Joyce gave a good answer. I'm wondering:
Was the disclosure form itself attached to the contract by reference or otherwise?
If I was the buyer in this situation and it being in a flood zone (of any level requiring insurance) was a deal killer I would hold the seller to the statement. I would not matter to me if the seller just did not know. If they answer the question they answer it as of the date they make the statement. I would tell my attorney to help me take action against the seller if they didn't release the escrow and I would go for damages. Of course my attorney might tell me that I'm dreaming but I'd go for aggravating the seller as much as possible anyway.
Of course I might take an in between route instead by telling the seller I would continue with the deal if they agreed to pay my flood insurance for x number of years.
If you ask an attorney about this (and you will not know the answer till you do) I'd be interested in knowing if you can be forced to agree to pay for flood insurance. If you refuse your loan likely will be denied and the mortgage contingency will kick in. Just some thoughts to run by a real estate attorney. I hope you have one.
Where is your agent in all this and did the house show as in a flood zone on the flood maps in TREND?
Paul Howard, Broker
www.NJHomeBuyer.com Realty (an exclusive buyer's office) (EBO)
Cherry Hill NJ 08002