What Happened?
Bill S3110, which was passed by the New Jersey Legislature on June 30, 2023, has now gone into effect as of March 20, 2024.
Under New Jersey law, landlords and property sellers must now notify tenants and prospective purchasers, prior to signing a lease or agreement of sale, whether a property has been or could be impacted by flooding, is located in the FEMA Special Flood Hazard Area (“100-year floodplain”) or is located in a Moderate Risk Flood Hazard Area (“500-year floodplain”).
The Department of Community Affairs (“DCA”) has published a model Flood Risk Notice to be used by landlords pursuant to the new law. The notice includes specific questions about flood risk and space for landlords to provide answers. Commercial landlords may model their notice to be specific to their property, but all notices must include all the information contained in the model notice in substantially similar language.
For rental properties, if a lease is in writing, the notice required may be included in the written lease or the written renewal lease, provided that the notice is a separate rider, individually signed or otherwise acknowledged by the tenant, and written in not less than 12-point typeface.
Additionally, every residential lease must contain the following notice to tenants: “Flood insurance [is] may be available to renters through FEMA’s National Flood Insurance Program to cover your personal property and contents in the event of a flood. A standard renter’s insurance policy does not typically cover flood damage. You are encouraged to examine your policy to determine whether you are covered.”
For properties being sold, the Division of Consumer Affairs (“Division”) has added specific questions and information to the Property Condition Disclosure Statement concerning certain flood risks. Sellers are required to use this updated Disclosure Statement as of March 20th, 2024.
Why you need to know about this?
This new legislative mandate makes New Jersey the 30th state in the US to require these disclosures from landlords and home sellers, better informing renters and homebuyers of the flood risk they face. This information will help renters and buyers decide if the risk is worth the cost, and if so, then consider purchasing the appropriate flood insurance to protect against costly out-of-pocket repairs.
If you are a landlord or a seller of property, these new requirements will directly impact how you must notify tenants or prospective buyers of a property’s potential flood risks. The new law imposes steep penalties on those not in compliance; including but not limited to early termination rights for tenants.
What should you do now?
Landlords should update all form leases and renewals to include both a flood disclosure notice modeled after the Department of Community Affairs provided form, as well as the required Flood Insurance Language, in order to provide the necessary disclosures for properties that have been or could be impacted by flooding.
Additionally, sellers of property should immediately begin using the new Property Condition Disclosure Statement provided on the Division of Consumer Affairs website. All forms of purchase agreements should also be updated to include the necessary flood disclosures.
Should you have any questions on the newly imposed disclosure requirements, please reach out to:
Zachary C. Friedman, Esq.
friedman@hylandlevin.com
856-355-2999
Robert S. Baranowski, Esq.
baranowski@hylandlevin.com
Phone: 856-355-2955