Starting on March 20, 2024 New Jersey’s Flood Risk Disclosure law will be in effect. If you haven’t heard about this law, don’t panic. You are not alone in your crowd. This is your inside scoop on what the new flood risk disclosure rule is all about and how you can prepare accordingly.
New Jersey’s New Flood Disclosure Rules
The state’s newest flood disclosure law establishes detailed rules for property owners and landlords. The purpose of the legislation is to improve safety and heighten awareness of the risk posed by floodwater. The new rules detail how owners of the state’s properties for rent or sale must completely divulge the entirety of its flood history including susceptibility to flooding as time progresses.
The latest round of bureaucratic rules was highlighted in-depth by New Jersey’s Department of Environmental Protection. Take a deep dive into the legalese of the law and you’ll find it mandates that landlords and sellers of NJ properties fill out new forms that communicate the truth of property flood risks to potential tenants and buyers.
Moreover, state government also recently debuted a web tool that empowers prospective buyers and renters to determine whether a property of interest is located in a flood zone.
Breaking Down the Details of the NJ Flood Disclosure Statement
Potential renters should be aware that landlords are now legally required to reveal whether 100-year/500-year storms from the preceding decades hit a property available for lease. Though the likelihood of such storms hitting is only likely to occur 1% or two-tenths of a percent, respectively, their chance of occurrence is likely to increase that much more as climate change worsens.
Moreover, prospective renters should know that landlords are also legally required to reveal whether any portion of the property has ever been susceptible to what the state refers to as “natural flooding.” If you know or suspect a New Jersey landlord is in violation of these legal requirements, it is in your interest to consult with a real estate attorney for potential legal action.
Moving forward, those interested in buying New Jersey properties should be aware that sellers are legally mandated to reveal if the property up for sale is subjected to federal law that mandates flood insurance. The disclosure statement explains how properties located in both “riverine” areas and those along the coast are likely to face a heightened risk for rushing water as time progresses. Basement waterproofing is essential for mitigating or even completely preventing costly damage from flooding.
The flood disclosure statement directly references climate change storms and sea level rise. However, the statement also notes that existing flood insurance rate maps do not acknowledge such risks. At the time of this publication, only 29 other states have a similar flood risk disclosure law on the books.
New Jersey property purchase contracts must now include a flood disclosure statement detailing property information such as whether it is located within the Federal Emergency Management Agency’s (FEMA) hazard spaces designated as either Special Flood or Moderate Flood spaces.
The disclosure rules even go as far as requiring that property owners reveal knowledge regarding whether the rental premises or even a portion of the premises, including diminutive areas such as lessee parking spaces, have flooded in the past or are vulnerable to flooding.
Why the Law is Important
New Jersey’s flood risk disclosure law is significant as it represents a change to the previously accepted yet unjust status quo. Up until the passage of the new law, NJ property owners were not required to reveal the potential of a flood risk to prospective renters or buyers. Now that the state has implemented its flood risk disclosure law, no property lease or sale contract can be authorized as legitimate until it is disclosed that the property is positioned in an area that is at risk for flooding.
New Jersey Governor Murphy signed his name on the legislation, making it a formal law this past summer. Murphy also issued a statement at the time of the law’s passage highlighting how it is a necessary rule based on the current context in which climate change is wreaking havoc on the Garden State and the rest of the nation.
The bottom line is property-seekers, be it tenants or buyers, deserve to understand the risks of potential flooding before plunking their hard-earned money down for purchase or deposit. Shining the spotlight on flood-vulnerable properties makes it easier for buyers and renters to pinpoint the safest possible residences and bid accordingly.
The legislation comes on the heels of Tropical Storm Ida in 2021. Garden State residents also remember the damage caused by Superstorm Sandy in 2012. The drama of those storms was rehashed earlier this year when yet another storm rendered inland residents along the northern part of the state submerged beneath water.
The legislation is being heralded by climate change scientists and bureaucrats alike. New Jersey and only six other states have received an A scorecard grade on the Natural Resources Defense Council’s disclosure law scorecard. Though few know it, an underpublicized 2022 report revealed nearly 8,000 statewide homes bought in 2021 were flooded in the past. Adding salt to the wound is the fact that flood damage to such homes was estimated to be greater than $18 million.
As long as the law is honored by property owners and enforced by the state, it will empower property-seekers to fully understand the flood risk of a land to protect real estate financial investment and also personal safety.
The legislation is likely to end the era of egregious out-of-pocket post-flood repair costs, ensuring all property buyers and renters have adequate flood insurance from move-in day forward.
As an example, the 2022 report referenced above highlighted that the average financial cost of a NJ home that suffered previous flooding amounted to more than $25,000. Moreover, the average flood damage cost to such a property with a 30-year mortgage amounted to more than $50,000.
It is even more alarming that new research analyzing the financial burden of unacknowledged flood risk reveals the nation’s housing market is valued $200 billion more than it should be.
An Eye on a Potentially Tumultuous Future
New Jersey state government recently issued an economic impact analysis for the recently passed Inland Flood Protection Rule, highlighting research that estimated nearly 95,000 homes throughout the state face significant flood risk across the next three decades. Moreover, the report highlighted how more than 10,000 state residents will likely suffer a financial loss resulting from flooding by 2050.
The hope is that the legislation’s Seller Property Condition Disclosure Statement will provide transparency regarding flood risk to help buyers and renters sidestep vulnerable properties. At a bare minimum, the statement will help those property-seekers bid within reason for such vulnerable properties.
The aforementioned disclosure statement includes a flood risk section that states by 2050, tens of thousands of state properties will face risk for potentially lasting flood waters from the Atlantic coast. It is estimated that approximately 40,000 such properties exist throughout the state. The fear is that the sea level will rise more than two additional feet.
The legislation also mandates that newly-constructed buildings within the state’s flood zones be built a minimum of two feet higher than allowed by prior rules. Aside from floods from storms, the legislation also mitigates potential damage and financial loss resulting from the ever-rising sea level.
Additional Resources for Property-seekers
The disclosure form detailed above is not effective until the spring of this year. New Jersey residents and those considering a move to the Garden State are encouraged to read Rutgers University’s report on strategies to decrease municipality funding with the installation of new infrastructure that accounts for climate change. The academic primer also provides information about strategies to mitigate runoff from stormwater.
The key takeaway from the NJ flood risk disclosure law is that the state faces a significantly higher chance of property flooding as a result of climate change. Both inland and coastal properties have the potential to be flooded in the year ahead and also through the 2020s and beyond. Even neighborhoods that have not flooded in the past are vulnerable to flooding in the years ahead.
Those looking to buy, lease or sell property in New Jersey and those interested in moving to the state are encouraged to learn more about the flood risk disclosure law by reading its full text.
New Jersey state government has also created a helpful tool to help those interested in property flood risk and the details of the flood disclosures mandated by law. Click here to access the New Jersey Flood Risk Notification Tool. The tool presents prospective property buyers and renters with information about the property’s flood risk today and also in the future. Simply search the tool for the property address you are considering buying or leasing and you’ll be fully informed about its flood risk.
Waterproof Your Basement Today
The message is clear: New Jersey, other coastal states and even inland states are becoming increasingly vulnerable to flooding. It is in your interest to prepare and act as if your home will be flooded. Basement waterproofing is your primary line of defense against property damage and significant financial loss.
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