Legal and material risks of buying properties in flood zones

Recent rains have exposed a recurring problem in Chile: the construction and sale of properties in areas with a high risk of flooding. Before signing a purchase agreement or a public deed, it is essential that the buyer knows not only the material state of the property but also its legal and territorial situation.

1. The regulatory plan and risk zones

The first step before acquiring a property is to consult the Prior Information Certificate (CIP) at the Municipal Works Directorate (DOM). This official document indicates whether the land is located in a flood risk area according to the Communal Regulatory Plan (PRC). Building or buying in these areas can imply severe restrictions for future expansions and even for the habitability of the property.

2. Hidden or redhibitory defects

In civil matters, if the seller deliberately conceals that the property floods during rains, the buyer could exercise the redhibitory action for hidden defects (Art. 1857 of the Civil Code). This allows requesting the rescission of the contract or a proportional reduction of the price, provided that the defect is serious, existed at the time of the sale, and was not disclosed by the seller.

3. Insurance and bank financing

Acquiring a property in a flood zone can make it difficult to obtain a mortgage loan. Banks assess the risk of the asset (the property) that will be held as collateral. Additionally, home insurance premiums against earthquakes or floods will be significantly higher or, in some cases, insurers might refuse coverage for specific weather events.

4. Legal recommendation

We always recommend performing a thorough Title Study and requesting a technical report (architect or engineer) to evaluate the actual water risk of the land. Our law firm at Terreno en Regla has expert professionals in real estate law to advise you and prevent your investment from becoming an irreparable financial loss.