Sea-level rise: A known defect?

I am out of town, but I was fascinated by our versatile reporter Billy Cox' article about a speech given by David Houle, Ringling College of Art + Design’s “futurist in residence,” to the Realtor Association of Sarasota and Manatee a few days ago. The topic was sea-level rise, which I will be writing more about in a month or two.

“When does it become fraud for a real estate agent to sell beachfront property?” Houle asked, knowing full well the sensitivity of this audience to such a question.

He went on to say that in four years, he expects the residential sales contract to include a clause in which the listing agent discloses that the property cannot be purchased with a mortgage, given that it sits in a flood zone that is only going to get deeper.

Insurance companies are “not going to insure an asset … that they don’t think will be around in five years,” Houle said.

He has a point. Even the American Institute of Architects' Florida-Caribbean chapter has a stated policy that future construction should account for a 3-foot sea-level rise in the coming decades. Others say it might be 6 feet. Might.

“It’s a seller’s obligation to disclose known issues, or issues that aren’t readily observable,” RASM President Linda Formella told Cox.

But that requirement normally means that if the seller knows, or should have known, that a swarm of killer bees lives in the chimney, or that Acme Foundation Repair was called in to fill a sinkhole in the back yard last month, the seller has to disclose it. These are called “known material defects that affect the value of the property.”

How about “defects” that could affect the value of real estate around the world?

Defects are past or present, and usually specific to the property. And, while disclosure of a property's location in a FEMA-mapped flood zone is customarily disclosed, and often required to be, can we expect sellers to disclose what might happen, decades from now?

Are sellers responsible for the veracity of climate-change science, regardless of how widely it is believed or disputed? Can we assume that buyers would, of course, be aware that Sarasota Bay could someday come over the seawall?

I imagine it might be the same in Hawai'i, in the shadow of an active volcano, where it is common knowledge that the big thing lets loose with lava every once in a while, and any buyer who doesn’t know it is a fool who probably shouldn’t be a homeowner in the first place. In California, a property's location in a designated seismic zone must be disclosed.

So I would ask Mr. Houle: Should an individual seller, or his agent, be held responsible for not stating an obvious, widely publicized “issue” that threatens not just one mansion on a beach in Sarasota, but civilization as we know it?

An agent who sells a lot of waterfront property told me that sea-level rise is not a “disclosable item” because it is “readily available information to the public.”

It is a legal and ethical situation that, I doubt, the John Ringlings and Carl Fishers of Florida could even have imagined when the were dredging and filling barrier islands in the 1920s.

I’m sure a good real estate attorney could argue either side with gusto.

Michael Belle of Sarasota is one of them. “I don't believe a seller would be required to disclose a potential issue of, say, the roof may fail in 50 years,” he told me. “This is a hypothetical, and we are so far down the road of the hypothetical that we may be disclosing things that may never happen, or may never happen in the new owner's lifetime.

“I don't know if we are at the point of disclosure yet. There is no present defect,” he said. “Normal flooding at high tides (as is happening in Miami Beach, either because of subsidence or sea-level rise) would have to be disclosed.” But as for sea-level rise, “the issue is, if this occurs.”