Other than the National Flood Insurance Program (NFIP) there are very few natural hazard mitigation policies at the state and federal levels. This is highlighted by the fact that mandatory hazard disclosure policies have never been enacted comprehensively or effectively at either the state or federal level. Several states, including California, have passed various types of hazard disclosure legislation, but none are comprehensive, and few have been adhered to with any regularilty, largely because of problems in the laws. At the federal level, The National Flood Insurance Program has flood disclosure stipulations, but only when the homeowner finances with a mortgage that is securitized on the secondary, federally regulated market (i.e. FANNY MAY and FREDDY MAC). In response to this gap in the legislation, the California Hazard Disclosure Law (AB1195) was passed, with the intention of created a foolproof, comprehensive disclosure requirement that was crystal clear and easy to implement. Found under State Civil Code Section 1102, this legislation was passed on June 1, 1998 by the State Assembly and requires that all home sellers whose properties fall within designated natural hazard zones show prospective buyers a Natural Hazard Disclosure Statement prior to escrow, informing them that the property is potentially subject to these hazards. These hazard zones include:
· Areas of potential flooding in the event of dam failure, designated by the State Office of Emergency Services
· Special flood hazard areas, corresponding with the 100 year flood plain, designated by the Federal Emergency Management Agency
· Very high fire hazard severity zones, designated by the California Department of Forestry
· Wildland fire areas, designated by the California Department of Forestry
· Earthquake fault zones, designated by the State Geologist; and
· Seismic hazard zones, designated by the State Geologist.
The Statement warns buyers "these hazards may limit your ability to develop the real property, to obtain insurance, or to receive assistance after a disaster." Once a local agency makes available maps showing which parcels are affected by the hazard zones, based on information from the agencies above, the seller and his or her agent are responsible for disclosing that information. The law additionally requires that homeowners in a floodplain purchase flood insurance, in accordance with the NFIP regulations, and that homeowners in both categories of fire hazard zones undertake prescribed vegetative fuel reduction within and around their property, in accordance with local fire regulations.
While preexisting state laws require certain types of real estate disclosure, AB 1195 is a significant departure from past approaches. There has always been a common law obligation for sellers or their agents to disclose facts that are considered “material” to the sale of the home. However, without statutory backing, this common law obligation generally goes unheeded except in the case of extremely egregious encumbrances. Additionally, under common law, there is no stipulation when this disclosure should occur or whether it must be written. Existing state law under Civil Code 1102.6 requires a seller and his or her agent to disclose all “material facts” about the condition of the property. The transfer disclosure statement (TDS) made for this purpose focuses mainly on structural factors. As for hazards, it only asks the seller or agent to disclose whether the property has undergone a natural event, such as flooding, and not whether the property is subject to potential hazards. Therefore, a property could be in a mapped hazard zone, but this fact did not have to be disclosed on the form.
Previous to AB 1195, several statutes did call for certain types of natural hazard disclosure. The Alquist-Priolo Special Studies Zones Bill (Section 2621-30 of the Public Resources Code) called for transfer disclosure of presence in potential earthquake fault rupture zones in certain “special study” areas along the San Andreas, Calaveras, Hayward, and San Jacinto Faults. The Seismic Hazards Mapping Act (Sections 2690-2699 of Public Resource Code) called for disclosure in mapped areas of seismically induced ground shaking, liquifaction and landslide zones (more specific zones than the designation under Alquist Priolo). Additionally disclosure was required for State Responsibility (SRA) fire zones under Public Resources Code 4125. All requirements called for real estate agents (or the seller, in the case of SRA zones) to disclose on the TDS form. Also, according to personal communications with Stan Weig of the California Association of Realtors, there are a large number of local hazard related real estate disclosure requirements that complicate further complicate the legal landscape.
There was a great deal of confusion and non-compliance surrounding this suite of laws. According to personal communications with Peter Detwiler, disclosure requirements supposedly were not well known among realtors because they were located in the Resources Section of California Code. The advisors to the real estate industry typically look in the Civil Code and real estate related laws in the Resources Code are generally overlooked. This was exacerbated by the fact that the requirements were dispersed among three different sections of code. Therefore, it is likely that most agents and brokers did not even know about these requirements, and where they did, they did not actively seek to comply.
AB 1195 consolidated these three hazard disclosure requirements into one code section, placed that code section in the Civil Code, added three more hazard zones, and required that all six be disclosed on a single disclosure form. Moreover, it granted a three-day rescission period giving buyers the right to terminate a transfer after the signing of a contract if proper disclosure was not made. This provision effectively gave sellers and their agents the incentive to disclose early in the process, rather than at the last minute, as was commonly the case in the past. Finally, in contrast to previous hazard disclosure laws AB 1195 clearly articulated where real estate agents were liable for disclosure and where they were not. Not only did it make clear for which hazards the agent was responsible for disclosing, but it allows transference of liability to a third party company that is hired to produce the natural hazard report. Previously it was the agent who was responsible for making sure that the designation was correct. Since the third party report generally costs only $50 and frees the agent from direct and indirect liability, it would not be surprising if this change alone is driving most agents to get their clients to disclose.
While no data is yet available on the current extent of disclosure under AB 1195, it is believed that the disclosure forms are being used in most real estate transactions, and that the disclosure forms under this law are far more meaningful and intelligible.  According to Stan Weig, the California Association of Realtors has been active in disseminating information on this statute to its members, and realtors have since been conscientious in ensuring that sellers disclose under AB 1195.
There were numerous motivations behind the passage of this law. First, it is intended to protect consumers by providing prospective buyers with information that might normally not be available to them. Second, it is intended to clarify realtors’ and sellers’ liability with respect to disclosure of potential hazards. Third, it is hoped that better hazard disclosure will steer new and continuing development away from hazard-prone areas, reducing communities’ exposure to disaster and decreasing state and federal disaster assistance payments. Finally, it is hoped among environmentalists that hazard disclosure may be a market-based means of reducing sprawl and subdivision in urban fringe land in California, where much of the undeveloped land is subject to hazards. According to economic theory, better access to information on environmental encumbrances will reduce prospective buyers’ expected utility from, and willingness to pay for those properties, in turn reducing market values for that land. The internalized reduction in value should equal a risk aversion premium plus the costs of required structural hazard mitigation (e.g. brush clearance or floodproofing). Ideally, this reduction in willingness to pay could reduce the pace of development in vacant land and further subdivision in already-developed land. Where hazard disclosure reduces consumer willingness to pay for a property and increases the costs of developing that property, developers will see a lesser potential for revenue. As more developers reduce their willingness to pay for that type of land, owners of hazardous land in the vacant property market might reduce their expectations of investment return and property values would be reduced (Holway and Burby 1993). However, lower land prices could be interpreted in several ways: a)development potential on that land has decreased and that the market now values that land at a "lower" economic use category (e.g. agriculture and range) or; b) sellers in the vacant land market are eager to sell and have come down to the price that developers are willing to pay to make a project feasible (Bollens et al 1989).
 Information given here on AB 1195 was obtained from personal communications in 1998 and 1999 with Peter Detwiler (Staff Director CA Senate local government committee and former Staff Director of CA Senate Committee on Housing and Land Use), and communications in 1999 with Julie Snyder (aid to state representative Hannah Beth Jackson), both of whom who were involved in drafting the law. Information also came from Peter Detwiler’s 1998 article on hazard disclosure.
 This is according to personal communications with Peter Detwiler (1999), Julie Snyder (1999) and Stan Weig (1999), who is a lobbyist for the California Association of Realtors.