Landmark Flood Disclosure Becomes Law

Governor Murphy recently signed Bill S3110/A4783 into 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.

“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,” said Peter Kasabach, Executive Director of New Jersey Future.

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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.

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