New Jersey Gov. Phil Murphy signed into law the Flood Risk Notification Law (P.L. 2023, c.93) on July 3, 2023, amending the Truth-in-Renting Act (P.L. 2001, c.313) and supplementing the Consumer Fraud Act (P.L. 1960, c.39), effective as of March 20, 2024. The Flood Risk Notification Law, also referred to as the Flood Disclosure Law, requires sellers and landlords of real property located in New Jersey to provide certain notifications to potential buyers and tenants concerning flooding, including disclosure of knowledge pertaining to a property's flood history, flood risk and location in a flood zone or area, making New Jersey the 30th U.S. state to require such flood notifications.

The law is intended to protect prospective purchasers and tenants of New Jersey real properties from unforeseen damages and financial losses incurred as a result of the impact of increased climate change. Updated regulations to be promulgated by the New Jersey Department of Environmental Protection (NJDEP), Department of Community Affairs (DCA) and Division of Consumer Affairs in accordance with this law are anticipated.

Updated Requirements for Sellers of Real Property in New Jersey

The Flood Disclosure Law supplements the Consumer Fraud Act by requiring sellers of real property located in New Jersey to make certain additional disclosures regarding flood risks on the Seller's Property Condition Disclosure Statement (Disclosure Statement). The Disclosure Statement is provided by the New Jersey Division of Consumer Affairs, and the related flood disclosures will now appear as questions 109-117. Pursuant to NJSA 56:8-19.2, it is mandatory by law for all sellers of real property to answer the flood risk questions on the Disclosure Statement – regardless of whether such property is residential or commercial – prior to a purchaser becoming obligated to purchase the property by contract.

The Disclosure Statement as supplemented by the new law must be used for transactions that take place as of March 20, 2024.

The additional flood risk questions on the updated Disclosure Statement are as follows:

• Is any or all of the property located wholly or partially in the Special Flood Hazard Area (100-year floodplain) according to the Federal Emergency Management Agency's (FEMA) current flood insurance rate maps?
• Is any or all of the property located wholly or partially in a Moderate Risk Flood Hazard Area (500-year floodplain) according to FEMA's current flood insurance rate maps?
• Is the property subject to any requirement under federal law to obtain and maintain flood insurance on the property? Properties in the special flood hazard area, also known as high-risk flood zones on FEMA's flood insurance rate maps, with mortgages from federally regulated or insured lenders are required to obtain and maintain flood insurance. Even when not required, FEMA encourages property owners in high-risk, moderate-risk and low-risk flood zones to purchase flood insurance that covers the structure and the personal property within the structure. Also note that properties in coastal and riverine areas may be subject to increased risk of flooding over time due to projected sea level rise and increased extreme storms caused by climate change that may not be reflected in current flood insurance rate maps.
• Have you ever received assistance, or are you aware of any previous owners receiving assistance, from FEMA, the U.S. Small Business Administration (SBA) or any other federal disaster flood assistance for flood damage to the property? For properties that have received federal disaster assistance, the requirement to obtain flood insurance passes down to all future owners. Failure to obtain and maintain flood insurance can result in an individual being ineligible for future assistance.
• Is there flood insurance on the property? A standard homeowner's insurance policy typically does not cover flood damage. Property owners are encouraged to examine their insurance policies to determine whether they are covered.
• Is there a FEMA elevation certificate available for the property? If so, the elevation certificate must be shared with the buyer. An elevation certificate is a FEMA form that is completed by a licensed surveyor or engineer. The form provides critical information about the flood risk of the property and is used by flood insurance providers under the National Flood Insurance Program (NFIP) to help determine the appropriate flood insurance rating for the property. A buyer may be able to use the elevation certificate from a previous owner for their flood insurance policy.
• Has a claim ever been filed for flood damage to the property with any insurance provider, including the NFIP? If the claim was approved, what was the amount received?
• Has the property experienced any flood damage, water seepage or pooled water due to a natural flood event such as heavy rainfall, costal storm surge, tidal inundation or river overflow? If so, how many times?
• Explain any "yes" answers given in this section.

Penalties and Failure to Comply: Sellers

A violator of the Consumer Fraud Act may be required to pay a penalty of up to $10,000 for a first offense and $20,000 for each subsequent offense. Furthermore, the violator may be required to pay an additional penalty of up to $10,000 if the violation caused pecuniary injury and the violator knew or should have known that the victim is a senior citizen or a person with a disability. The violator may also be required to pay an additional penalty of up to $30,000 if the violation was part of a scheme, plan or course of conduct directed at senior citizens or persons with disabilities in connection with sales or advertisements.

A violator of the Consumer Fraud Act may also be required to restore to the affected consumer all money or property that was acquired from the consumer due to the violation and pay twice the amount of all money or property that the violator acquired from a senior citizen due to the violation.

A consumer injured by a violation of the Consumer Fraud Act is entitled to file a civil claim that may result in the injured party obtaining from the violator equitable relief, treble damages and/or reasonable attorneys' fees and costs.

Updated Requirements for Landlords of Real Property in New Jersey

The Flood Disclosure Law amends the Truth-in-Renting Act by requiring landlords of real property located in New Jersey to provide tenants with a Flood Risk Notice that addresses whether the landlord has actual knowledge of flooding at the rental premises or any portion of the parking areas of the rental premises, the availability of insurance for tenants through FEMA'S NFIP and the impact of climate change on New Jersey's flood risks. Landlords must provide the notices required by the Flood Disclosure Law prior to signing a new lease or a lease renewal. While this law does not distinguish outright between residential and commercial leases, it does state that the Flood Risk Notice may be provided in writing as part of a lease or lease renewal and specifies that, in the case of residential leases, a written notice must appear as a separate rider, written in font no less than 12-point typeface and must be signed or acknowledged by the tenant.

Landlord disclosures pursuant to the Flood Disclosure Law must be made for leases that are entered into or renewed from and after March 20, 2024.

Seasonal and transient rentals for a period of fewer than 120 days are exempt from the disclosure requirements of the Flood Disclosure Law (e.g., hotels, motels, vacation rentals or other guest houses).

Penalties and Failure to Comply: Landlords

If a landlord fails to comply with the Flood Disclosure Law and a tenant later learns that the leased real property is located in a FEMA Special Flood Hazard Area or Moderate Risk Flood Hazard Area, the tenant has the right to terminate the lease effective immediately and without penalty. Also, within 30 days after the tenant's surrender of the rental premises, the tenant is entitled to a refund of all rent and other amounts that have been paid in advance under the lease for any period following the lease's effective date.

If a landlord fails to comply with the Flood Disclosure Law and flooding damages a tenant's personal property and/or affects the habitability of or access to the rental premises, the tenant is entitled to all legal remedies available under the law to recover damages caused by the landlord's failure to disclose flooding information.

Additionally, landlords are subject to a fine of up to $100 for each violation of the Truth-in-Renting Act.

Conclusion

Compliance with the Flood Disclosure Law is of the utmost importance for sellers and landlords of real property, not only for the protection of buyers and renters but also to protect themselves from the consequences of noncompliance. It is particularly noteworthy that a landlord's failure to comply with the Flood Disclosure Law gives a tenant who later learns that he or she is renting property in a FEMA Special Flood Hazard Area or Moderate Risk Flood Hazard Area the right to terminate the lease immediately and recover the full amount of rental and other amounts paid in advance under the lease.

The NJDEP provides a free Flood Risk Notification Tool that allows users to enter the parcel information for a property and receive a Flood Risk Notification via email. Additional information pertaining to the Flood Disclosure Law may be found on the NJDEP's website.