Jump to Page
Greenbaum, Rowe, Smith & Davis LLP Client Alert

What You Need to Know

The New Jersey statute concerning real property and flood notifications, commonly referred to as the Flood Hazard Disclosure Law, was enacted on July 3, 2023. The law imposes certain disclosure requirements on both landlords and the sellers of real property commencing March 20, 2024. 

Sale Transactions

The Flood Hazard Disclosure Law applies to both sale and exchange transactions. The required disclosures must be made before a purchaser is obligated under a contract for the purchase. The disclosure must include whether the property is located in the FEMA Special or Moderate Risk Flood Hazard Area, as well as certain other disclosures enumerated below.   

The seller’s disclosure form must include the following questions, an explanatory answer to any question responded to in the affirmative, and further explanatory language required by the statute:

The disclosure form must also include a notice that statewide flood risks are increasing, and that the buyer may review these risks by going to the website that the New Jersey Department of Environmental Protection (DEP) will manage, which will be linked to and published on the New Jersey Department of Community Affairs (DCA) website. An interim disclosure form is available online pending the promulgation of regulations to implement the new legislation. 

Although there is no express remedy set forth in the statute, in light of the requirement that the disclosure must be given before the buyer is obligated to purchase the property, a question remains whether a buyer will have a termination right when a seller has failed to make the required disclosure. 

Lease Transactions

The flood hazard disclosures under the new law must be made before the lease signing or renewal and may be made either within the lease or by a separate disclosure document. Consultation is necessary with respect to disclosures for existing leases with renewal options.  

The landlord’s required disclosure form must include the following questions:

There are severe consequences to a landlord that fails to provide the required notice. If the landlord violates the requirements, a tenant has a right to terminate the lease. In addition, if flooding occurs that results in (i) damage to the tenant’s personal property, (ii) affects the habitability of the leased premises, or (iii) affects access to the leased premises, the tenant has a right to pursue all legal remedies. 

An interim disclosure form is available online pending the promulgation of regulations to implement the new legislation. 

Questions for Resolution

The Flood Hazard Disclosure Law presents a number of questions with respect to both sale and lease transactions. To begin with, the statute provides for disclosures to be made based on actual knowledge; however, the present form calls for best knowledge for a sale and fails to set forth any disclosure standard with respect to a lease transaction. 

The published property condition disclosure form for sales simply adds the flood hazard disclosures to the form that historically has only been used for residential purposes. The form is overly broad, requiring disclosures pertaining to such matters as:

Such a broad disclosure will challenge the notion of an “As-Is” transaction. There is a question whether the full disclosure form is required or an abbreviated version that only addresses the flood hazard disclosures required by statute will satisfy the statutory requirements. Additional questions remain as well, including whether a buyer can validly waive the disclosures and available remedies, and the scope of the seller’s investigation in answering the disclosure questions.

There also are a number of questions that require resolution in the lease context. Traditionally courts will enforce the agreements made between a commercial landlord and tenant set forth in a lease. In light of the new statute, several issues need consideration in future lease agreements, including whether:

Because the statute requires disclosure prior to a renewal, landlords need to assess the situation of existing leases that include renewal options. The analysis will include a determination regarding:

Please contact the author of this Alert with questions concerning New Jersey’s flood notification law and disclosure requirements under the statute.

Jack Fersko

Jack Fersko
Co-Chair, Real Estate Department