Delaware Advisory Committee Suggests Mandatory Disclosure Of Rising Sea Levels In Real Estate Contracts

by McCarter & English: Climate Change & Renewable Energy
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If the State dropped a notice in the mail advising you that 10% of your property was going to be condemned without compensation, you would immediately hire a lawyer, seek out the press and raise holy **** about the trampling of individual rights, justice and the Constitution. That is the situation in which Delaware contemplates finding itself, but the Constitution is no salve.  Rising sea levels of between 0.5 and 1.5 meters are predicted to inundate between 8% and 11% of the state's land area by 2100.

Delaware, however, is not one to tear its clothes and beat its chest in lamentation; instead, it is acting. Last July, the Delaware Sea Level Rise Advisory Committee published Preparing for Tomorrow's High Tide:  Sea Level Rise Vulnerability Assessment for the State of Delaware. Besides providing background about sea level rise and the methodology of vulnerability determinations, it looked at 79 resources in the state and assessed the impact of rising sea levels. Sixteen of those resources were assessed as being of high concern statewide.

To quote the Executive Summary:

"Within those potentially inundated areas lie transportation and port infrastructure, historic fishing villages, resort towns, agricultural fields, wastewater treatment facilities and vast stretches of wetlands and wildlife habitat of hemispheric importance."

"[E]very Delawarean is likely to be affected by sea level rise through increased costs of maintaining public infrastructure, decreased tax base, loss of recreational opportunities and wildlife habitat, or loss of community character."

From roads to wetlands to tourism, Delaware now has a basis to marshal its resources, and its polity, and move forward into the next phase:  adaptation planning.

The United Nations Framework Convention on Climate Change defines "adaptation" thus: "Adaptation refers to adjustments in ecological, social, or economic systems in response to actual or expected climatic stimuli and their effects or impacts. It refers to changes in processes, practices, and structures to moderate potential damages or to benefit from opportunities associated with climate change."  Delaware's focus is to "identify ways that government, businesses and citizens can adapt their policies and business practices to reduce the impact of seal level rise on our state's citizens, economy, and natural resources."

The committee has wasted little time in taking action on the vulnerabilities identified in July. As reported in Delaware Online, last Thursday the committee offered up for public comment this question:  "whether property owners selling inside boundaries where seas are predicted to rise will have to disclose that vulnerability to potential buyers."  Hearings will begin in February.  Currently, disclosure of a property's location in a flood zone is required, but flood zones are based on the historical record. Requiring a disclosure about a prediction for the future is new.

One can quickly see a few of the implications. First, all things being equal, some will be dissuaded from purchasing, demand will drop and prices will fall. How much and when is anybody's guess.  Second, the drawing of the sea-level-rise boundary may be intensely litigated. Indeed, we have already seen one ocean front property rights case, Stop the Beach Renourishment v. Fla. Dep't of Envtl. Protection, 130 S. Ct. 2592 (2010), make its way all the way to the Supreme Court. Third, realtors, real estate lawyers and other professionals involved in shore transactions will be pleased by this development as the liability for non-disclosure will be much harder to pin on them.  An injured property owner likely will find it difficult to assert an adviser's failure to disclose the risk was the proximate cause of his or her injury.  See J. Wylie Donald, Getting Ahead of Storm Surge, Especially in the Era of Climate Change.  

Fourth, and perhaps most significantly, this small step will set the stage down the road when questions of compensation arise for individuals and entities harmed by rising sea levels. Buyers with such a disclosure in their contracts will be hard-pressed to claim ignorance. That in turn is likely to figure into the public discussion of fairness and the right to compensation.

Of course, the committee's raising the point for discussion does not mean anything is going to change.  But, with the dialogue initiated, we expect that this issue will no longer be quietly ignored.  In any event, we look forward to further discussion in February.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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