A buyer in Oakland, California, receives an NHD report that does not indicate any natural hazard zones. Three months after closing, the buyer learns from a neighbor that the property is actually within a Seismic Hazard Zone for liquefaction. The buyer sues the third-party NHD company. Under California Civil Code §1103.4, what is the NHD company's potential liability?
Correct Answer
B) The NHD company may be liable if it failed to exercise reasonable care in researching and reporting the hazard zone information
Under California Civil Code §1103.4, while agents can rely on third-party NHD reports in good faith, the NHD company itself can be liable if it failed to exercise reasonable care in preparing the report. The standard is negligence — if the company's research was inadequate or careless, it may be liable for resulting damages.
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Previous Question
A listing agent in Redding, California, orders an NHD report from a third-party company. The report indicates the property is in a State Fire Responsibility Area (SRA). The seller asks what this means. What is the correct explanation?
Next Question
A seller in Santa Cruz, California, provides the NHD to a buyer. The NHD shows the property is in both a Seismic Hazard Zone and a Very High Fire Hazard Severity Zone. The buyer wants to know who created the maps used to determine these zone designations. Which answer is correct?