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Her new house floods. Under Texas law, she would have been warned, but not in Florida
Posted by C.A.F. Insurance Solutions on
By Alex Harris
Heather Gaker found her dream home on North Lake Drive in Boynton Beach in 2015. It had 28 different species of palm trees, a mother-in-law suite and — according to what the sellers and the Realtor told her — no history of severe flooding.
One summer rainy season later, 60-year-old Gaker started to suspect that last part wasn’t true. Floodwaters regularly puddled on her street, in her neighbor’s yards and came all the way up to her door. Neighbors joked she bought the flood house.
Then in 2017, six weeks after Hurricane Irma tore through Florida, the water got inside her house. The flood was a bad one; the insurance company paid out more than $100,000, over half the value of the house.
After she started fixing up the home, she got a letter from the insurance company with startling news: this was her home’s fourth reported flood with more than $5,000 in damage, and that this catapulted her home into a category known as “severe repetitive loss.”
She had few choices — elevate the home for nearly the same price as she bought it for, sell it for what the land was worth or tear it down and build something else.
“I never would have bought this house if I knew it had the flood history it had. I probably wouldn’t have bought it if I knew it had one flood,” she said. “If I had known what was going to happen no way on earth I would have gone near this house.”
In other states, homeowners like Gaker do have access to that kind of detailed information about flooding. But not Florida.
Heather Gaker’s home after a heavy rainstorm with floodwater puddled near her foundation. Heather Gaker
As of last month, Texas home sellers have to disclose a lot more information about flood risk and flood history. Now they must tell potential buyers if the home has ever flooded or if it’s in a flood pool, in or near a reservoir or if it’s within a 500-year floodplain. Previously, Texans only had to tell buyers if a home was within a 100-year floodplain, which is FEMA’s AE zone.
The new law nearly doubles the at-risk area homeowners must disclose to buyers in Houston’s Harris County, according to an analysis by the Texas Tribune.
Meanwhile, in Florida, the state most at risk from sea rise driven flooding, no such law exists. A Natural Resource Defense Council review of various states’ flood disclosure laws flunked the Sunshine State, noting that “Florida homebuyers are greatly disadvantaged when it comes to learning of a home’s past flood history or potential for future flooding.”
Florida courts have held that a home seller must disclose anything about the property that could have a “substantial impact” on its value, but it’s unclear if that ruling could apply or has ever been applied to flood hazards.
The closest thing Floridians have to flood disclosure is a voluntary form issued by the Florida Realtors Association that includes several questions about flooding. Unlike flooding, Florida sellers are required to tell home buyers if there have been sinkholes on the property. The sinkhole section on the voluntary form is led with the Florida statute requiring it.
So why, in Florida, does property value trump consumer protection when it comes to flooding?
Thomas Ruppert, a land-use expert and lawyer for Florida Sea Grant, points to the strong business interests involved in keeping property values as high as possible. There’s the local government, which relies on property taxes to keep the lights on, the real estate industry that powers the state and even the homeowner, who likely sunk their life savings into the property.
Texas has the same pressures as Florida, he said. But the massive destruction wrought by Hurricane Harvey — largely to homes built in flood plains in Houston and owned by people who didn’t know the risk — changed things for the state.
“You get enough repeated disasters and misery that the public is aware of the misery enough to overcome the political class making the determination,” he said. “It’s not rocket science. We know the issue. We know what we need to do. It’s a matter of political will.”
Texas’ laws are some of the most comprehensive in the nation, and advocates want to see the same standard applied everywhere.
Laura Lightbody, director of the Pew Charitable Trusts’ flood prepared communities initiative, said the nation’s patchwork of flood policies leaves homeowners in the dark and unable to make an informed decision about the property they’re investing in.
Her organization found that 74 percent of Americans support a national requirement for sellers to tell buyers if the home has flooded repeatedly. Pew is lobbying for the federal government to require flood disclosure as part of the next update to the National Flood Insurance Program.
For now though, homeowners have few options to find out the flood risk of a potential property. Other than knocking on doors in the neighborhood, there’s a slew of online services (some free, some paid) that rate the vulnerability of a particular piece of property.
Most, however, rely only on FEMA flood zones, a notoriously outdated measuring stick for risk. Around 80 percent of the flood losses in the Panhandle due to Hurricane Michael were uninsured because homeowners weren’t in zones that required flood insurance, the Tallahassee Democrat reported.
One such tool is MyFloodRisk.org, a free service run by one of the largest flood insurance companies in the nation, National Flood Insurance. My Flood Risk President Tuna Siraci said his product rates a property’s risk based on FEMA flood zones, property elevation, and storm surge risk.
“Our purpose is to give you a heads up that your flood zone is a horrible indication of your flood risk,” he said.
Amanda Bryant, director of operations for the firm, said her home on the barrier island of Satellite Beach is a mile from the ocean and a couple hundred feet from a river, yet FEMA says she’s in a zone that doesn’t require flood insurance.
“Florida is arguably the riskiest state for flooding,” she said. “You’d think Florida would be the No. 1 state where flood disclosure is required.”
When homeowners don’t know the risks of a property, they could end up in a situation like Gaker’s, paying too much for a risky piece of property. Florida, home to 35 percent of all NFIP policies, has more property at risk from flooding than any other. And as sea levels continue to rise, the issue of accidentally buying flood-prone property is only going to become more common.
Without consumer protections like flood disclosure, experts say the market for homes doesn’t reflect the reality, that flood-prone homes are worth less money and are riskier investments.
“It helps prop up — artificially — the value of properties where if people were more aware of that risk of that property, that property would probably be worthless,” Ruppert said.
If that continues, it could make it difficult to begin the transition of moving more people inland as climate change drives more flooding to low-lying coastal areas.
“The hope is that people choose, at the end of the day, to ultimately live in higher ground in areas that are less risky so that we don’t continue to see sea level rise, high tides, floods, hurricanes, coastal surge impacting so many lives and also costing so much because of all the valuable assets in nature’s way,” Lightbody said.