NJ disclosure rules
What New Jersey licensees must disclose, what they must not discuss, and the newer flood risk disclosure.
Sources: N.J.A.C. 11:5-6.4; P.L. 2023, c. 93
Disclosures in one paragraph
Physical defects vs psychological stigmas vs Megan's Law
| Physical defects | Stigmas and social conditions | |
|---|---|---|
| Examples | Leaking roof, cracked foundation, water in the basement, known flood damage | A murder or suicide in the home, barking dogs, noisy neighbors |
| Volunteer it? | Yes. Disclose every known material physical condition. | No. It is not physical condition information. |
| If a buyer asks | Answer fully and honestly. | Share what you know, except racial makeup or group homes: tell them to research it. |
| Megan's Law (sex offenders) | Not a physical condition. Never discuss it. | Not a stigma you answer either. Refer the buyer to the county prosecutor. |
| Your duty to find out | Ask the seller and visually inspect for readily observable problems. | No duty to investigate. |
Disclosures: 4 rules to memorize
Disclose physical conditions.
Ask the seller and visually inspect. Disclose any known material physical condition.
Stigmas only if asked.
A death or noisy neighbors aren't physical defects. If asked, share what you know.
Megan's Law goes to the prosecutor.
Never discuss sex offender information. Refer the buyer to the county prosecutor.
Flood risk is disclosed.
Sellers disclose flood zone status, past flood damage, claims and aid.
Disclosures, explained
Social or psychological conditions, like a death in the home or a difficult neighbor, are not physical conditions, so you do not volunteer them. If a buyer asks, you share what you know. Licensees may not discuss the racial makeup of a neighborhood or the presence of a group home, and they refer those questions back to the buyer's own research.
Megan's Law questions are a hard stop. Licensees do not discuss sex offender notifications; they refer the buyer to the county prosecutor. Residential contracts and leases include a Megan's Law statement.
New Jersey's flood risk law (P.L. 2023, c. 93) added flood questions to the seller's property condition disclosure: whether the home is in a FEMA flood hazard area, whether flood insurance is required or carried, past flood insurance claims or federal aid, and known flood damage. Landlords of most rentals also give tenants a flood notice before a lease is signed.
Since August 1, 2024 (P.L. 2024, c.32), the firm representing a seller in a residential sale must get a signed Property Condition Disclosure Statement from the seller. If the seller has no firm, the seller gives it to the buyer before the buyer is bound by a contract.
Know the exact categories in N.J.A.C. 11:5-6.4(d). Social conditions are neighborhood issues like barking dogs or noise. Psychological impairments are events like a murder or suicide on the property. Neither counts as physical condition information, so you do not volunteer them, but you answer honestly if a buyer or tenant asks. The two exceptions to answering are racial makeup or group homes (tell them to research it themselves) and Megan's Law notices (refer them to the county prosecutor). The same rule also requires you to disclose any actual or potential conflict of interest you can reasonably anticipate.
Off-site conditions are a separate disclosure. Owners of things like high-voltage transmission lines (240,000 volts or more), substations, gas transmission lines, landfills, sewage treatment plants and airport safety zones report them to the municipal clerk, who makes the list public. For new residential construction, a licensee-prepared contract includes a notice telling the buyer that these lists are available. For other residential property, a licensee who actually knows about an off-site condition discloses it before the buyer signs.
The flood disclosure duties under P.L. 2023, c.93 began March 20, 2024. Sellers answer the flood questions on the disclosure statement before the buyer is bound by a contract. Landlords give a Flood Risk Notice before a lease is signed or renewed; seasonal or transient rentals under 120 days are exempt. If a landlord skips the notice and the tenant later learns the unit is in a FEMA Special or Moderate Risk Flood Hazard Area, the tenant can end the lease by written notice to the landlord, effective when the tenant moves out.
How the exam tries to trip you up
- The seller says the basement is dry, but you see water stains on the walls. Your duty is not satisfied by the seller's word. You also visually inspect, and a readily observable problem gets disclosed.
- A question says a licensee must tell every buyer about a past suicide in the home. Wrong. Stigmas are not volunteered. But the opposite trap is refusing to answer when asked: if the buyer asks, you share what you know.
- The buyer asks about sex offenders and you happen to know the answer. Knowing does not change the rule. You do not discuss Megan's Law notices at all, and licensees are not entitled to notification from the prosecutor. Refer the buyer to the county prosecutor.
- Watch for 'as is' or a seller who asks you to keep quiet. Neither cancels your duty to disclose a known material physical condition.
Disclosures practice questions
A buyer asks a New Jersey licensee whether a registered sex offender lives nearby. The licensee should:
Disclosures flashcards
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- Psychological impairment
- A non-physical stigma like a death in the home. Not volunteered, but answered if asked.
- Megan's Law inquiry
- Refer the buyer to the county prosecutor.
- Flood risk disclosure
- Seller discloses flood zone status, insurance, past claims and known flood damage.
- Social condition
- A neighborhood issue like barking dogs or noise. Not physical, so not volunteered, but answered if asked.
- Reasonable effort to learn condition
- At minimum, asking the seller about physical conditions and visually inspecting for readily observable problems.
- Off-site condition
- A nearby feature like a landfill or high-voltage line, listed with the municipal clerk for buyers to review.
- Flood Risk Notice
- Landlord's notice of flood zone status and known flooding, given before a lease is signed or renewed.
Disclosures: common questions
Sources and further reading
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