Robert L. Baker, Jr.
Partner
732-568-8376 rbaker@sh-law.comAuthor: Robert L. Baker, Jr.|March 25, 2024
Effective as of March 20, 2024, New Jersey law requires property sellers and landlords to make certain notifications regarding flooding. The new law, P.L. 2023, c.93, amending and supplementing both N.J.S.A. 56:8-19.2 and N.J.S.A 46:8-50, specifically mandates that sellers of real property and landlords disclose knowledge of a property’s history of flooding, flood risk, and location in a Special Flood Hazard Area or Moderate Risk Flood Hazard Area. Additionally, the new law requires landlords to notify tenants of the availability of insurance for renters through the National Flood Insurance program.
New Jersey is one of several states that has experienced more frequent and intense flooding in recent years. In some cases, residential and commercial property owners and tenants were unaware that they were located in a flood-prone area. The new flood risk disclosure law aims to ensure that renters and property buyers make informed decisions when conducting real estate transactions and understand how to reduce their flood risks by electing to purchase flood insurance to protect their property.
The new law imposes several new legal obligations on New Jersey landlords. Among other requirements, landlords must:
To help facilitate this process, the Department of Community Affairs, in consultation with the Department of Environmental Protection, was required to develop a model notice to be used by landlords, which is now published on its website here. Suppose a landlord violates the law by failing to disclose that the property is located in the FEMA Special or Moderate Risk Flood Hazard Area and a tenant subsequently becomes aware that the property is located in such an area. In that case, the tenant may be entitled to terminate the lease by giving a written notice of termination to the landlord. Suppose a landlord violates the notice requirements and flooding occurs that damages a tenant’s personal property, affects the habitability of the leased premises, or affects the tenant’s access to the leased premises. In that case, the tenant may also seek to recover damages.
The new law also imposes new requirements on property sellers. Most notably, a seller of real property located in New Jersey must disclose, on the property condition disclosure statement, whether the property is located in the FEMA Special or Moderate Risk Flood Hazard Area and any actual knowledge of the seller concerning flood risks of the property to the purchaser before the purchaser becomes obligated under any contract for the purchase of the property.
To implement the new law, the Division of Consumer Affairs has added specific questions and information to the “Seller’s Property Condition Disclosure Statement” concerning certain flood risks to a property being sold. Effective March 20, 2024, all sellers of real property (including both residential and commercial property)must answer these questions on the revised form (currently numbered 109-117) before the purchaser becomes obligated under any contract for the purchase of the property. This is the case regardless of whether the remainder of the Disclosure Statement is being completed.
The questions on the disclosure statement include:
For both property sellers and landlords, the new law imposes new legal obligations about flood risk disclosure. To prepare, we encourage individuals and impacted entities to closely review the model flood risk disclosures published by the Division of Consumer Affairs and contact experienced counsel with any compliance concerns. More broadly, flood risk assessment is becoming increasingly important for all parties conducting New Jersey real estate transactions. We encourage residential and commercial property owners and sellers, along with landlords and renters, to always conduct due diligence and work with an experienced New Jersey real estate attorney to reduce your potential risks. Commercial mortgage lenders should also incorporate the new flood disclosure requirements into their due diligence procedures for loans secured by real property located in New Jersey.
Partner
732-568-8376 rbaker@sh-law.comEffective as of March 20, 2024, New Jersey law requires property sellers and landlords to make certain notifications regarding flooding. The new law, P.L. 2023, c.93, amending and supplementing both N.J.S.A. 56:8-19.2 and N.J.S.A 46:8-50, specifically mandates that sellers of real property and landlords disclose knowledge of a property’s history of flooding, flood risk, and location in a Special Flood Hazard Area or Moderate Risk Flood Hazard Area. Additionally, the new law requires landlords to notify tenants of the availability of insurance for renters through the National Flood Insurance program.
New Jersey is one of several states that has experienced more frequent and intense flooding in recent years. In some cases, residential and commercial property owners and tenants were unaware that they were located in a flood-prone area. The new flood risk disclosure law aims to ensure that renters and property buyers make informed decisions when conducting real estate transactions and understand how to reduce their flood risks by electing to purchase flood insurance to protect their property.
The new law imposes several new legal obligations on New Jersey landlords. Among other requirements, landlords must:
To help facilitate this process, the Department of Community Affairs, in consultation with the Department of Environmental Protection, was required to develop a model notice to be used by landlords, which is now published on its website here. Suppose a landlord violates the law by failing to disclose that the property is located in the FEMA Special or Moderate Risk Flood Hazard Area and a tenant subsequently becomes aware that the property is located in such an area. In that case, the tenant may be entitled to terminate the lease by giving a written notice of termination to the landlord. Suppose a landlord violates the notice requirements and flooding occurs that damages a tenant’s personal property, affects the habitability of the leased premises, or affects the tenant’s access to the leased premises. In that case, the tenant may also seek to recover damages.
The new law also imposes new requirements on property sellers. Most notably, a seller of real property located in New Jersey must disclose, on the property condition disclosure statement, whether the property is located in the FEMA Special or Moderate Risk Flood Hazard Area and any actual knowledge of the seller concerning flood risks of the property to the purchaser before the purchaser becomes obligated under any contract for the purchase of the property.
To implement the new law, the Division of Consumer Affairs has added specific questions and information to the “Seller’s Property Condition Disclosure Statement” concerning certain flood risks to a property being sold. Effective March 20, 2024, all sellers of real property (including both residential and commercial property)must answer these questions on the revised form (currently numbered 109-117) before the purchaser becomes obligated under any contract for the purchase of the property. This is the case regardless of whether the remainder of the Disclosure Statement is being completed.
The questions on the disclosure statement include:
For both property sellers and landlords, the new law imposes new legal obligations about flood risk disclosure. To prepare, we encourage individuals and impacted entities to closely review the model flood risk disclosures published by the Division of Consumer Affairs and contact experienced counsel with any compliance concerns. More broadly, flood risk assessment is becoming increasingly important for all parties conducting New Jersey real estate transactions. We encourage residential and commercial property owners and sellers, along with landlords and renters, to always conduct due diligence and work with an experienced New Jersey real estate attorney to reduce your potential risks. Commercial mortgage lenders should also incorporate the new flood disclosure requirements into their due diligence procedures for loans secured by real property located in New Jersey.
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