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Senate panel debates weakening seller duties on FEMA flood-map disclosures
Summary
The Senate Economic Development, Housing & General Affairs Committee debated H.106 and whether to remove seller obligations to identify whether property lies within FEMA flood-mapped hazard zones, to add a prospective effective date and short intent language, and to narrow liability for sellers who rely on available maps or professional reports.
The Senate Economic Development, Housing & General Affairs Committee on May 13 examined H.106, a bill that would change what sellers must tell buyers about flood risk and map status for Vermont real property.
Committee members and counsel reviewed Act 181 (the existing statute), concerns raised by the House amendment to H.106 and possible constitutional problems if the Legislature removed earlier disclosure requirements retroactively. Authority witnesses and real-estate representatives discussed options ranging from keeping current disclosure duties, to requiring only that sellers provide a link or copy of a FEMA flood insurance rate map, to adding a statutory “reasonable effort” defense for sellers who cannot determine a property’s map status.
Why it matters: the law currently requires sellers to disclose whether the property is in a FEMA-mapped special or moderate flood hazard area, whether the property was subject to flooding while the seller owned it, and whether the seller maintains flood insurance. Those duties create private remedies for buyers who do not receive the disclosures. Committee members said striking the location-disclosure requirement without addressing retroactivity would expose the state to constitutional challenges and leave a gap for transactions that occurred while the current law was in force.
Committee counsel, Cameron Wood of the Office of Legislative Counsel, summarized the statutory baseline and the House changes, noting that the House preserved the disclosure but expanded a seller’s defense if the seller, "after a reasonable attempt to identify whether the location is in a FEMA mapped ... flood hazard area, notifies the buyer that the seller cannot reasonably determine" the location. Counsel cautioned that removing a past duty could raise constitutional questions and said findings could help courts understand the Legislature’s reasons for a prospective change.
Representatives of the real-estate community urged care. Peter Bogart of the Vermont Association of Realtors and other real-estate commenters warned that changing the law prospectively could nonetheless be cited by defendants as a reason they could not determine map status during the period between act enactment and any new effective date.
Committee members discussed practical alternatives offered at the May 13 hearing: (1) preserve seller disclosure that a property has been subject to flooding and whether the seller maintains flood insurance; (2) remove the statutory obligation for sellers to determine or certify that their property is in a FEMA-mapped area but require sellers to provide the buyer an electronic link or copy of the applicable FEMA map; and (3) add brief legislative intent/findings explaining that FEMA maps are not uniformly accurate to help courts evaluate later suits if the repeal were applied retroactively. Several committee members said they preferred a prospective change and opposed broad retroactive repeal of the prior disclosure duty.
The committee directed staff to prepare revised draft language for the next meeting that would (a) remove the requirement that sellers certify whether a property is in a FEMA-mapped area, (b) retain seller disclosure about prior flooding and whether the seller maintains flood insurance (reworded to clarify whether the property is required to carry flood insurance), (c) require sellers to provide buyers with a FEMA map or an electronic link to the FEMA map for the property, and (d) include brief intent language explaining the Legislature’s reasons for the change if members want courts to consider that finding. The committee set a follow-up discussion for 9 a.m. Thursday to consider a redraft and asked counsel to circulate proposed intent language to members for comment.
Background and context: Act 181 (the law in effect before the House amendment to H.106) already required sellers to disclose four items related to flood risk (map location, prior flooding or flood damage during seller ownership, whether the seller maintains flood insurance, and mobile-home–specific disclosures). Under current law a buyer may sue for damages and reasonable attorney’s fees for failure to provide required information, and punitive damages are available if a seller knowingly withheld required information. A seller currently has a defense if the inaccuracy or omission is based on a written report from a public body or a licensed professional.
Next steps: Committee counsel will circulate a revised draft and intent language; the committee will reconvene Thursday morning at 9 to consider the draft. No formal vote occurred on H.106 at the May 13 meeting.
