KATY, Texas—With lush parks, solid schools nearby and its proximity to Houston, the Cinco Ranch planned community seemed the perfect place for Elisio and Ana Soares to buy a house after moving to the U.S. from Brazil.

But only after Hurricane Harvey swamped their dream home in August 2017 with 7 inches of water did the couple learn something they say they were never told during 18 years there. Their home was built on the edge of a dry reservoir the U.S. Army Corps of Engineers designed to hold water during severe storms to protect downtown Houston from flooding.

Thousands of residents in sprawling subdivisions west of Houston don’t just blame the historic rainfall for the losses they incurred during Harvey. They also fault the federal government.

A trial starting Monday will test the legal claims of these residents and business owners who allege the U.S. Army Corps of Engineers knew homes were at risk of flooding and now, under eminent domain law, owes them compensation.

“How come nobody ever told us?” said Mr. Soares, whose home incurred roughly $100,000 in damage from Harvey. “Nothing from the government or anybody saying ‘Hey, beware, you are buying property inside the reservoir,’” he said.