Desjardins, the fifth largest cooperative financial group in the world, based in Quebec, will no longer offer new mortgages for properties in high-risk zones due to the certainty of a flood every 20 years in the province. It is reasonable to assume other lenders will follow suit as a better understanding of the risk and impact of increasing flooding across Canada takes hold.
How can you find out if you are in a flood zone?
When buying, does a realtor know and have to disclose?
What are flood zones?
In Canada, a flood zone is typically defined as an area that is at risk of flooding from sources such as rivers, lakes, oceans, or heavy rainfall. The specific criteria for what constitutes a flood zone can vary by province and territory, as land use planning and management, including flood risk assessment, is primarily under provincial and territorial jurisdiction. A Desjardins survey revealed that 1 in 4 Canadians have experienced water damage to their home, but only half know what’s covered by their insurance policy.
However, there are some general classifications used across the country to identify flood-prone areas:
High-Risk Zones: These areas have a high probability of flooding, often defined by a return period, such as a 1-in-20-year flood event or higher frequency. These zones are typically found near water bodies like rivers and lakes or in low-lying coastal areas. This means that there is a 5% risk of flooding in any given year.
Medium-Risk Zones: These areas face a moderate risk of flooding, possibly defined by events with a return period like a 1-in-100-year flood. The risk level is lower than in high-risk zones but still significant.
Low-Risk Zones: These areas have a minimal risk of flooding, with events occurring less frequently than those in medium-risk zones, such as a 1-in-500-year flood event.
Regulatory Flood Plains: These are areas regulated by local or regional authorities, where development is controlled or restricted to minimize flood damage. The criteria for defining these plains often include historical flood data and hydrological models.
Special Flood Hazard Areas (SFHAs): While this term is more commonly used in the United States, it’s relevant in the context of understanding flood zones in Canada as well. SFHAs would be akin to high-risk zones, where the annual chance of flooding is higher.
How can you find out if you are in a flood zone?
The Government of Canada, through its various agencies like Environment Canada, Natural Resources Canada, and the Canadian Hydrographic Service, provides data and mapping tools to help identify flood zones. Additionally, the Flood Hazard Identification and Mapping Program (FHIMP) supports provinces and territories in updating and creating flood hazard maps.
For the most accurate and current information on flood zones in a specific area in Canada, it’s best to consult local government websites, provincial or territorial authorities, or specific flood hazard maps provided by the government or insurance companies.
In Ontario, most flood maps are created by municipalities and conservation authorities. The maps are used to:
- protect people and property from flooding
- direct new development away from high-risk areas
- identify areas where flood-proofing or other measures may be required to manage risks to communities
To map where a flood is most likely to occur, Ontario draws the amount and elevation of floods on a base map.
To get more information from the Province of Ontario website, see: Technical Bulletin –Flooding Hazards: Data Survey and Mapping Specifications,
To get the actual report in detailed PDF, see: Technical Bulletin — Flood Hazard Data Surveying and Mapping Guidance
Ontario Municipal Flood Plain Information
Flood plain: Durham Region
Flood Plain: Greater Toronto Area
Flood Palin: Hamilton
Unfortunately, the information is not necessarily conclusive, and comprehensive flood maps are only now being developed, but reviewing this information will certainly help or at least give you some sense as to the risk of buying property in a given area.
When buying, does the realtor know and have to disclose?
A realtor is required to disclose if they have knowledge of a property being on a flood plain. However, most realtors will not have access to this information and will not likely be able to answer the question definitively, “Is this property on a flood plain?”.
Real estate agents may soon be required to collect and report this information to potential buyers, especially as such information gets developed by governmental bodies and shared with the public. The impact of this could be catastrophic to present owners and those with financial interests in the impacted area.
The official publication of a report could have an immediate effect on the value of properties impacted if it disclosed areas it now views as ‘high-risk zones’. The value of those properties would likely immediately decrease substantially. Not only would such properties be uninsurable, but informed purchasers would stay away, refinancing a mortgage for an existing owner may become impossible, and an elderly person would not be able to obtain a reasonable reverse mortgage.
Such a report could have a substantial domino effect in the community impacting businesses and the economic viability of the area as a whole.
Knowing the risk
Desjardins said that climate change, including water damage, is growing in importance and causing substantial damage. The company points out that less than 5% of its mortgage properties are in high-risk flood zones but says homes in these areas are generally uninsurable, and it needs to account for the risks. Consequently, homeowners might not be able to pay their mortgages if a major flood event occurs. Other companies have made similar moves, with more than a million homes across Canada now deemed uninsurable for flood risk. This could have a major impact on the loan-to-value ratio, an important metric used to determine mortgage approval.
