Vt.: Mandatory flood risk disclosure for real estate transactions passes state Legislature 

May 28, 2024

Recently, the Vermont Legislature passed a significant piece of legislation to enhance transparency in real estate transactions and rental agreements concerning flood risk. The measure, which is part of a larger piece of legislation (H.687), would mandate that sellers, landlords and mobile-home park owners disclose flood hazard information to potential buyers and tenants. 

Seller’s obligation 

If the bill is signed into law, before or as part of a real-estate sale contract, sellers would need to inform buyers if the property requires flood insurance under federal law. This information would need to be presented clearly in a separate document, attached as an addendum to the contract. 

Buyer’s rights 

According to the bill, if the seller fails to provide this flood risk information, buyers would have the right to terminate the contract before the transfer of title or occupancy, whichever comes first. In addition, buyers who do not receive the required flood risk disclosure would be able to seek compensation from the seller for damages and reasonable attorney’s fees. 

The bill also allows a buyer to seek punitive damages if the seller knowingly withheld the information. However, sellers would not be liable for errors, inaccuracies or omissions in the disclosed information, if it was based on data from public bodies or professionals with specialized knowledge—provided the seller believed the information to be correct and shared it with the buyer. 

Rules for rentals 

If signed into law, the bill also would affect landlords who would need to disclose to potential tenants if any part of the rental property is in a flood hazard area as mapped by the Federal Emergency Management Agency. This notice would be given in a separate written document before the lease is signed. 

Rules for mobile-home park leases 

Mobile-home park owners also would need to include a notice in all lot leases if any part of the park is in a flood hazard area, according to the current flood insurance rate map. This notice would need to be conspicuous and provided as a separate document attached to the lease. 

This bill aims to protect buyers and tenants by ensuring they are fully informed about potential flood risks associated with their property. By mandating clear and upfront disclosure, the bill is designed to prevent future disputes and financial losses related to flood damage. 

Even if it isn’t signed into law, this bill underscores the importance for agents and brokers to communicate with clients about the risks of flooding. It creates an opportunity to discuss the risk of flooding and what the clients should do to protect themselves. 

What happens next? 

The bill will be sent to Gov. Phil Scott for his consideration. However, there is no guarantee that the governor will sign the bill.  

While the flood disclosure measure is uncontroversial, its inclusion in a larger bill could mean it might become a political casualty.  

Bradford J. Lachut, Esq.
PIA Northeast

Bradford J. Lachut, Esq., joined PIA as government affairs counsel for the Government & Industry Affairs Department in 2012 and then, after a four-month leave, he returned to the association in 2018 as director of government & industry affairs responsible for all legal, government relations and insurance industry liaison programs for the five state associations. Prior to PIA, Brad worked as an attorney for Steven J. Baum PC, in Amherst, and as an associate attorney for the law office of James Morris in Buffalo. He also spent time serving as senior manager of government affairs as the Buffalo Niagara Partnership, a chamber of commerce serving the Buffalo, N.Y., region, his hometown. He received his juris doctorate from Buffalo Law School and his Bachelor of Science degree in Government and Politics from Utica College, Utica, N.Y. Brad is an active Mason and Shriner.

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