Texas Legislature Revises Statutory Seller’s Disclosure Notice to Better Disclose Flood Risks
The Texas Legislature loves to tinker with the statute that requires a “seller of residential real property comprising not more than one dwelling unit” to make specific disclosures relating to the condition and status of the property to a potential buyer. Under § 5.008 of the Texas Property Code, a Seller’s Disclosure Notice (SDN) must be provided to a buyer before the effective date of the sale contract; if the notice is provided late, the buyer can terminate the contract for any reason within seven days of receiving the notice or the closing date stated in the contract, whichever occurs first.
The latest changes to the SDN statute require additional disclosures relating to the risk that the property will experience a flood. The changes were prompted by the devastating floods in Texas caused by Hurricane Harvey, which struck the Houston area in August 2017. Harvey was the wettest tropical storm to strike the mainland United States on record, and dropped a catastrophic 40-60 inches in many areas, with epicenter Nederland, Texas receiving over 60.5 inches. Hurricane Harvey was probably at least a 1,000-year flood event, meaning that the risk of a similar flood is 1 out of thousand in any particular year. What made the situation even worse was that the Houston area had experienced 500-year flood events the prior two years; there was barely time to dry out before the next deluge.
Over 150,000 homes were flooded by Hurricane Harvey, including many that were in the vicinity of the Barker and Addicks Reservoirs, flood control reservoirs operated by the U.S. Corps of Engineers on the Buffalo Bayou, Houston’s major river, whose gates were opened up during the hurricane to relieve pressure on the dams. Over the years since the reservoirs were built, the City of Houston allowed developers to build subdivisions within the flood basins; at present there are approximately 14,000 homes within these basins that are vulnerable to flooding. And flooding was not limited to the Houston area. Governor Abbott recently estimated that at least 60 Texas counties were adversely affected by the hurricane (see his proclamation of June 13, 2109, rescuing the State Board of Plumbing Examiners from being sunsetted, an interesting story in itself).
The prior version of § 5.008 required disclosure of “Water Penetration”—this is now changed to “Water Damage Not Due to a Flood Event,” and a new section is added to the notice form dealing with flood-related issues. Here is the change to Section 4 of the SDN: