Real Estate Practice Alert: New Flood Risk Disclosure Requirements in New Jersey Take Effect on March 20, 2024
FSKS Explains Key Updates in New Jersey’s Flood Risk Disclosure Mandates Effective March 20, 2024
There is a form in most mortgage packages called the Flood Hazard Determination. While going through the mortgage package at the closing table, I explain to my clients that while right now your property may not be in a Special Flood Hazard Area, that can change due to changes in applicable flood maps for your area. (For example, in December 2012, FEMA developed new National Flood Insurance Program maps for coastal New Jersey, expanding the then-existing defined flood areas.) If, at any time during the term of your loan, your lender determines that the property is in a designated Special Flood Hazard Area, you will be required to obtain or escrow for flood insurance. The concern isn’t merely academic: the FEMA flood maps do, in fact, change to reflect that larger areas of New Jersey are falling into higher-risk flood areas.
Recent catastrophic storms have provided real-life examples of the growing flood risks in New Jersey. Responding to these growing flood risks and global warming, New Jersey enacted The Flood Risk Notification Law on July 3, 2023. The Department of Community Affairs, in consultation with the NJ Department of Environmental Protection, have included the Flood Risk Disclosure to the Seller’s Property Condition Disclosure Statement, and a Notice to Renters, along with a user-friendly tool on the DEP website. The Tool allows you to search a mailing address to determine if the property is located in the FEMA Special Flood Hazard Area (10-year floodplain) or Moderate Risk Flood Hazard Area (500-year floodplain).
The flood risk disclosure requirements begin on March 20, 2024.
Beginning on March 20, 2024, SELLERS of real property must disclose on the Property Condition Disclosure Statement (new form found on the DEP website) whether the property is located in the FEMA Special Flood Hazard Area or Moderate Risk Flood Hazard Area, and disclose actual knowledge of flood risks before a purchaser is obligated under the Contract of Sale. The Purchaser must be notified that the Statewide flood risks are increasing, and the purchaser may review these risks by going to the DEP website.
Beginning on March 20, 2024, LANDLORDS (both commercial and residential) must provide Notice (model notice form found on the DEP website) and disclose to prospective and current renters whether the property is located in the FEMA Special Flood Hazard Area or Moderate Risk Flood Hazard Area, and disclose if the Landlord has actual knowledge that the property or portion of the property, including parking areas, have been subjected to flooding. Residential leases require a separate Notice, outside of the lease, acknowledged by the renter. The Notice has information regarding the Flood Risk and directs the reader to the DEP website. Exemptions from the Notice requirements include dwelling units in premises containing not more than two such units, owner-occupied premises of not more than three dwelling units; and hotels, motels, or other guest houses serving transient or seasonal guests.
For more information regarding flood risk rights and obligations under New Jersey’s new Flood Risk Notification Law, please contact Kristen Klics, Esq. at kklics@fskslaw.com or (973) 538-4700.
