New Jersey Law Now Requires Landlords and Property Sellers to Disclose Flood Risks

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. 

Flooding Is the “New Normal”

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.

New Flood Risk Disclosure Requirements for New Jersey Landlords

The new law imposes several new legal obligations on New Jersey landlords. Among other requirements, landlords must:

• Notify tenants before lease signing or renewal, whether a property is located in the FEMA Special Flood Hazard Area (“100-year floodplain”) or Moderate Risk Flood Hazard Area (“500-year floodplain”) and if the landlord has actual knowledge that the rental premises or any portion of the parking areas of the real property containing the rental premises has been subjected to flooding.
• Provide the required notice in writing at the time of application and before the time that the lease of the rental unit is signed. If the lease is in writing, the notice may be included in the written lease or the written renewal lease, provided that, in the case of a residential lease, the notice is a separate rider, individually signed or otherwise acknowledged by the tenant, and written in not less than 12-point typeface.
• Include the following notice to tenants in every residential lease: “Flood insurance 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.”

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. 

New Flood  Risk Disclosure Requirements for New Jersey Property Sellers

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:

• Has the property experienced any flood damage, water seepage, or pooled water due to a natural flood event, such as heavy rainfall, coastal storm surge, tidal inundation, or river overflow?  If so, how many times?
• Is any or all of the property located wholly or partially in the Special Flood Hazard Area according to FEMA’s current flood insurance rate maps for your area?
• Is any or all of the property located wholly or partially in a Moderate Risk Flood Hazard Area according to FEMA’s current flood insurance rate maps for your area?
• Is the property subject to any requirement under federal law to obtain and maintain flood insurance on the property? 
• Have you ever received assistance, or are you aware of any previous owners receiving assistance from FEMA, the U.S. Small Business Administration, or any other federal disaster flood assistance for flood damage to the property? 
• Is there flood insurance on the property? 
• Is there a FEMA elevation certificate available for the property?  (If so, the elevation certificate must be shared with the buyer.)
• Have you ever filed a claim for flood damage to the property with any insurance provider, including the National Flood Insurance Program?  If the claim was approved, what was the amount received?

Key Takeaway

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.