I am selling a home that has recently been deemed a flood plain (after I purchased it). I was not aware of

Asked by Pam, West Chester, PA Thu Aug 28, 2008

this fact and now the buyer is wanting to back out because she will have to pay flood insurance. I do not and have never had flood insurance and was wondering if this is a legitimate reason to breach contract or is she still bound by the contract.

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Keith Sorem, Agent, Glendale, CA
Thu Aug 28, 2008
Pam
Every time the buyer gets a new disclosure (at least in California) a three day recission period starts (meaning they can back out...they have three days to consider the new information).

Normally a disclosure company prepares a Natural Hazard Disclosure that "should" encompass all of the known things that affect the property's value. I am assuming that this holds true in your area.

At any rate, if you were to put your feet in the buyer's shoes, what would you want to do?

It is not really the flood insurance premium I would worry about if I were the buyer. It's the floods. I have relatives that live in a flood plain, and it is not fun. At all.

If you need to sell I would discuss with your Realtor approaching this development in this way:
So, were it not for the fact that the area in which the home sits has been declared a flood plain, would you proceed with the purchase, or is it the premium of the flood insurance that concerns you?

If they say "We like, it's the premium" then ask "so if we could find a way so the premium was more affordable, would you proceed?" Maybe you offer to pay for a year or two of flood insurance?

If they say,"We like the property, but we do not want to buy it because we are afraid of flooding" then that is a horse of a different color. Then it would come down to "what concerns you about the possibility that the lot would be flooded?" and see if you could work out a compromise plan of some sort.

The bad news is that this affects your value negatively and so it might make more sense to create a win-win deal so you can sell it and move on. It may be worse with the next buyer.
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Yvonne Cousar, Agent, Round Rock, TX
Thu Aug 28, 2008
Check with a real estate attorney in your area. In most jurisdictions, if a buyer did not receive disclosure of a particular problem impacting the desirability of a property at the time the contract was formed, the buyer may not be bound.

Yvonne Baker, Real Estate Consultant
http://www.YvonneBaker.com
ycbaker@kw.com
Web Reference:  http://www.YvonneBaker.com
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