After Harvey surprised thousands with unexpected flooding, new law aims to better inform homebuyers

By Lara Korte and Connie Hanzhang Jin
© 2018 The Texas Tribune

When Hurricane Harvey's devastating rains began overwhelming the Houston area, Donna and George Duggan didn't immediately evacuate their Katy home.

After all, the Duggans, both 62, had lived there for the better part of 20 years and the house had never flooded. Until one Sunday morning in late August 2017, when, after a night of heavy rain, George Duggan woke up his wife with a warning.

"He said, ‘Donna, I think we're going to flood," Donna Duggan said. "So we got packed up."

The Duggans, and their Corgi, Cooper, were rescued from their home by volunteers just as rising flood waters approached their front steps. Had they known decades earlier that their home sat in a designated flood area known as Barker Reservoir, Donna Duggan said they would have thought twice about their decision to live there.

"We would never have bought it," she said of the house that would eventually flood with two feet of water and require months of cleanup and renovation.

Starting Sept. 1, the state will require homeowners to disclose more information about flood risks and flood history before they sell their property. Previously, sellers in Texas had only been required to disclose whether their home was in a 100-year floodplain — an area, typically along a river or bayou, that has a 1% chance of flooding every year. Senate Bill 339, which Gov. Greg Abbott signed earlier this year, expands that disclosure to include whether the home is located in a 500-year floodplain, a flood pool, in or near a reservoir, and whether the home has flooded or may flood in a catastrophic event.

It's a step toward transparency for homebuyers in Texas, but figuring out a property's true risk of flooding can be tricky, and others are worried about the impacts to home and insurance prices.

"That's going to pose difficulties for the seller," said Mary Conner, a Houston attorney who specializes in environmental litigation. "Under Texas law, buyers can sue sellers under certain circumstances for certain failures to disclose."

Daniel Gonzalez, director of legislative affairs for Texas Realtors, said it's going to be best for sellers to be honest about the state of their homes — flood risks and all. But if a homeowner is unaware of risks and the home floods after they sell it, the burden of proof would be on the buyer.

"If a buyer does bring a lawsuit forward, they would have to prove the seller knowingly kept that information from the sellers disclosure notice," he said.

For a homeowner to determine if they need to disclose flood risks, they could look up the location of their home relative to floodplains using FEMA's map locator tool. But there's one problem — floodplains aren't always an accurate indicator of flood risks.

Amanda Bryant is director of operations for National Flood Insurance (an organization not affiliated with the federal government flood program) that works to inform homeowners of all the factors that could mean flooding for their property. Bryant said because FEMA maps don't take into account land development, rainfall or changing weather patterns, they leave owners woefully uninformed of their true risks of flooding.

"They're not looking at elevation differences, they're not looking at how the land is being used," Bryant said. "All of that changes flood risks substantially. Water will soak into soil but it won't soak into asphalt."

The maps, which are based on historical data, are supposed to be updated regularly, but that process often encounters delays. Harris County, for example, was supposed to have updated maps in May 2018, but is now scheduled to have an update in November. In March, FEMA announced it would change the way it determines flood risks — revamping methodology that hasn't changed since the 1970s. The new method, called Risk Rating 2.0, should debut in 2020.

Thousands of Houston-area properties outside of the 100-year floodplains flooded during Harvey, according to city data. Many people didn't know their homes sat within the boundaries of two reservoirs — Addicks and Barker — that had been built in the 1940s by the U.S. Army Corps of Engineers. But those weren't the only people whose homes flooded.

During Harvey's epic rain, as the water in the reservoirs got to a critical level, the Corps opened the dams from Addicks and Barker into Buffalo Bayou, flooding thousands of homes downstream of the reservoirs, many of which sat outside of designated floodplains.

According to data from the city of Houston, the majority of structures impacted by Harvey were outside of the 100- and 500-year floodplains. Even when excluding properties in the Buffalo Bayou and San Jacinto watersheds, 46,000 structures inside floodplains were impacted compared to 65,000 structures outside floodplains.

If those homeowners decide to sell their properties in the future, they will be required to inform potential sellers of past flooding or future risks on the seller's disclosure form.

While it does mean homebuyers will be better-informed about catastrophic risks, it also means current owners could be forced to take unforeseen losses when they decide to sell.

"Every realtor's concerned that it's going to have an impact," said Bill Baldwin, owner of Boulevard Realty in Houston. "You're going to get a number of different things that are going to impact selling homes — some of it is disclosure, some of it's new flood maps — that will greatly impact our ability to sell some of these houses that have been easier to sell in the past."

The biggest impact the law will likely have is to spur more people to buy flood insurance policies. Flood insurance is separate from homeowners insurance and optional for homes that sit outside of 100-year floodplains. As of 2017, Texas had about 665,000 flood insurance policies in effect. But many feel that number is far too low, and that floodplain maps don't do a good job of conveying the true risk of flooding.

"It's a constant battle to keep people's minds set to the level of risk that we have," Baldwin said. "We're a society that moves on and doesn't think about something relatively quickly, whether that was the last storm or the last situation. So, I think it's a constant battle to keep on peoples' mind the level of risk and their need for flood insurance."

One of the stipulations of the new law is that homeowners must disclose to buyers if the property may flood under catastrophic circumstances. Gonzalez, with Texas Realtors, said lawmakers were likely trying to apply that rule to people who live near reservoirs.

"In the real world, I think what's going to happen is someone who had previous flooding is obviously going to be checking that box," he said. "Obviously, I think the word catastrophic could have a different definition to different people, but I think for the most part, you're going to see people fill that in if they've had previous flooding of the property."

Huffman did not return several requests for comments about the law or her intentions of that section.

The Duggans, however, have already decided to embrace the notification — and even plan to offer to pay the buyers for several years of flood insurance when they eventually sell.

"We've already got the paperwork to show what they did to remediate the flooding," Donna Dugan said. "I think you have to be honest."

Baldwin called SB 339 "a step in the right direction" and said there's still more that could be done to keep homes safe from flooding. The new law goes into effect on Sept. 1, but regardless of where a home falls on a map, Donna Duggan wants to caution homeowners to err on the side of caution regardless of whether they are buying, selling or staying put.

"The first thing that I would say to anybody that lives along any of the Gulf Coast or any of the coasts?" she said. "Get flood insurance."

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© 2018 The Texas Tribune