The Natural Hazard Disclosure (NHD) is a report that is anywhere from 40 to 100 pages and is a required disclosure in the state of California for anyone purchasing a home.

Unfortunately many buyers become  too intimidated by the size of the report and never really take the time to learn the important information inside.

The good news is this report is nowhere near as intimidating as it looks.  I’m going to break it down for you and show you how you to review and understand the whole thing in 10 minutes flat.

The NHD is broken up into two or sometimes three parts:

  1. Part One is the part that actually describes the natural hazards.  You will find that the actual report is only 2-3  pages and it is located somewhere around page 6 of the document.
    1. You will recognize the report itself because it will have a list of all possible hazzards and checkmarks indicating whether the home is “In” or “Not In” a particular hazard area.
    2. This report is broken up into 3 parts: state, county, and city.  Each municipality is in charge of over-seeing different categories of hazards, but in many instances, those categories overlap so it’s possible to see conflicting information between city, county, and state.
      • The first thing you will want to do is find this report and go through it to see which hazards the home area is “In”.  In the case of conflicting information always error on the safe side and assume the hazard does exist.
      • Ignore all of the hazards that the home is “not in” because they do not affect you.
    3. The next 30+ pages are for your reference and will provide detailed explanations for each type of hazard.  The only pages you are going to be interested in are the ones for the “In” hazards, so you can safely discard the rest unless you’d like to save it for some exciting bedtime reading 🙂 .
      • If you would like t know more about a specific threat or hazard that might affect your home look at the page number listed next to it and refer to the appropriate page for an explanation.
    4. RELAX!  Your home is not going to sink into the ground, flood, or shake itself into rubble.
      • It is perfectly normal to have natural hazards in the area where you live.
      • Just because there is a threat, does not make it a significant threat.  A home close to a creek might be labeled as a flood hazard regardless of the fact that the creek is 2 blocks away and has never had more than 1 inch of water.
      • The key is to be aware of the potential threat, get educated on the topic, and take the appropriate precautions in the care and maintenance of your new home.
  2. Part Two of the NHD is regarding the local taxes which start about half the way through the report after the last Hazard has been explained.
    1. The first page shows what type of taxes and liens you are subject to.  Are you in a Melo Roos area? which means you’re paying a little extra for streets and sewers,  or do you only have direct assessments (property taxes, and whatever the voters passed)
    2. On page 2 you’ll see a break-down of all of these taxes as they’ve been paid by the prior owner.
      • There is nothing you’re going to be able to do about the taxes until the next election, so the goal of this report is to make you aware of how much you will be paying and where that money is going.
    3. A few pages in, will show you how to estimate your future property taxes based on your purchase price. (Just plug it into the calculation.)
    4. The last few pages talk about transfer taxes when you’re buying and selling, as well as various other potential taxes and fees.
  3. There is now an optional part 3, depending on how much the purchaser of the report wanted to pay.  This part will include other information such as:
    1. Information on gas pipelines in the area – this has become much more popular since the devastating explosion in San Bruno in 2010.
    2. Information on chemical contaminations in the local area.
    3. Neither of these are actually legally required disclosures at the current time (6/3/11).

Aside from the NHD, by law, you are also required to receive the The Combined Hazard Book, which consists of 134 pages with the following publications:

  • Residential Environmental Hazards
  • Protecting your Family from Lead
  • Home Energy Rating System
  • Home Owner’s guide to earthquake safety
  • Mold and other safety information

This is a booklet that every buyer in the state of California is required to receive when they buy. It has a tremendous amount of information that you should at least skim through if not read.  A lot of it will not apply to you because of the age of the home or the specific situation you’re in, but some will apply and will be important to know.

If you have any questions about the NHD, or are thinking of buying or selling a home in the bay area, CONTACT US today for a free consultation!