A long-awaited piece of legislation that would require full disclosure of a property’s risk and history of flooding may mandate transparency only for rentals, but not home sales.
Currently, New York state law allows property owners to give buyers a $500 credit toward their closing costs to avoid laying out the apartment or house’s flood history, and whether it sits in a federally designated flood zone. There is no disclosure required for rentals. While flood maps are publicly available, federal rules shield prior claims for flooding damage from prospective buyers or renters.
A coalition of housing and environmental groups has criticized the state law for years, saying it is a loophole that can blindside buyers and renters.
Now, these groups are calling the pared-down legislation — long stalled in the state Assembly’s judiciary committee — a partial win, while acknowledging that it does not meet their goals for full transparency.
“It’s half a loaf,” Elizabeth Malone, the program manager for resiliency and insurance at the community development group NHS Brooklyn, said. “And the attitude we're taking is, half a loaf is better than none.”
The state law is sponsored by Robert Carroll, an assemblyman representing parts of Park Slope, Kensington and Windsor Terrace in Brooklyn.
In an interview, Carroll said he was not sure exactly who in the legislature supported removing the disclosure requirement for home sales.
“People who decide that they don't want people to know that homes are in floodplains, it’s troubling,” Carroll said.
The bill has not seen opposition from lobbyists for developers and real estate agents, said Tyler Taba, the senior manager for climate policy at the Waterfront Alliance.
“But for some reason the bill really got stuck in the judiciary committee, and we couldn't get it to move out of committee,” Taba said. “It’s really unfortunate.”
A representative for Assemblyman Charles Lavine, who chairs the body’s judiciary committee and represents a coastal suburban community on Long Island, initially scheduled an interview with a reporter with Lavine, before retracting the interview offer and saying in an email that Lavine was still reviewing the legislation.
The representative declined to respond to an emailed list of questions regarding the bill.
Lobbying records indicate that Lavine has only been lobbied on the bill by the National Resources Defense Council, which is part of the coalition of various advocacy groups called Rise to Resilience that supports the bill.
Carroll said he believed that opposition to the bill centered on concern from real estate interests that eliminating the waiver would create an “undue burden” on sellers.
But, he said, “People should be able to go eyes wide open into a home purchase.”
State Sen. Brad Hoylman, who is a sponsor of the Senate’s version of the bill, said that he and other state legislators plan to revisit disclosure for home sales in a future session.
“We wanted to get something passed in these last few days in both houses, so we bifurcated the requirement,” Hoylman said. “That suits my constituents very well.”
Hoylman, who represents parts of lower and midtown Manhattan, said he’s confident they’ll be able to pass disclosure for home sales when “the sky doesn’t fall” after requiring transparency around flood risk for rental units.
Sam Spokony, the chief communications officer for the Real Estate Board of New York, said the group was still reviewing the bill, one of many regarding housing yet to be decided during the current legislative period.
With only a few days left in the state’s legislative calendar, the bill has been amended to affect only residential leases. The law will require leases to include a notice as to whether the property has experienced any kind of flood damage, whether from coastal surges or inland rain, as well as whether it falls within flood maps created by the Federal Emergency Management Agency.
Leases will also be required to note that typical renters insurance does not cover flood damage, and that FEMA offers flood insurance.
The law does not lay out any penalties for property owners that do not include this information in the lease.
Taba said that the bill was necessary to eliminate the waiver because it is so often used to hide information about a property’s flood history.
“That $500 waiver, 99% of the time today, that’s what’s done,” Taba said. “They call it a fee, but it’s really a loophole.”
Prospective renters and homebuyers can use various sites, such as FloodHelpNY.org, to see if a property falls within FEMA floodplains. But claims made under the National Flood Insurance Program can only be seen by a property owner, not a potential buyer or lessee, Taba said.
“This is really a consumer protection issue as much as it's about climate and environmental protection,” Taba said.
Disclosing past flood damage has become much more important since FEMA changed its rating system for the federal flood insurance program, Malone said.
The new rating system places greater weight on a home’s history of flood incidents, as well as its build type, elevation and other local geographic factors — not simply whether it sits in a FEMA-designated floodplain.
That means that, under current law and the new rating system, prospective renters and buyers have no way of knowing if a property is likely to have an elevated cost of flood insurance. That risk is spreading inland, Malone noted, since flooding caused by intense rainfall far from the coasts, such as during last year’s Hurricane Ida, is becoming more common.
Malone said that real estate agents have told her that with the new rating system, insurance in areas once designated as “moderate” flood risk in FEMA maps are seeing costs approaching $2,000 a year.
Many homeowners, such as in low-lying Canarsie in eastern Brooklyn, don’t even know they are in risky areas for flooding, Malone said. Only homes in a FEMA-designated “special flood hazard” area are required to get flood insurance to receive a federally backed mortgage.
All of these issues will need to be addressed as soon as possible, Malone said, noting that the recently released hurricane forecast predicts the seventh consecutive unusually active storm season.
“The legislation needs more teeth,” Malone said of the disclosure bill. “I support putting our foot in the door now with the renters. But this is a very high priority thing for all of coastal and internal New York.”