New Jersey Commercial Disclosures: Environmental & Zoning Due Diligence

While New Jersey commercial real estate generally operates under the doctrine of caveat emptor (tenant beware), state law has introduced specific mandatory disclosures in recent years, most notably regarding environmental cleanup and flood risk.

1. Mandatory Flood Risk Disclosure (2024 Update)

Effective March 20, 2024, New Jersey law (N.J.S.A. 46:8-50) requires all landlords—including commercial landlords—to provide a written disclosure to tenants regarding flood risk.

• FEMA Maps: Landlords must disclose if the property is located in a FEMA Special Flood Hazard Area (100-year floodplain) or Moderate Flood Hazard Area (500-year floodplain).
• History of Flooding: Landlords must disclose if the property or any portion of the parking area has experienced flooding.
• Form of Notice: This notice must be included in the lease or provided as a separate addendum signed by the tenant.

2. Environmental Liability (ISRA)

The Industrial Site Recovery Act (ISRA) is a unique New Jersey law. Certain industrial and commercial operations are required to conduct environmental investigations and receive a "Response Action Outcome" (RAO) from a Licensed Site Remediation Professional (LSRP) before:

• Closing a business.
• Transferring a lease or ownership.
• Terminating operations.

A commercial tenant should demand a disclosure regarding the property's ISRA status and any history of contamination to avoid inheriting cleanup liability under the New Jersey Spill Act.

3. Zoning and Certificate of Occupancy (CO)

In New Jersey, the burden of verifying zoning compliance rests with the tenant, but landlords must ensure the building has the proper municipal permits.

• Variability: Requirements for a Continuing Certificate of Occupancy (CCO) vary significantly by municipality (e.g., Newark vs. Jersey City).
• Zoning Contingency: It is standard practice to include a clause in the lease making it contingent upon the tenant obtaining a "Certificate of Occupancy" for their specific intended use.

4. Americans with Disabilities Act (ADA)

While there is no statutory "disclosure form" for ADA compliance, landlords must disclose any known non-compliance if the lease shifts the burden of structural upgrades to the tenant. In NNN leases, the tenant typically accepts the property "as-is" but should verify that current entrances and restrooms meet accessibility standards to avoid private lawsuits.

5. Truth in Renting (Exception)

New Jersey's "Truth in Renting" booklet requirement (N.J.S.A. 46:8-43) does not apply to commercial properties. This is a residential-only consumer protection.

Best Practices

1. Include the NJ Flood Risk Addendum: Use the official state-approved form to avoid lease voidability issues.
2. Review ISRA Applicability: Determine if the tenant's SIC or NAICS code triggers ISRA requirements before signing.
3. Verify Local CCO Requirements: Contact the municipal building department to see if a new inspection is required for a change in tenancy.

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