What Happens If You Skip the NHD Report? [Video]
Skipping the NHD report might save a few hours, but it can cost exponentially more in liability, litigation, and lost deals. California law treats natural hazard disclosure as a core requirement, not an optional form. The video below covers the consequences in 36 seconds.
The legal requirement
Civil Code §1103 requires sellers of one-to-four unit residential property to disclose whether the property is located in specified natural hazard areas. The standard way to satisfy this obligation is to provide a Natural Hazard Disclosure statement prepared by a qualified provider. The seller must also sign the statement, acknowledging receipt and understanding.
Consequences of skipping disclosure
- Buyer rescission. If a buyer discovers a material hazard was not disclosed, they may be able to rescind the transaction or seek damages.
- Seller liability. Sellers can be held liable for nondisclosure of known or statutorily required hazard information, including attorney fees and remediation costs.
- Agent discipline. Real estate licensees have a duty to advise sellers of disclosure obligations. Willful failure can trigger DRE disciplinary action.
- Litigation exposure. Post-sale lawsuits over undisclosed flood, fire, or seismic zones are a recurring source of real estate litigation in California.
Cost comparison
A complete NHD report typically costs between $75 and $125. By contrast, defending a nondisclosure claim can run from $10,000 in mediation to well over $100,000 if the case reaches trial. Ordering a report is a small transaction cost that protects every party in the deal.
Verity NHD reports are delivered in minutes and include built-in eSignature. See current pricing on our pricing page or learn more about what's covered on our NHD report guide.
Who is responsible for ordering the NHD?
Under Civil Code §1103, the seller is responsible for providing the Natural Hazard Disclosure statement to the buyer. In practice, the listing agent usually handles the ordering process as part of the transaction checklist. The buyer's agent has an independent duty to conduct a reasonably competent visual inspection — but neither agent is liable for the accuracy of the NHD itself if it was prepared by a qualified third-party provider. The key is having the report in the file before the buyer removes contingencies.
Key takeaways
- Civil Code §1103 makes NHD disclosure mandatory on all one-to-four unit residential sales.
- Buyers who discover undisclosed hazards after closing may rescind the purchase or sue for damages.
- Sellers bear primary liability for nondisclosure, but agents can face DRE disciplinary action for failing to advise clients of their obligations.
- A complete NHD report costs a fraction of even the smallest nondisclosure claim — typically under $100 versus $10,000 or more to defend.
- Ordering early in the listing process — not after an accepted offer — gives every party time to review and sign before contingency deadlines.