Assuring proper disclosure
Q: I contracted to purchase a house, and I will need bank financing. I do not want to be in a flood zone so I may reduce or eliminate the need for flood insurance. The sellers provided a disclosure form that stated the property was not in a flood zone, which was the information reported by the Lee County Property Appraiser. However, at closing, the bank required me to purchase flood insurance, because it actually was in a flood zone (the property appraiser may have had old information). This is going cost me thousands over the next several years, what should I do?
A: Due to our sub-tropical environment that can bring both torrential rains and storm surge, flood insurance is advisable to insure your own interests as well as a lender. With that said, it sounds like the owners did not realize the flood maps had changed, and were reporting what they knew. Most contracts provide for an inspection period, which includes your opportunity to confirm whether the property lies in a flood zone, and, if so, provides an opportunity to exit the contract. The inspection period likely lapsed before your closing date. Many buyers do not realize it is their responsibility to do proper due diligence, including inspecting for mold, termites and items like flood insurance. The only way you can prevail against the seller of an as-is contract is to prove that the sellers knew of a defect that materially impacted the value of the home, and failed to disclose that fact. In many cases, this is a very high burden for a buyer to prove. And, most buyers would prefer not to go to court. “An ounce of prevention is worth a pound of cure” – all buyers should confirm prior to the inspection period that the house and its characteristics are acceptable, and again walk through prior to close to ensure there are no material changes.
In your case, the seller may recognize that his or her disclosure form was wrong, and perhaps he or she will agree to give you a credit at closing, or a payment after-the fact. If you do decide to seek legal action, your attorney will need to review all facts and documents to advise whether going forward is advisable. I hope you enjoy your new home.
Eric P. Feichthaler has lived in Cape Coral for 27 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through his chairmanship of the Harney Point Kiwanis Club KidsFest, which provides a free day of fun and learning to thousands of Cape Coral families, and funds numerous scholarships. He has been married to his wife, Mary, for 13 years, and they have four children together. Recently, he earned his board certification in Real Estate Law from the Florida Bar. He is also a Supreme Court Certified Circuit Civil Mediator.
This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.