Regarding flood insurance, can a buyer back out of a deal if the seller(foreclosure,bankowned) failed to disclose that the home is in a flood zone?

Asked by Bj Moore, Atlanta, GA Mon Jan 11, 2010

This brings ups all kinds of issues that were not anticipated. Am I stuck?

Help the community by answering this question:

+ web reference
Web reference:


Dena Hoggard, Agent, Atlanta, GA
Mon Jan 11, 2010
Normally an individual seller would have to fill out a Property disclosure and must disclose everything. With bank owned properties they usually have a clause in their addendums that state that the property is sold "as is" with no disclosure. Most bank owned sellers have not even seen the property. They are relying on appraisers, and listing agents to take pictures and market the property. It is up to the buyer to discover all such issues with the property during the inspection period. You can always back out of a deal before closing but will lose any earnest money and any money you have put into inspections and appraisels. If you signed a financial contingency you can get the lender to say they won't loan on a house that is in the flood plain, then you in turn can not obtain a loan.

Dena Hoggard

H&L Realty Group
1 vote
Marla McWill…, Agent, Coeur d Alene, ID
Sat Jan 16, 2010
Talk to your lender. Flood insurance can raise the cost of your mortgage payment considerably and you may not be able to qualify at the higher mortgage payment. If your contract has a financing contingency, that may be a way out for you......

However, the BEST bet is for you to take your contract to a real estate Attorney, and ask them that question. That is definately a legal question that should be addressed to an Attorney.

Good Luck....
1 vote
Hank Miller, Agent, Alpharetta, GA
Sat Jan 16, 2010
Banks sell things 'as is" - did you not complete a thorough due diligence? The appraiser should have run a flood map check as part of the appraisal, the lender often runs their own as well. You're likely stuck if the due diligence period is up - this is a perfect example of why you have to go in eyes wide with these bank homes.

You can likely punch out and lose the earnest money, have your agent check the contract - but given the fact that the agent should have been closely advising you so that this didn't happen......

Hank Miller, SRA, ABR
Associate Broker & Certified Appraiser
Prudential GA Realty
0 votes
James Dudley, Agent, Suwanee, GA
Tue Jan 12, 2010

Dena explained it best.

Consult your realtor & their broker before you proceed. They should review your contract terminology and be able to find you an acceptable way out of your contract if you are not comfortable. At worst you would lose your earnest money deposit.

Keep in mind with the recent rains and flooding in the area if the home did not flood then you should be in good shape. You will spend a little more on flood insurance, but this may be an opportunity for you to negotiate a better deal on your purchase with the bank.

Don't panic evaluate the situation and see where negotiations lead you.

Best of luck!
0 votes
Anna M Brocco, Agent, Williston Park, NY
Mon Jan 11, 2010
What does your contract state--you may wish to consult any attorney specializing in real estate,. regarding any statutory flood zone disclosure requirements, etc--protect yourself.

0 votes
Nancy Doyle, Agent, Cape Coral, FL
Mon Jan 11, 2010
Hi Bj,
It all depends on the verbiage in the contract and bank any addendum's. I have had a few bank owned properties that in the bank addendum they allowed for nothing. In other words not even an inspection period...buying as is. Did you work with a Realtor on this? If so I would run this by them as they are familiar and can interpret the language in your contract and explain it to you. If you did not use a Realtor I would recommend getting in touch with a local real estate attorney to help. Usually with bank owned homes they do not disclose anything as they know nothing to disclose. That is the big risk in buying foreclosures and the importance of being represented by a Realtor.

I wish you the best of luck,

Nancy Doyle
search Cape Coral homes for sale at
Web Reference:
0 votes
Search Advice
Ask our community a question

Email me when…

Learn more