What Happened?
Bill S3110 was signed into law by Governor Murphy on July 3, 2023. New Jersey joins 29 other states in requiring the disclosure of flood risk to potential homebuyers and renters. The law requires sellers of real property and landlords to disclose knowledge of a property’s history of flooding, flood risk, and location in a flood zone or area. Additionally, the law requires landlords to notify tenants of the availability of insurance for renters through the National Flood Insurance program.
Under this legislation, landlords and property sellers must 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”) will prepare a notification that statewide flood risks are increasing and that the tenant may review these risks on its website. The requirement to disclose if the property is in the FEMA Special or Moderate Risk Flood Hazard Area, beyond actual knowledge, will take effect after the website look-up tool is in place.
For properties being sold, the Division of Consumer Affairs (“Division”) will add specific questions and information to the Property Condition Disclosure Statement concerning certain flood risks. A seller of real property shall be required to use the revised form beginning on the 90th day following its publication on the Division’s website.
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. The DCA, in consultation with the Department of Environmental Protection, will publish a model notice to be used by landlords. The notice will include specific questions about flood risk and space for landlords to provide answers.
The legislation also requires landlords to notify tenants of the availability of insurance for renters through the National Flood Insurance program. 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.”
Why you need to know about this?
This new legislative mandate will make New Jersey the 30th state in the US to require flood hazard disclosures from landlords and home sellers, in order to inform renters, and homebuyers of the flood risk they face.
This information will help renters and buyers decide if the risk is worth the cost of insurance, 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.
For purposes of this legislation, a “landlord” is, “any person who rents or leases, for a term of at least one month, commercial space or residential dwelling units other than dwelling units in a premises containing not more than two such units, or in an owner-occupied premises of not more than three dwelling units, or in hotels, motels, or other guest houses serving transient or seasonal guests defined as those who rent a property for a period of less than 120 days.”
What should you do now?
The new legislation is welcomed news for renters and prospective property buyers, but it also presents a new set of challenges for landlords and sellers. For now, landlords and sellers should update all form leases and purchase agreements to provide the necessary disclosures for properties that have been or could be impacted by flooding. Additionally, property owners should regularly check the website of the DCA and the Division for the publication of the new Model Notices and new requirements to the Property Condition Disclosure Statements.
Should you have any questions on the newly imposed disclosure requirements, please reach out to us below:
Zachary C. Friedman, Esq.
friedman@hylandlevin.com
856.355.2999
Robert S. Baranowski, Esq.
baranowski@hylandlevin.com
856.355.2955