Monday, June 28, 2010

Real Estate Commission Rules Western North Carolina Landslide Maps Must be Disclosed

North Carolina Real Estate Commission

In a recent article the Macon County News reported that Realtors and developers conducting business in landslide-mapped counties must reference hazard maps on property listings and in sales contracts. According to the newspaper, the North Carolina Real Estate commission has determined that landslide maps are material facts for sales transactions in Buncombe, Macon and Watauga Counties.

The North Carolina Real Estate Commission has not posted this ruling so there are unanswered questions. When asked for specifics re the Macon County article, the Commission's spokeman responded, "all material facts must be disclosed."

All that is known, is that Macon County Realtors were informed of the North Carolina Real Estate Commission’s findings during a May 20, 2010 meeting. Reference: Macon County News—“Realtors, developers grapple with the implications of disclosure req’s for landslide hazard maps"— June 17, 2010.

Buncombe, Watauga & Macon County Landslide Hazard Maps

Buncombe, Watauga and Macon County landslide/soil hazard maps illustrate the danger of building on unstable ground. The risk data shows past slope movement, where landslides are likely to originate, and where these destructive forces will travel. Henderson County landslide maps are pending. Jackson County will follow.

For additional information please contact the North Carolina Geological Survey.

Buncombe County Landslide Hazard Maps

Watauga County Landslide Hazard Maps

Macon County Landslide Hazard Maps

North Carolina Residential Property Disclosure Statement

For financial reasons the landslide map disclosure rule has not been well-received by many in the real estate community. Those opposing this fair warning inclusion should read the North Carolina Residential Property Disclosure Statement. This document presently requires notification of whether saleable property is located in a federally-designated flood plain. Without this caveat property owners would not know the risks and the importance of obtaining federal flood insurance.

Owners of landslide-prone real estate have no such safeguards. The fact is there is no federally subsidized landslide insurance program and industry underwriters will not insure properties located in areas like Western North Carolina.

Federal Emergency Management Agency

Western North Carolina mountain slope development has been a federal concern for more than a decade. Emergency management officials notified county governments in 1998 that significant tracts of land under their jurisdiction were not suitable or safe for development because of landslide hazards. FEMA classifies the following counties high risk:
Alleghany, Ashe, Avery, Buncombe, Burke, Caldwell, Cherokee, Clay, Graham, Haywood, Henderson, Jackson, McDowell, Macon, Madison, Mitchell, Surry, Swain, Transylvania, Watauga, and Yancey.
Western North Carolina Landslide Disasters

Intense rainfall triggered multi-county landslides in September 2004. For receipt of $72 million in federal emergency funds the state agreed to accelerate the Western North Carolina landslide mapping program. The Hurricane Recovery Act of February 2005provides a description of the harm caused by these storms:
Hurricanes Frances and Ivan wrought havoc upon Western North Carolina impacting the region on a scale not experienced before in that area of the State. The President issued two federal disaster declarations for the Western Region of the State. During Hurricane Ivan, the community of Peeks Creek was devastated by a debris flow triggered by heavy rains. The debris flow traveled speeds as great as 33 miles per hour for two and a quarter miles from the top of Fishhawk mountain. Five persons were killed and 15 homes destroyed by the flow that was estimated to be several hundred feet wide and up to 40 feet high. Other communities that were particularly hard hit by landslides include the Starnes Creek area in Buncombe County, the Little Pine area in Madison County, the White Laurel community in Watauga County, and the Bear Rock Estates in Henderson County. Further...people could not know the landslide risks associated with their housing location because such maps are not readily available. The state needs to...prepare landslide mapping for the region so that homes may be built in safe areas.
Western North Carolina Landslide Maps

When the first of the Western North Carolina landslide maps were released in 2006 then-Governor Mike Easley stressed their importance for all parties:

"These maps will show which areas are prone to landslides and that will help developers, county officials, and residents decide where to safely build homes, roads, and other structures."

Rhetoric aside, state legislators have not had much interest in identifying the region’s landslide-prone real estate. Since 2005 only three counties have been mapped: Macon 2006, Watauga 2008 and Buncombe 2009.

Landslide Hazard Disclosure Statement

Macon County Realtors told the newspaper that they understand the North Carolina Real Estate Commission’s decision but are uncertain of how to proceed. In the absence of state guidelines, Realtors and developers could avoid charges of fraud by including the following disclosure statement on property listings and in sales contracts:
Real property in this county has been evaluated for landslide risks. Landslide hazard maps are available online through the North Carolina Geological Survey.

The decision to buy landslide-hazardous real estate should be well-considered. Landslide insurance is not obtainable in this county. The inability to insure this special-risk real estate will likely have an adverse effect on property values and mortgage refinancing.

The maps and reports generated by the North Carolina Geological Survey for this county are “best guess” estimations of unstable conditions. All questionable building sites should be investigated by state licensed engineers.
Failure to Communicate

Although never recorded on subdivision plats or noted on real estate documents Western North Carolina hazardous-land conditions have been a material fact for years. It can be argued that Realtors should have disclosed the existence of and the need for the Mapping Program in 2005.

The North Carolina Real Estate Commission's ruling offers cautionary advice: there are consequences for withholding material information.

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