Florida Sinkhole Disclosure Law (§627.7073)

TL;DR

Florida law imposes a specific seller disclosure obligation for properties with a paid sinkhole insurance claim. Under §627.7073(2)(c), the seller of real property upon which a sinkhole claim has been made by the seller AND PAID by the insurer must disclose to the buyer, BEFORE CLOSING, that a claim has been paid and whether or not the full amount of the proceeds was used to repair the sinkhole damage. This statutory disclosure is separate from — and in addition to — the general seller duty to disclose known material defects under Johnson v. Davis. Florida law distinguishes two related but distinct insurance coverages: CATASTROPHIC GROUND COVER COLLAPSE (which every Florida property insurer MUST include under §627.706, and which requires all four statutory conditions — abrupt ground collapse, a visible depression/hole, structural damage confirmed, and the structure condemned and ordered vacated) and SINKHOLE LOSS (optional additional coverage available for a separate premium under §627.706(1)(b), covering structural damage from sinkhole activity that need not rise to the catastrophic-collapse level). Because catastrophic ground cover collapse requires the building to be condemned and uninhabitable, mere settling or cracking of a foundation does NOT qualify as catastrophic ground cover collapse. Sinkhole reports verified under §627.7073 are recorded with the county clerk. Florida leads the nation in sinkhole activity, so these disclosure and coverage distinctions are central to Florida residential real estate practice, and licensees must ensure the §627.7073(2)(c) disclosure is made before closing whenever a paid sinkhole claim exists.

The §627.7073(2)(c) seller disclosure obligation

The core seller disclosure rule appears in §627.7073(2)(c). When a sinkhole claim has been made by the seller on the property AND the insurer has PAID that claim, the seller must disclose to the buyer, before closing, two things: (1) that a sinkhole claim has been paid; and (2) whether or not the full amount of the insurance proceeds was used to repair the sinkhole damage. This second element is critical for buyers — a property where a sinkhole claim was paid but the proceeds were NOT fully applied to repairs may still have unremediated structural issues, which materially affects value and insurability.

The disclosure trigger is specific: it requires BOTH that the seller made a claim AND that the insurer paid it. A property with a history of sinkhole activity but no paid insurance claim does not trigger this particular statutory disclosure (though it may trigger the general material-defect disclosure duty discussed below). The timing requirement — before closing — ensures the buyer has the information while there is still an opportunity to renegotiate, obtain inspections, or withdraw. For related state-specific frameworks, see our Florida seller property disclosure guide and our Florida flood disclosure guide.

Sinkhole loss vs catastrophic ground cover collapse

Florida law draws a sharp distinction between two sinkhole-related coverages, and confusing them is a frequent error. The distinction is defined in §627.706:

Catastrophic ground cover collapse (mandatory coverage). Under §627.706(1)(a), EVERY insurer authorized to transact property insurance in Florida MUST provide coverage for catastrophic ground cover collapse. But "catastrophic ground cover collapse" is narrowly defined — it requires geological activity that results in ALL FOUR of the following: (1) the abrupt collapse of the ground cover; (2) a depression in the ground cover clearly visible to the naked eye; (3) structural damage to the covered building, including the foundation; and (4) the insured structure being condemned and ordered to be vacated by the governmental agency authorized to issue such an order. Because all four conditions are required — including condemnation and an order to vacate — mere settling or cracking of a foundation or structure does NOT constitute catastrophic ground cover collapse.

Sinkhole loss (optional additional coverage). Under §627.706(1)(b), the insurer must MAKE AVAILABLE, for an appropriate additional premium, coverage for "sinkhole losses" on any structure. Sinkhole loss coverage is broader than catastrophic ground cover collapse — it covers structural damage caused by sinkhole activity that need not rise to the catastrophic (condemned-and-vacated) level. A homeowner who wants protection against sinkhole damage short of total catastrophic collapse must purchase this optional coverage for the additional premium. Insurers that exclude sinkhole loss coverage must give a bold-type statutory notice explaining that the policy covers only catastrophic ground cover collapse unless sinkhole coverage is separately purchased.

The sinkhole testing and reporting process under §§627.7072-627.7073

When a policyholder reports a sinkhole claim, the insurer investigates. If structural damage is confirmed but the cause is uncertain or consistent with sinkhole activity, the insurer engages a professional engineer or professional geologist to conduct testing under §627.7072 to determine the cause within a reasonable professional probability. The engineer or geologist then issues a written report and certification under §627.7073.

Under §627.7073(1)(a), sinkhole loss is VERIFIED if the report certifies that (1) structural damage to the covered building has been identified within a reasonable professional probability; (2) the cause of the structural damage is sinkhole activity within a reasonable professional probability; (3) the analyses were of sufficient scope to identify sinkhole activity as the cause; and it includes a recommendation of methods for stabilizing the land and building and repairing the foundation. If sinkhole activity is RULED OUT, the report must so state and provide the actual cause. The findings, opinions, and recommendations of the insurer's professional engineer or geologist are presumed correct under §627.7073(1)(c).

Verified sinkhole reports are RECORDED with the county clerk. Under §627.7073(2)(b), as a precondition to accepting payment for a sinkhole loss, the policyholder must file a copy of any sinkhole report on the property, bearing the cost of filing and recording. The recording does not itself create a lien, encumbrance, or title defect, but it does place the sinkhole history in the public record where a title search or diligent buyer inquiry can find it.

Interaction with the general duty to disclose material defects

The §627.7073(2)(c) disclosure is a specific statutory duty layered on top of Florida's general common-law duty to disclose known material defects. Under Johnson v. Davis, 480 So. 2d 625 (Fla. 1985), a seller of residential property must disclose facts materially affecting the value of the property that are known to the seller and not readily observable by the buyer. Sinkhole activity — even without a paid insurance claim — is a classic material defect that a seller who knows of it must disclose under Johnson v. Davis.

The two duties work together. The §627.7073(2)(c) statutory disclosure specifically requires disclosure of a paid sinkhole claim and whether proceeds fully funded repairs. The Johnson v. Davis common-law duty more broadly requires disclosure of any known sinkhole activity materially affecting value. A seller with a paid claim must satisfy the specific statutory disclosure; a seller who knows of sinkhole activity without a paid claim must still disclose under the general material-defect duty. Real estate licensees should ensure BOTH duties are satisfied — the specific statutory disclosure whenever a paid claim exists, and the general material-defect disclosure whenever the seller knows of sinkhole activity affecting value. See our Florida seller property disclosure guide for the broader Johnson v. Davis framework.

Practical impact on Florida real estate transactions

Florida leads the nation in sinkhole activity, particularly in the "sinkhole alley" region of west-central Florida (Pasco, Hernando, and Hillsborough counties). Properties with a sinkhole history — even repaired ones — carry practical consequences: they can be harder to insure, some insurers refuse to write policies on properties with known sinkhole activity, and those that do may charge higher premiums or impose larger deductibles (sinkhole-loss deductibles can run 1%, 2%, 5%, or 10% of the dwelling limit under §627.706).

Completing all recommended stabilization and foundation repairs and obtaining an engineer's certification that repairs were properly performed (recorded with the county clerk under §627.7073(3)) can help restore insurability and protect resale value. For a buyer, the §627.7073(2)(c) disclosure — that a claim was paid and whether proceeds fully funded repairs — is a critical due-diligence signal: a paid claim where proceeds were NOT fully applied to repairs is a red flag warranting a professional inspection and careful review of any recorded sinkhole reports before closing. See our Florida flood disclosure guide for another Florida-specific hazard disclosure that operates alongside the sinkhole rules.

Frequently Asked Questions

When must a seller disclose a sinkhole claim in Florida?

Under §627.7073(2)(c), when a sinkhole claim has been made by the seller AND PAID by the insurer, the seller must disclose to the buyer, BEFORE CLOSING, that a claim has been paid and whether or not the full amount of the proceeds was used to repair the damage. The disclosure trigger requires both a claim made by the seller and payment by the insurer. Separately, under the Johnson v. Davis common-law duty, a seller who knows of sinkhole activity materially affecting value must disclose it even without a paid insurance claim.

What is the difference between catastrophic ground cover collapse and sinkhole loss?

Catastrophic ground cover collapse is MANDATORY coverage that every Florida property insurer must include (§627.706(1)(a)), but it requires ALL FOUR statutory conditions: abrupt ground collapse, a visible depression, confirmed structural damage, AND the building being condemned and ordered vacated. Sinkhole loss is OPTIONAL coverage available for an additional premium (§627.706(1)(b)) that covers structural damage from sinkhole activity without requiring condemnation. Because catastrophic ground cover collapse requires condemnation and an order to vacate, mere cracking or settling of a foundation does NOT qualify — but it may qualify as a sinkhole loss if caused by sinkhole activity and the owner purchased the optional coverage.

Does mere foundation cracking count as catastrophic ground cover collapse?

No. Under §627.706, catastrophic ground cover collapse requires all four conditions, including that the insured structure is condemned and ordered to be vacated by the governmental authority. The statute expressly provides that damage consisting merely of settling or cracking of a foundation, structure, or building does NOT constitute a loss resulting from catastrophic ground cover collapse. Such damage might be covered under the optional sinkhole loss coverage if caused by sinkhole activity and the owner purchased that coverage, but it does not meet the catastrophic-collapse threshold.

Are sinkhole reports part of the public record?

Yes. Under §627.7073(2)(b), as a precondition to accepting payment for a sinkhole loss, the policyholder must file a copy of any sinkhole report on the property with the county clerk, bearing the cost of filing and recording. Additionally, under §627.7073(3), upon completion of stabilization or foundation repairs, the monitoring engineer files a report and certification (including the legal description and property owner name) with the county clerk. The recording does not create a lien or title defect, but it places the sinkhole history in the public record where a diligent title search or buyer inquiry can find it.

Why are properties with sinkhole history hard to insure?

Florida leads the nation in sinkhole activity, and properties with a known sinkhole history carry elevated risk. Some insurers refuse to write policies on properties with known sinkhole activity; those that do may charge higher premiums or impose larger deductibles (sinkhole-loss deductibles can be 1%, 2%, 5%, or 10% of the dwelling limit under §627.706). Completing all recommended stabilization and foundation repairs and obtaining an engineer's certification that repairs were properly performed can help restore insurability and protect resale value. A buyer should treat a paid sinkhole claim — especially one where proceeds were not fully applied to repairs — as a signal to obtain a professional inspection.

How does the sinkhole disclosure interact with the general duty to disclose defects?

The §627.7073(2)(c) statutory disclosure (paid claim and whether proceeds fully funded repairs) is layered on top of the general Johnson v. Davis common-law duty to disclose known material defects. The two work together: a seller with a paid claim must satisfy the specific statutory disclosure; a seller who knows of sinkhole activity materially affecting value must disclose under Johnson v. Davis even without a paid claim. Real estate licensees should ensure both duties are met — the specific statutory disclosure whenever a paid claim exists, and the general material-defect disclosure whenever the seller knows of sinkhole activity affecting value.

Bottom Line

Florida's sinkhole disclosure rule at §627.7073(2)(c) requires the seller of real property on which a sinkhole claim has been made by the seller AND PAID by the insurer to disclose to the buyer, BEFORE CLOSING, that a claim has been paid and whether or not the full proceeds were used to repair the damage. Florida law distinguishes two coverages: CATASTROPHIC GROUND COVER COLLAPSE (mandatory under §627.706(1)(a), but requiring all four conditions — abrupt ground collapse, visible depression, confirmed structural damage, and the building condemned and ordered vacated) and SINKHOLE LOSS (optional additional coverage for a separate premium under §627.706(1)(b), covering sinkhole-caused structural damage without requiring condemnation). Mere settling or cracking of a foundation does NOT qualify as catastrophic ground cover collapse. Sinkhole claims are investigated through professional engineer/geologist testing under §627.7072 and verified by written report and certification under §627.7073, which is recorded with the county clerk. The statutory disclosure is layered on top of the general Johnson v. Davis (Fla. 1985) common-law duty to disclose known material defects — a seller who knows of sinkhole activity affecting value must disclose it even without a paid claim. Florida leads the nation in sinkhole activity, making these coverage and disclosure distinctions central to Florida residential practice; licensees must ensure the §627.7073(2)(c) disclosure is made before closing whenever a paid sinkhole claim exists. For related state-specific frameworks, see our Florida seller property disclosure guide, our Florida flood disclosure guide, and our Florida license law and ethics guide.

Source: Florida Statutes §627.7073 — Sinkhole Reports and Seller Disclosure · Florida Statutes §627.706 — Sinkhole Insurance; Catastrophic Ground Cover Collapse · Florida Statutes §627.7072 — Testing Standards for Sinkholes