About a quarter of all properties in New York and New Jersey are at high risk for severe flooding, according to data from the non-profit First Street Foundation. Undisclosed previous flood damage can cost buyers tens of thousands in damages over the life of a mortgage, actuarial consulting firm Milliman found.

But until recently, both states had fairly toothless laws — or none at all — regarding disclosure of flood risks by home sellers and landlords.

In 2023, New Jersey and New York both enacted stronger laws requiring homeowners and landlords to provide more detailed information about their property’s flood risks to potential buyers and tenants — or face legal liability for failing to do so.

New York’s amended home disclosure laws

Previously, sellers in New York state could omit flood information from a Property Condition Disclosure Statement (shared with buyers) by simply giving buyers a $500 credit on the purchase price. As of March 20, 2024, sellers won’t have the option to pay a credit and exclude flood information.

Instead, sellers now have to include on the disclosure statement:

• Whether their property is in a 100- or 500-year FEMA floodplain

• If the property is subject to federally mandated flood insurance requirements

• Its flood insurance history, including if it’s currently covered by flood insurance

• Whether the seller has ever filed a flood insurance claim for the property

• If the property has had flood problems in the past

Sellers who intentionally withhold this information can be held liable for actual damages the buyer incurs and for “any other existing equitable or statutory remedy.

New landlord disclosure requirements in New York

As of June 21, 2023, landlords in New York must also disclose whether the property they’re renting out is in a FEMA floodplain and whether it has previously experienced flooding.

Residential leases must also include a statement informing tenants that they can get flood insurance for their personal property through FEMA’s National Flood Insurance Program and that renters insurance doesn’t typically cover flood damage.

New Jersey amended disclosure laws

Homeowners in New Jersey must now disclose on a Property Condition Disclosure Statement whether their home is in a FEMA flood zone before going under contract with a buyer. They must also disclose:

• If their property is subject to a federal flood insurance mandate

• If the property currently has flood insurance

• Any flood insurance claims on the property

• Any past flood damage, such as water seepage or pooled water due to a natural flood event

Similarly, New Jersey landlords must now disclose to potential tenants whether their property is in a FEMA flood zone and if it’s ever experienced flooding due to a natural event. And New Jersey’s new disclosure law also requires rental agreements to include verbiage on the availability of flood insurance for tenants.

What this means for buyers and renters

Knowing the flood risks associated with a home can help give buyers and tenants a clearer picture of the total cost of living there. Buyers and tenants may choose to look for homes with lower risks of flooding, which can cause property damage, displacement, and significant financial losses.

In New York, the new law repeals the option for sellers to pay a $500 credit in lieu of providing flood disclosure information.

“This negligible penalty leads many sellers to treat the requirement to provide the disclosure statement as optional, and the $500 credit as merely a cost of doing business,” according to a New York State Assembly memorandum in support of the new legislation. “New York is unique in this regard, as no other state has this opt-out credit option in law.”

What's next

New York’s stronger seller disclosure requirements will be effective March 20, 2024. The state’s landlord law is already in place — Gov. Kathy Hochul signed the bill into law on Dec. 23, 2022, and it took effect on June 21, 2023. New Jersey’s laws also took effect in 2023.

Eighteen states currently have no flood-risk disclosure laws in place, according to the Natural Resources Defense Council. And laws are inadequate (6) or merely adequate (17) in another 23 states, the NRDC reports. Just eight states — now including New York and New Jersey — have good disclosure laws.

The NRDC has called for states to update their disclosure laws to better inform homebuyers about flood risks. The organization also advocates making comprehensive flood disclosure requirements a condition for state participation in the National Flood Insurance Program.