New Jersey Adopts a New Dam Disclosure Law for Property Sellers

What Happened?

On August 6th, Governor Sherill signed a law that requires a seller of real property located in New Jersey to disclose to the contract buyer, on the property condition disclosure statement, if a dam is located within the boundaries of the property. The seller must also disclose any actual knowledge possessed by the seller concerning the dam before the buyer becomes obligated under any contract for the purchase of the property.

The new law does not expressly indicate whether it is applicable to both residential and commercial real estate sales; however, the requirement pertains specifically to the property condition disclosure statement, which is applicable to residential real estate sales.

What You Need to Know:

Under the new disclosure law, the seller must provide the following information:

• Is there a dam located wholly or partially on the property? If so, what is the hazard classification for the dam?
• If current law requires the inspection of the dam, what are the results of the most recent inspection?
• If there are any obligations associated with the dam under state law for which a purchaser would assume responsibility for, what are the obligations?

The buyer may contact the State of New Jersey, Department of Environmental Protection, Bureau of Dam Safety (“NJDEP”) for further information regarding these issues, including ownership responsibilities, removal, and hazard classification of dams. The law also requires NJDEP to maintain a website with pertinent information.

The law takes effect immediately and applies to sales and exchanges of real property occurring on or after the 90th day next following the publication of the revised property condition disclosure statement by the Division of Consumer Affairs by posting it on its website, here.

The new law amends the Consumer Fraud Act, N.J.S.A. 56:8‑1 et seq., so any violation of this new requirement could result in an award of treble damages and attorney fees.

Under New Jersey law, the Consumer Fraud Act applies broadly to the sale of both commercial and residential real estate.

Next Steps for Owners and Sellers:

Owners of real property who are contemplating a sale should promptly:

• Determine if a dam is located on the property;
• Assess dam conditions, hazard classification, and ownership responsibilities; and
• Map out a plan to address the disclosure requirements.

Property owners are advised to monitor further developments regarding the application and scope of this new law.