Bill on Governor Murphy’s Desk Would Impose New Flood Disclosure Notice Requirement on All Commercial & Residential Leases and Sales of Property

By: Andrew B. Robins

Recently passed legislation on Governor Murphy’s desk for enactment would require all new leases and lease renewals in New Jersey – both commercial and residential – to include specific disclosures regarding potential and past flooding. Similar disclosures would also be required to be added to the “Property Condition Disclosure Statement” for the sale of “any real property located in the State.” (A separate post on this law blog will summarize the bill’s impact on sale contracts.)

The requirement would take effect 90 days after adoption of implementing regulations by the Department of Community Affairs (DCA) in consultation with the Department of Environmental Protection (DEP).

The legislation, S3110/A4783, directs DCA to create a “Model Notice” which will have to be “individually signed or otherwise acknowledged” by the prospective tenant “prior to the time the lease for the rental unit is signed,” either as separate form or as a separately signed rider to the lease. The requirement would apply to all residential and commercial leases except “seasonal rentals” of less than 120 days.

Failure to obtain an executed copy of the required notice from a tenant would allow that tenant to terminate its lease and receive the return of “all rent and other amounts paid in advance for any period after the effective date of the lease termination.” Tenants would also be able to seek recovery of damages it incurs from flooding if the notice was not provided and executed in certain instances.

Under the bill, the “Model Notice” must include disclosures of whether any portion of the rental property is:

• within the 100-year flood plain (i.e., the “Special Flood Hazard Area” or “SPHA”) as designated by the Federal Emergency Management Agency (FEMA) (the SPHA includes what is commonly known as the A-zones and the V-zones);
• within the 500-year flood plain (i.e., the “Moderate Risk Hazard Area”) as designated by FEMA (these are generally known as the B-zones and the shaded portion of the X-zones); and
• “experienced 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” and if so, how many times those events have occurred.

The Model Notice would include specific language regarding the availability of flood insurance through FEMA’s National Flood Insurance Program and a warning that standard renter’s policies do not typically provide that coverage.

DEP would be required to create a website to make it easier for landlords to ascertain which areas are in the 100-year and 500-year flood plain.