New York’s New Flood Insurance Notice Requirements For Co-ops and Other Landlords.
New York State has passed new Real Property Law Section 231-b, requiring landlords to notify tenants of flood insurance risks for their buildings. Co-op corporations, and individual owners who lease or sublease their units, have been swept into the mix.
Flood Hazard Lease Notice
All residential leases must now specify whether the leased premises is located in a (a) designated floodplain; (b) Special Flood Hazard Area (“SFHA”) 100-year floodplain; or (c) Moderate Risk Flood Hazard Area (“500-year floodplain”). These are FEMA [Federal Emergency Management Agency} designations shown on their flood maps.
In addition, the lease must now disclose “any prior flood damage to the leased premises” due to a “natural flood event” that the lessor knows or should have known has occurred, and the nature of the damage.
Finally, leases must include a Notice that a tenant can obtain flood insurance, and that a standard renter’s insurance policy does not cover flood damage.
Does this Apply to Condos? Since Condos are not “landlords,” they are not subject to these requirements. However, if you are leasing or subleasing your apartment, this law will apply to you, even if your apartment is on the 7th floor of a midtown high-rise.
What about HOA’s? Although HOA’s are not subject to this statute, New York State modified the Property Disclosure Statement Law to require homeowners to provide the same information to prospective buyers. (The State also eliminated the option of giving a $500 credit in lieu of disclosure.)
Getting the Info: You can determine whether you are located in an area with any flood risk by going to FEMA’s website, msc.fema.gov/portal/home. Buildings in designations starting with an “A” or a “V” are generally required to obtain flood insurance. Of course, if you live in a high-rise building, the Co-op or Condo association should be getting the flood insurance for the building, but your tenant (or you) can still get flood insurance covering your personal property and improvements to the unit if you wish.
Problems with the law:
- What is the “leased premises”? Is it limited to the apartment, or the entire building? What if the basement flooded but the 7th floor did not? Does the Co-op issue different notices for different floors?
- What is a “flood”? The law includes “heavy rainfall” as an example of flood damage. Last month’s storms resulted in leaks into many apartments due to overflows from the roof or balconies, or infiltration through walls and around windows. Is that a “flood”? FEMA Flood insurance policies would say no, because a flood is limited to “surface water.” Surprisingly, most property damage policies also exclude wind-driven or storm-related water damage, unless the storm damaged a portion of the building envelope and water came in through the gap. (That’s the subject of another e-blast.)
Related questions: Is a sewage backup due to inadequate capacity of the storm drainage system a “flood”? Is a burst pipe? Associations and homeowners should both check their policies to see what coverage they have for these types of damage.
- How far back does flood history go? Two years (Hurricane Ida)? Ten years (Hurricane Sandy)? Fifteen years (Hurricane Irene)? What if the Co-op installed a comprehensive sump pump system after it suffered flood damage, and the system seems to have worked since then? Should that be noted as well?
Initial Recommendations. Initially, we suggest that the Co-op or Condo provide the flood-plain information as a separate Notice to all owners. Co-ops need to put the notice into proper statutory form. The notice should disclose all “flooding events” that could have been (or were) covered by flood insurance. The flood history should go back (say) 20 years or whenever the Co-op’s current Board or Managing Agent would reasonably know. Although nothing more is required by statute, the Association might wish to disclose to its owners whether it carries flood insurance or that it has installed an enhanced drainage system if it thinks a tenant or subtenant might benefit from that knowledge.
If you are acting as a landlord and leasing or subleasing your own unit, this notice is mandatory. Initially we would treat your unit as the “leased premises” for purposes of the notice since a tenant would be more interested in whether your unit has flooded than other parts of the building. You still have to announce whether the building is located in a flood hazard zone, but depending on the location of the unit, that may be irrelevant to a prospective tenant.
Shareholders who receive the Flood Hazard Notice should insert it in their Proprietary Leases, next to the Sprinkler Disclosure notice, the Smoke and CO2 Detector notice, the Stove Handle notice, the Lead Paint notice and the Window Guard notice.
Certain specific language is required. The wording that could be used in one form of Notice that we have developed is available HERE (You will need to decide on the alternative language and fill in the blanks.)