Landmark Flood Disclosure Bill Now Law
TRENTON, June 30, 2023—Today Bill S3110/A4783 became law, requiring home sellers and landlords to disclose past flood damages to potential buyers and renters. This new mandate will make New Jersey the 30th state in the US to require such disclosures from landlords and homesellers, better informing renters and homebuyers of the flood risk they face. This information will help renters and buyers decide if the risk is worth the cost, and if so, then consider purchasing the appropriate flood insurance to protect against costly out of pocket repairs.
This popular piece of legislation brought together a diverse group of supporters, ranging from smart growth, climate change, and environmental advocates to real estate and apartment industry champions. These groups, though sometimes approaching issues with different priorities, collaborated to ensure the bill was thorough, reasonable, fair, and succeeded in its path from bill to law. The bill moved through each house of the legislature garnering unanimous approval before receiving modifications from Governor Murphy, who strengthened penalties against landlords and companies that do not comply with this new disclosure law. Senators Bob Smith (D-17) and Richard Codey (D-27), along with Assembly Members John McKeon (D-27), James Kennedy (D-22), and Anette Chapparo (D-33) were key co-sponsors in both houses of the legislature whose dedication to the issue ensured the ultimate passage of this bill into law.
A new study examining the cost of unrealized flood risks estimates that the US housing market is overvalued by approximately $200 billion due to unaccounted flood risks. A 2022 NRDC report showed that in New Jersey, an estimated 7,944 homes were purchased in 2021 that had previously been flooded and the expected annual flood damages for these sold homes were estimated to be over $18 million. The average New Jersey home with prior flood damage has an expected average annual loss of $1,678, compared to only $104 for the average home in the state. The same report showed that over the course of a 15-year mortgage, the average expected damages to the previously flooded home equate to $25,175, and for a 30-year mortgage the damages equate to $50,351. Together, these findings demonstrate the scale of flood risk in NJ, and underscore the financial implications individuals and households face without proper, full knowledge of the flood risk associated with a property.
These figures don’t even take into consideration the equity impact of this legislation. Lower income renters and home buyers have less financial capacity to weather these flooding events, which can have catastrophic results in a household’s ability to remain housed, stay in the community, or maintain employment. The health impacts on households recovering from flood damage are also well documented, including dealing with the physical problems of mold and the psychological challenges of loss, disruption and displacement.
Peter Kasabach, Executive Director, New Jersey Future, states:
We know that safe and secure housing is a social determinant of public health and resilience in the face of climate change. As we brace for sea level rise and inland flooding, this landmark piece of legislation will provide necessary transparency for homebuyers and renters. In a highly developed, coastal state like New Jersey, we know the impacts of coastal and inland flooding will threaten housing stock across the state. This law ensures that homebuyers and renters are informed when making the major financial decision to determine where to form a household or find shelter.
Joel Scata, Senior Attorney for the Natural Resources Defense Council (NRDC), states:
Given the increasing risk of flooding, home buyers and renters deserve the right to know a property’s flood risk in order to make informed decisions about what’s best for their family. Today, New Jersey has become a nationwide leader in providing that right.
Nick Manis, 2023 President of New Jersey Realtors® commented:
We applaud Governor Murphy for signing bill S3110 into law today. We support providing adequate flood risk information to all potential buyers and renters in New Jersey and believe this will make that process easier and more reliable for all.
Cortney Koenig Worrall, President and CEO, Waterfront Alliance and the backbone staff of the Rise to Resilience Coalition, adds:
With the increased threat of flooding from climate change, future homeowners and renters have a right to better understand and consider flood risks to properties. With the historic passage of S3110/A4783, New Jersey is closer to requiring disclosure of past and future flood risk to all buyers and renters across the Garden State. New Jersey is on its way to being a nationwide leader in climate communication, transparency, and awareness when it comes to residential flooding.
David H. Brogan, Executive Director and CEO, New Jersey Apartment Association, comments:
NJAA applauds Governor Murphy for signing S-3110. Currently, landlords are required to notify renters if they are located in a flood hazard area, but up until now, we had no searchable tools to ensure the exact locations of those flood hazard areas. Under this new law, the state will establish a searchable database of properties so that owners and renters of all types can better understand their risk from flooding. This new law will also clarify the notification requirements placed on landlords, and lead to better awareness of flood hazards and the National Flood Insurance Program (NFIP). We appreciate the willingness of the sponsors and the governor for taking our input and achieving a bipartisan bill that reflected a broad consensus of various stakeholders.
