cities and counties also recognize additional natural hazard threats, such as tsunamis, debris flow, or rock fall. If the house you’re buying is in one of these areas, you’ll see this information on your natural hazard disclosure report.

Some NHD report providers can also include other important disclosures or property hazards in their reports, including:

• Airport influence areas: Property located close enough to an airport to experience booming noises, structural shaking, pollution, fuel odors, etc.
• Commercial and industrial usage: Property that is close to companies or industries that may manufacture (or previously manufactured) products that are potentially hazardous to health, water, land, etc.
• Environmental contamination sites: Property that is on or near a former military installation, landfill area, brownfield, etc.
• Toxic mold sites
• Radon gas exposure

You can review a sample NHD report for California at the end of this article.

Who Prepares an NHD Report?

When you sell a home in California, you must provide an NHD report to the buyer. Although the law doesn’t require you to use a third-party NHD service to create the report, the potential risks of getting it wrong are high. Thankfully, these reports are relatively inexpensive to buy — they start at about $80 — and are easy to obtain. Plus, when you hire an NHD expert, you’re legally protected against any errors in their report.

The NHD industry is not regulated, so choosing an established, reputable company such as First American Natural Hazard Disclosures or JCG-LGS Natural Hazard Disclosures is a good idea. Your real estate agent should guide you through this process.

Is an NHD Report Required Outside of California?

NHD reports are used in other states but are not required. Some states require sellers to disclose different natural hazards when selling properties; however, the specific hazards and disclosure processes vary. For example, Washington and Texas only require sellers to disclose what they already know about — they aren’t required to research and investigate to discover unknown issues.

With climate change amplifying the frequency and intensity of many natural hazards, knowing about potential risks is more important than ever. Even if you’re in an area where an NHD report isn’t required, ordering one can be valuable when buying or selling a home. Natural hazards like flooding, tornadoes, and fires can make homeowners insurance more expensive and sometimes difficult to obtain. Being aware of potential hazards lets you weigh the possible risks and costs before you buy. For sellers, an NHD report can provide an extra layer of legal protection in the case of a lawsuit.

Other Ways to Make Home Buying and Selling Easier

Buying or selling a home can be stressful, so finding the right real estate agent with the experience and skill to help you is essential. Your agent can guide you through the complex process of submitting offers, getting inspections, and closing — offering you recommendations and advice at each step.

Another way to gain peace of mind when selling or buying a home is to get a home warranty. This protection safeguards your budget and gives you a simple solution when covered home systems and appliances break. Learn more about home warranty coverage for buyers and sellers.

FAQs About Natural Hazard Disclosure Reports

What is an NHD report?

An NHD or natural hazard disclosure report provides information about potential hazards that may impact a property. When buying a home, this report tells you about possible risks associated with the property. This information can help you determine any additional protections you may need.

Is an NHD report required outside of California?

California is currently the only state that requires the seller to provide an NHD report to the buyer.

What does an NHD report include?

Natural hazard disclosure reports include detailed information about various natural hazards that may impact a property. In California, these reports must indicate if the property is within one or more of the following:

• Flood hazard area
• Dam inundation zone
• Very high fire risk zone
• Wildland fire area
• Earthquake fault zone
• Seismic hazard area

Who prepares an NHD report?

The seller typically purchases the NHD report from a company that specializes in natural hazard disclosure reporting. However, buyers or sellers can purchase them in any state. These companies use specialized tools and databases to quickly provide accurate and up-to-date information.

If I am selling, when should I put together the NHD report?

In California, you’re required to provide the natural hazard disclosure report to the buyer as soon as possible after you’ve accepted their offer. This gives the buyer time to review the report before moving forward with the sale.

The contents of this article are provided for general guidance only. First American Home Warranty does not assume any responsibility for losses or damages as a result of using this information.