Natural Hazard Disclosures for Real Estate Transactions

One of the main purposes of using an escrow officer when moving forward with your real estate or business transaction is to make sure that both seller and buyer fulfill all of their requirements (both legal and contractual). The escrow officer holds onto all of the funds in the transaction until those requirements are met, at which point, the escrow officer is legally allowed to begin disbursement. One of those legal requirements that must be completed by the seller, at least for real estate transactions in California, is what is known as a natural hazard disclosure, or NHD. In general terms, this means that, before escrow can close, the seller must disclose any and all potential hazards related to the real estate property being sold.

In some cases, sellers will fill out the required documentation themselves, usually the Natural Hazard Disclosure Statement or on the Local Option Real Estate Transfer Disclosure Statement (if applicable), both of which allow the seller to outline all hazards in full. However, the vast majority of sellers elect instead to use a third-party service to prepare the disclosure statement. It is important to note that, even if a seller uses such a third-party, they are still legally responsible for any information that is not disclosed. So, if a seller wishes to use a third-party service, they should make sure to choose one that will deliver the required scope of information necessary.

Natural Hazard Disclosures need to have information regarding whether the property is located in an area that has a heightened risk of certain (usually significantly destructive) natural disasters. For example, the seller must disclose if the area is one of potential flooding and if it is located in Zone A or Zone V (specially-designated zones that have very high flood hazard). Additionally, the NHD will include whether the area has been designated as "high fire risk," or if it is within a designated wildland area. Finally (and perhaps most devastatingly, in California), the NHD must list if the property is in an area with heightened earthquake risk and if the property is located along a fault line.

So, now that you know what kind of information you need to disclose when selling real estate, make sure that you cover all of your bases before escrow closes. A recent analysis of several third-party NHD preparers discovered that several of the companies only included the major, state-mandated information, as outlined above. However, there are often local city or county regulations that require even more natural hazards to be disclosed. These additional disclosures can range from recent methane leakages to issues with hillside erosion or landslides. So, be careful when filling out your disclosure statement, and be even more careful if choosing a third-party. You don't want to be left without full legal and financial protection because of a couple of missing disclosures.

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Caltech Researchers Discover Deep-Level Earthquakes in the Mantle

For a very long time, seismologists (people who study earthquakes) believed that earthquakes could only happen in the Earth's crust layer, no more than 15 miles below the surface. A recent discovery by researchers at Caltech turned that assumption on its head. As Rong-Gong Lin II wrote in his L.A. Times article, it turns out that some earthquakes actually have the ability to travel deep under the surface, to the mantle level, which can multiply the quake's power many times.

Some of the earthquakes took place so far under the surface that the state-of-the-art sensors employed by the Caltech researchers barely sensed them, which explains why conventional seismometers have failed to pick up the signals in the past. Basically, what the researchers discovered is that the largest earthquakes are those that spent some time percolating in the mantle. One example was the 8.6 earthquake that happened in the middle of the Indian Ocean in 2012. At the time, science's understanding of how earthquakes work could not explain how an earthquake that large had happened.

If these greater-strength quakes were possible, areas around the Newport-Inglewood fault or the San Andreas fault could be at risk. Fortunately, the researchers have so far only found evidence of microquakes (2.0 or less) that originated in the deeper layers. It is possible that the deeper-level quakes are more spread out and don't usually join together, which could mean that they would only cause small microquakes. If a quake on the scale of magnitude 3 or 4 were to be detected in the mantle, concerns would likely be raised, but right now, researchers have asked for more time to study and learn more about the way earthquakes work.

Additionally, research performed in areas other than the Long Beach portion of the Newport-Inglewood fault line did not show nearly as much evidence of deep quakes. Some evidence points to liquids flowing up from the mantle in certain beachside areas, so that may contribute to Long Beach's increased risk for deep quakes. At the moment, there is no way to tell if deep-level quakes are as large a risk as they could be. Perhaps it is only an issue in Long Beach; maybe it's only an issue in cities that border the ocean. Only time and a lot more research will reveal the truth.

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Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.

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