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Posted by on Mar 21, 2015 in Buying a Home | 0 comments

When do you Need to Give a Natural Hazard Disclosure Statement?

California is frequently the site for natural hazards such as hurricanes, earthquakes, and wildfire. Over the last two decades, numerous instances of “acts of God” have devastated many homes and commercial properties, resulting in significant economic losses due to property damage. As a result, the state legislature saw fit to put a law in place that will warn potential homeowners about the natural hazards that may have an impact on a particular property. This Natural Hazards Disclosure Act went into effect in June 1998.

This Act mandates that people selling a home should accomplish a standardized National Hazard Disclosure (NHD) Statement, which focuses on six areas of concern: flooding, dam inundation, very high fire, wildfire, earthquakes, and seismic hazards. In order to fill up the NHD statement properly, the seller or the agent must obtain accurate and updated information about the status of the property pertaining for each hazard. Uncertainty over the designation in a particular hazard requires the seller to select “yes,” just to be on the safe side. Easily obtaining complete and accurate natural hazard information for a specific area is possible by commissioning a report from a reputable natural hazard disclosure company.

However, it should be noted that under California Civil Code § 1103, where the Act is spelled out, the NHD statement is not confined to people who are selling their property. The section actually states in the first portion that:

(a) Except as provided in Section 1103.1, this article applies to the transfer by sale, exchange, installment land sale contract, as defined in Section 2985, lease with an option to purchase, any other option to purchase, or ground lease coupled with improvements, of any real property described in subdivision (c), or residential stock cooperative, improved with or consisting of not less than one nor more than four dwelling units.

This means that even when leasing out the property, the lessor has to provide the potential lessee with the NHD statement. Another portion includes the sale and resale of manufactured and mobile homes.

If you are planning to sell, resell, or lease real property in whatever shape or form, it would be best to provide a potential client with a complete NHD Statement. At the very least, it will shield you from any civil liability if disaster strikes. This is not an unreasonable precaution, considering that you will be spending less than $100 for a complete NHD report.

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