The Flood Insurance Podcast Episode 39: Texas Flood Insurance Disclosure Law Change

Today we're talking about the new law change in Texas when it comes to disclosing information on a property. We want to talk about why the law changed, why is it important now, what helped create this law change, and most importantly who is it going to impact?

Texas Disclosure Law

It's important to note first that there were a lot of things that impacted the law change, but today we want to focus on how it relates to flood insurance. A lot of flooding had happened lately and in fact, one of the biggest floods Houston faced. When Hurricane Harvey hit Houston, it dumped more than 40 inches of rain over a short amount of time and flooded properties that had never been flooded before. Areas that were told they didn't need flood insurance got hit hard with flooding at that time. A lot of these areas were flooded because they sat between two reservoirs. 

What Changed

What happened previously is you only had to at least disclose that you and your property sit in a 100-year flood zone. When this Texas law change happened, there are more guarantees to potential buyers of the property. This is due to owners having to disclose the history of flooding experienced by the property and if it sits in a 100-year flood zone or 500-year flood zone. 

Now, this does two things for the potential buyers of the property which really helps the consumer in this market. First, it helps them understand the long-term flood risk of the property as well as if there are possible concerns of having the property flooded before. This can really help buyers when it comes to checking the history of flooding since it will affect the resell value of the property as well as the severity property list.

Severity loss property means that the house or building was flooded more than once within a 10-year period. When this happens, the flood insurance premiums for that property can be very expensive. This can also mean that there will be limited options is very limited because of some mitigation efforts that FEMA requires.

Why Change Now?

Now, most people would ask why is now the good time to have this law out there? Well, as we get through Hurricane Harvey, and now we've gotten through another tropical storm that just dropped 40 inches of rain, this law is really coming in the right place at the right time. As we fix these flooded properties or maybe some that are getting flipped when real estate investors buy them, they're going to have to disclose the flooding history of the property. This really does a great job protecting a consumer or buyer in that market. 

Will this have an impact on the housing and real estate market in Houston? Absolutely since these houses may not sell as much as they did before because now you're having to disclose whether or not these properties were flooded or not. 

So we just wanted to do a quick cover on this Texas law change as this will definitely change the course of the real estate market in Houston as well as directly impacting the flood insurance premiums for these houses. If you have more questions on this Texas law change, federal flood insurance, the insurance industry in general, how the National Flood Insurance Program works, or anything about flood. Reach out to us.

Remember, we have an educational background in flood mitigation and we want to help you protect the value of your property long-term. Click the links below to know more and get started: