Natural Hazard Disclosure (NHD) in Real Estate Explained

Answer

A natural hazard disclosure is a document that informs potential buyers about whether a property is located in an area prone to specific natural risks. These hazards might include earthquakes, floods, wildfires, landslides, or other environmental dangers that could impact the safety and value of the home. The purpose of this disclosure is to provide transparency and help buyers make informed decisions when purchasing real estate.

In many U.S. states — especially in regions like California, where natural hazards are more common — providing a natural hazard disclosure is a legal requirement during the home sale process. The document typically outlines whether the property is situated within designated hazard zones, such as a Special Flood Hazard Area, an Earthquake Fault Zone, or a Very High Fire Hazard Severity Zone, as determined by local, state, or federal authorities.

The seller is responsible for completing and providing this disclosure to the buyer, usually before closing. The information is often gathered using official maps and records from government agencies. In some cases, sellers or their agents might hire a third-party natural hazard disclosure company to prepare a formal report that complies with legal requirements.

For buyers, reviewing the natural hazard disclosure is essential, as it can influence insurance costs, property maintenance responsibilities, and personal safety decisions. If significant risks are identified, buyers may choose to renegotiate terms, seek additional inspections, or secure specialized insurance coverage before finalizing the purchase.

Ultimately, the natural hazard disclosure ensures both transparency and legal protection for all parties involved in a real estate transaction.