S384

An Act concerning the presence of lead service lines in residential properties, amending P.L.1999, c.76, and supplementing Title 58 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 1 of P.L.1999, c.76 (C.56:8-19.1) is amended to read as follows:

1. Notwithstanding any provision of P.L.1960, c.39 (C.56:8-1 et seq.) to the contrary, there shall be no right of recovery of punitive damages, attorney fees, or both, under section 7 of P.L.1971, c.247 (C.56:8-19), against a real estate broker, broker-salesperson or salesperson licensed under R.S.45:15-1 et seq. for the communication of any false, misleading or deceptive information provided to the real estate broker, broker-salesperson or salesperson, by or on behalf of the seller of real estate located in New Jersey, if the real estate broker, broker-salesperson or salesperson demonstrates that he:

a. Had no actual knowledge of the false, misleading or deceptive character of the information; and

b. Made a reasonable and diligent inquiry to ascertain whether the information is of a false, misleading or deceptive character. For purposes of this section, communications by a real estate broker, broker-salesperson or salesperson which shall be deemed to satisfy the requirements of a "reasonable and diligent inquiry" include, but shall not be limited to, communications which disclose information:

(1) provided in a report or upon a representation by a person, licensed or certified by the State of New Jersey, including, but not limited to, an appraiser, home inspector, plumber or electrical contractor, or an unlicensed home inspector until December 30, 2005, of a particular physical condition pertaining to the real estate derived from inspection of the real estate by that person;

(2) provided in a report or upon a representation by any governmental official or employee, if the particular information of a physical condition is likely to be within the knowledge of that governmental official or employee; or

(3) that the real estate broker, broker-salesperson or salesperson obtained from the seller in a property condition disclosure statement, which form shall comply with regulations promulgated by the director in consultation with the New Jersey Real Estate Commission, provided that the real estate broker, broker-salesperson or salesperson informed the buyer that the seller is the source of the information and that, prior to making that communication to the buyer, the real estate broker, broker-salesperson or salesperson visually inspected the property with reasonable diligence to ascertain the accuracy of the information disclosed by the seller. In addition to any other question as the director shall deem necessary, the property condition disclosure statement shall include a question specifically concerning the presence of lead plumbing in the residential property and a question specifically concerning the presence of a service line containing lead in the residential property.

Nothing in this section shall be interpreted to affect the obligations of a real estate broker, broker-salesperson or salesperson pursuant to the "New Residential Construction Off-Site Conditions Disclosure Act," P.L.1995, c.253 (C.46:3C-1 et seq.), or any other law or regulation.

(cf: P.L.2004, c.18, s.2)

2. (New section) a. If before the sale of any residential real property, the property is determined to be served by a service line containing lead, then closing of title on the sale of the residential real property shall not occur unless, at closing, both the buyer and seller of the property certify, in writing, that the service line will be replaced as a condition of the sale.

b. As used in this section, “service line” means the pipe, tubing, and fittings connecting a water main to a residential building.

3. This act shall take effect on the 90th day next following enactment.

STATEMENT

This bill requires property condition disclosure statements to include questions concerning the presence of lead plumbing and lead service lines in residential properties. The bill also conditions the sale of certain residential properties upon the replacement of lead service lines.

Under current law, a real estate broker, broker-salesperson, or salesperson is exempt from punitive damages and other penalties under the New Jersey Consumer Fraud Act, P.L.1960, c.39 (C.56:8-1 et seq.) when communicating the condition of a residential property if the broker, broker-salesperson, or salesperson relied on information provided in a property condition disclosure statement. The property condition disclosure statement is the form provided by the seller of residential property to the real estate broker, broker-salesperson, or salesperson to disclose certain information before the sale of the property.

The bill requires the property condition disclosure statement to include questions concerning the presence of lead plumbing and lead service lines, respectively, in the residential property. A real estate broker, broker-salesperson, or salesperson who communicates the condition of a residential property to a prospective buyer without obtaining this information from the seller could be liable for providing false, misleading, or deceptive information.

The bill also provides that if a residential property is determined to be served by a service line containing lead before the sale of the property, then the closing of title on the sale of the property cannot occur unless the buyer and seller certify, in writing, that the service line will be replaced as a condition of the sale.