In 1968, the US Congress created the National Flood Insurance Program (NFIP). Now administered by the Federal Emergency Management Agency (FEMA), the intent of the NFIP is to reduce future flood damage and to provide protection for property owners from potential losses through the purchase of federal flood insurance. The NFIP provides affordable flood insurance for property owners by encouraging communities to adopt and enforce floodplain management regulations. These efforts help mitigate the effects of flooding on new and improved structures.
FEMA produces Flood Insurance Rate Maps (FIRMs) that show areas in a community that are subject to flooding. The maps depict common physical features in the community, along with information that allows the identification of Special Flood Hazard Areas (SFHA), the location of a specific property in relation to the SFHA, the base (or “100-year”) flood elevation or depth at a specific site, the magnitude of flood hazard in a specific area, regulatory floodways, flood insurance risk zones, and areas subject to inundation by the 500-year flood. A SFHA is any risk zone “A” or “V” on a FEMA flood map. (Source: FEMA website.)
In 1998, the California Legislature mandated the disclosure of SFHAs in real property transactions, along with certain other disclosures of flood, fire and seismic hazard zones. The seller's agent or the seller without an agent must disclose to the buyer if the property is in a SFHA. The statutory Natural Hazard Disclosure Statement includes a space for making this disclosure.