Beginning on March 20, 2024, the new NJ law requires sellers of real property and landlords to make disclosures regarding known and potential flood risks in purchase and sale agreements and new leases and renewals.
Previously, sellers and landlords had no specific statutory obligation to disclose a property’s flood history to buyers and tenants or advise them if the property was located in a Federal Emergency Management Agency (FEMA) Flood Hazard Zone Area. This new requirement imposes one of the strictest requirements of potential flood risk disclosure on sellers and landlord in the nation.
For commercial and residential purchase and sale transactions, every seller of real property is required to disclose specific flood risk information pursuant to a property condition disclosure statement in connection with a purchase and sale contract. The disclosure must contain answers to certain mandated questions and explanatory language regarding flood risks. Before a purchaser becomes obligated under any purchase and sale contract, a seller must disclose such flood risk information to the purchaser.
Every landlord, both commercial and residential, must now notify tenants in writing of the flood risk of the leased premises prior to lease signing or lease renewal. Specifically, both commercial and residential landlords must disclose whether the property is located in a 100-year or 500-year floodplain and, to the best of landlord’s knowledge, whether any portion of the premises or parking areas have experienced any flood damage, water seepage or pooled water due to a natural flood event. Additional requirements apply for residential lease signings or lease renewals, which include either: (i) the flood risk notice be part of a separate rider, individually signed or (ii) otherwise acknowledged by the tenant, and written in at least 12-point typeface.
There are harsh penalties for failing to include the now mandated flood risk notice. The failure to comply with the law on new leases and renewals after March 20, 2024 may provide the tenant the ability to terminate the lease, and the statute further provides that should “flooding occur[] that results in damage to a tenant's personal property, affects the habitability of the leased premises, or affects the tenant's access to the leased premises, the tenant may pursue all legal remedies under the law to recover damages recognizing the landlord's failure to disclose critical information."
To view the new law, see: https://pub.njleg.state.nj.us/Bills/2022/PL23/93_.PDF
