Understanding the Duty to Notify of Obtain and Maintain
In July 2017, Louisiana REALTORS® ("LR") published an article on “" Obtain and Maintain Insurance Requirements " to provide information to REALTORS® about the perils of failing to purchase flood insurance for property that had previously flooded and received federal money. In addition to the article, a sample “ Flood Insurance Purchase Requirement Addendum” form ("Addendum 1") was provided to REALTORS® for assisting sellers in complying with the requirements of the obtain and maintain law and the duty to notify it includes.
To supplement the article, in December 2018, LR published another article to further explain this legal requirement and its application.
Since such time, several REALTORS® have contacted LR to inquire about how to find the necessary information to complete the sample Addendum 1 when their sellers do not know the amount of FEMA aid received by previous owners of the property. In a State that sees flooding every year, and no region is safe from water intrusion, it is no surprise this is a wide-spread concern. This article provides additional information on Addendum 1 and an alternative sample Addendum ("Addendum 2") when the information is not available to complete the initial sample Addendum 1.
OVERVIEW
WHAT ARE THE POTENTIAL AMOUNTS?
HOW TO FIND OUT:
When a seller or buyer wants to know the minimum amount required for a flood policy, a public records request for this information can be made to retrieve such information from the following:
Individual Assistance or Public Assistance | FOIA request to FEMA:
www.dhs.gov/dhs-foia-request-submission-form.
Hazard Mitigation | Governor’s Office of Homeland Security and Emergency Preparedness:
http://gohsep.la.gov/ABOUT/PUBLIC-INFORMATION.
CDBG-DR | OCD-DRU Office:
THE BOTTOM LINE
In response to REALTORS® requests, an additional sample addendum to the “Louisiana Agreement to Buy and Sell can be downloaded. Although Addendum 1 provides the most complete information to buyers, Addendum 2 will put buyers on notice of the legal requirement of the Obtain and Maintain notice, and may be used when the Seller was not the actual recipient of disaster assistance and does not know the amount of disaster assistance the property received. Addendum 1 is also attached and can be used when the seller received FEMA funds or has information regarding the FEMA funds received by the previous owners. Addendum 1 and Addendum 2 are sample forms. You may wish to create your own form in consultation with your counsel. Please note disclosure of the "obtain and maintain" requirement must be included in the Act of Sale.
[1] The SFHA includes Zones A, AO, AH, A1-30, AE, A99, AR, AR/A1-30, AR/AE, AR/AO, AR/AH, AR/A, VO, V1-30, VE, and V; and can be verified at https://www.fema.gov/special-flood-hazard-area.
