Natural Hazard Disclosure Reports
A natural hazard zone is an area where homes face a great risk for damage or destruction from natural disasters such as earthquakes, floods, landslides and wildfires.
The Natural Hazard Disclosure Report (NHD) is an essential part of the California home buying process. California law requires home sellers to provide the document as part of the 1998 Natural Hazard Disclosure Act.
In California, this report discloses if a home is:
- In an area prone to floods;
- Rests on an earthquake fault line;
- In an area likely to be subjected to fires and wildfires;
- At risk of a dam breach; or
- In a seismic hazard zone.
An NHD often runs more than 40 pages. In addition to the most common natural disasters, these reports can also disclose if a home is impacted by other potential hazards that could make insuring a home more expensive or living in it riskier, such as a home located in an airport influence area, radon gas exposure, etc.
When selling, the listing agent will order a NHD report from a third-party company before the completion of the sale. The report typically cost home sellers $100 - $200, depending on its length.
Once buyers receive the NHD form, they should review the document, and if they decide to buy the house, they must sign a Natural Hazard Disclosure Statement.
Why Do You Need A NHD Report?
An NHD report is an opportunity to inform buyers of the risks involved in purchasing your home. For example if you disclose that your home is in an area prone to earthquakes or wildfires, you won't be liable should a buyer purchase your home and it is destroyed or damaged by an earthquake or engulfed by a wildfire.
When you purchase a NHD from a third party, it also offers you protection from other potential lawsuits in the future. If the NHD contains incorrect information, the legal liability will be transferred to the company that prepared the report, not on you.