Natural Hazards Disclosure (NHD) Report
What it is:
A report required by most states that discloses if a property is located in an area that has a higher risk of natural hazards. The report is typically paid for by the seller & given to the buyer during escrow.
While a NHD Report may seem intimidating, get a quick overview of the most important information its “Summary Page.”
Look for the “X” marked under “IS” or “IS NOT” for easy identification.
The natural hazard zones covered in a NHD report:
- Special Flood Hazard Area
- Area of Potential Flooding
- Very High Fire Hazard Severity Zone
- Wildland Area that may Contain Substantial Forest Fire Risk and Hazards
- Earthquake Fault Zone
- Seismic Hazard Zone
In addition to disclosing the above items, the following supplemental disclosures are commonly reported as well:
- Mello-Roos Taxes
- Special or Direct Assessments
- 1915 Bond Act Districts
- Airport Influence Area
- Commercial or Industrial Area
- Military Ordinance
- Oil and Gas wells
What if the property being considered is in one of the natural hazard zones?
Each hazard zone may have a different impact, which should be further examined should the considered property fall within any of the above mentioned zones.
Possible impacts could include limits on what you might be able to build, the insurability of the property, limits on assistance after a disaster, or responsibility for extra tax payments.
Should it be the case that the property you are considering happens to fall within a natural hazard zone, and you find yourself subject to potential impacts, not to worry. Below are a few questions to help you begin considering how best to move forward:
- Am I OK with this home being subject to [...]?
- Is this a cost that I am willing to take on?
- Is this cost high enough to reasonably ask the seller to contribute to?
- Will this impact the resale value of my home?
Your Open Listings agent can help you understand the impact of any hazard zones that the property might fall into. Generally, you can manage the hazard risk with additional insurance coverage -- your lender will require that you have flood insurance if your home is in a flood zone for example.
As with all disclosures, make sure you read them carefully and ask your agent about anything you might not fully understand.