New York Landlords Brace for New Flood Risk Disclosure Requirement
Legislation passed by the New York State Assembly in June 2022 is about to go into effect across the Empire State – and landlords need to be ready.
On June 21, 2023, landlords across New York State will be required to disclose information about flood risks to tenants prior to lease signings. If the property being rented has been flooded in the past or is located on a floodplain, this information must be disclosed on the lease.
Although the law impacts landlords across the state, NYC landlords will feel its effects the most. To this day, developers build new housing on floodplains across the city, where more than two-thirds of residents are renters. In New York City alone, approximately 25% of all small residential buildings – roughly 180,000 structures – are vulnerable to flooding in the future.
New Law Presents Big Loopholes
In passing the new law, New York became the eighth state in the country to enact such legislation. The law stipulates that landlords must disclose if a property has ever experienced flooding or flood damage. However, the floodplains location tenet only applies to coastal flood risks, so many vulnerable properties are overlooked.
Calculations used to enforce the new law are based on FEMA flood insurance rate maps, which are overwhelmingly outdated. FEMA flood insurance rate maps have not been updated at all since 2007. New maps, which were proposed in 2015, were disputed by New York City. Because of these and other delays, new maps won’t be published until at least 2027, leaving many big loopholes in the law that could leave renters in the lurch.
Reports Highlight Increasing Concerns About Flood Damage
Although homeowners usually have to account for flood risk when mortgaging and insuring a home, renters often remain completely oblivious to the flood risks associated with properties they are thinking about renting. The new legislation aims to educate renters about such risks, allowing them to make informed decisions about where they rent and how they insure their belongings.
According to a report published in early 2023, existing homes in areas that are vulnerable to future flooding are overvalued by between $120 billion and $237 billion. Another report estimated that rising sea levels could partially or fully flood coastal real estate worth upwards of $34 billion over the course of a typical 30-year mortgage.
Flood Damage Remains a Serious Problem for Landlords and Tenants
New York’s new flood disclosure legislation aims to bring renters up to speed about the risks of renting certain properties. Many people don’t realize how damaging even a minor flooding incident can be. For example, one inch of water causes $25,000 or more in damage. From 2010 to 2018, floods caused more than $17 billion of damage across the U.S. Between 1980 and 2017, more than 80% of presidential disaster declarations related to events that involved flooding in some way.
Despite the ongoing and increasing risks presented by flooding, many tenants sign leases without taking any precautions to protect their belongings if flooding occurs. Although federal law requires landlords of most buildings built before 198 to disclose information about the risk of lead paint, for example, there is no federal requirement regarding the disclosure of flood risks to renters.
States Take Matters into Their Own Hands
Although there’s no federal law requiring landlords to disclose flood risk information to renters, a handful of states – mostly ones affected by major floods – have put such laws on their books. The first such laws were enacted in Oklahoma in the mid-1980s after serious floods occurred in 1985 and 1986. In 1995, Georgia joined Oklahoma after incurring costly damages from Tropical Storm Alberto. Most recently, Texas enacted flood risk disclosure laws on January 1, 2021, after Hurricane Harvey wrought more than $125 billion in damages across the state.
New York joins seven other states in enacting this type of legislation: Oregon, California, Oklahoma, Texas, Indiana, Georgia, and New Jersey.
What It Means for Landlords
If you are a landlord anywhere in New York State – but especially in the Big Apple – it’s crucial to get up to speed regarding the new flood risk disclosure requirements.
Going forward, leases must include the flood risk of a rental property in the face of a one-in-100-year flood event or a one-in-500-year flood event. Flood damage is not typically covered by traditional renter’s insurance, and leases must disclose this.
Landlords must advise renters that they can obtain flood insurance through the National Flood Insurance Program (NFIP) or FEMA. Such coverage typically costs as little as $100 per year, and it can help protect renters from serious financial difficulties in the event of flooding.
If you need help navigating the new flood risk disclosure requirement, Amo Realty can help! Contact us today for more information or other help regarding New York and NYC rentals.