Why do I need Natural Hazard Disclosure and Tax Reports?

November 8, 2018 12:13 pm

PDQ Report Hazards

Are the NHD, Tax, and Environmental reports legal obligations of home sellers and Realtors?

When a home is sold in California, the seller is legally mandated to disclose specific hazards and taxes that affect the property.  Generally, sellers turn to 3rd party companies, such as PDQ Disclosure, that provide this information in Natural Hazard Disclosure and Tax reports to fulfill this obligation.  These reports are designed to give buyers an understanding of hazards and taxes that impact the property in question.  This helps protect sellers by limiting their liability and thus reducing potential hassles in the real estate transaction.


What is a Natural Hazard Disclosure report (NHD)?

When selling or buying your home in California, a Natural Hazard Disclosure (NHD) report is a required part of the transaction.  A NHD report fulfills the obligations of The Natural Hazards Disclosure Act, under Sec. 1103 of the California Civil Code, which requires any seller or their agents to disclose whether their property for sale is located within any of six specified natural hazard zones.

The 6 hazard zones required to be disclosed are

  • Flood Hazards: FEMA Special Flood Hazard Zones, Areas of Potential Flooding
  • Fire Risks: Very High Fire Hazard Severity Zones and Wildland Fire Areas
  • Seismic Hazards: Earthquake Fault Zones, Seismic Hazard Zones.

Though California law requires 6 hazard zones to be reported, PDQ Disclosure’s NHD report covers over 30 potential that could impact a property, including

  • Radon Gas Exposure
  • Airport Influence Area
  • Military Ordinance

PDQ Disclosure’s Natural Hazard Disclosure reports provide prospective buyers a clearer picture of the prospective property.  NHD reports are an indispensable tool, allowing buyers to make better informed decisions about their purchase. There may be additional expenses for a property owner if their parcel is within hazard zones, such as additional retrofitting, fire abatement or the purchase of insurance.  To further protect buyers, California law allows a home purchase contract to be canceled up to 3 days after receiving the NHD report if the buyer is not satisfied with the information .  There can be no penalties imposed on the buyer for canceling and both parties walk away free and clear. 


What is a California tax report in a real estate transaction?

Sec. 1102.6 of the California Civil Code mandates sellers of property in California to disclose all Mello-Roos and 1915 Bond Act districts affecting the subject property.   In addition, there are sometimes multiple taxes and “special assessments” levied against a property. These are implemented to help pay for roads or other public improvements or to supplement existing taxes. The California tax report helps mitigate the seller’s liability by offering a thorough disclosure of taxes, assessments and fees.  The California Tax disclosure includes all legal requirements set by California law, and, like the PDQ NHD report, the California Tax report provides important supplemental information. The following items are covered in the California tax report

  • Notice of Special Tax and Assessments
  • Notice of Fire Prevention Fee
  • Supplemental Tax Bill Calculator
  • Notice of Supplemental Property Tax Bill
  • Special Alert
  • Description of Mello-Roos Community Facilities Districts
  • Tax Bill General Breakdown
  • Description of Property Tax Charges


What is an Environmental report in a real estate transaction?

The Environmental report is an optional report in a real estate transaction that is becoming more popular. The information found within the report helps buyers determine the proximity of known environmental hazards that impact a property. The report includes a hazard map that shows the location of sites up to a mile that could have an environmental hazard risk as reported by federal, state and county agencies. The reports provide descriptions and as much information as possible about the sites to help disclose location and types of hazard found around the property. These sites include:

  • Radiation Information Database
  • Toxic Release Inventory
  • Hazardous Waste Facilities and Cleanup Sites
  • Condition and Location of Oil and Gas Wells
  • And many more

An Environmental report from PDQ Disclosure provides the proximity to hazard sites documented by various sources including the US EPA, the RCRA, and the Department of conservation (These databases exceed 10,000 records and cover over 20 hazards). PDQ Disclosure delivers the highest quality Environmental reports possible and are created by our team of disaster management and risk mitigation specialists.


What makes reports from PDQ Disclosure different?

Disclosure supports Realtors and home owners by providing NHD, Tax, and Environmental reports created by our team of disaster management and risk mitigation experts.  We have helped Realtors and home owners conducting FSBO home sales meet and exceed California Natural Hazard Disclosure requirements since 2003.  We raise the bar in NHD disclosures by providing the real estate industry the same quality and expertise we have provided organizations like FEMA, Lloyds of London, NASA, and the World Bank.

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