Amd §283, RP L; amd §2, Chap of 2024 (as proposed in S.7125-A & A.5073-A)
Makes clarifying changes in regards to the purchase of flood insurance by mortgagors that exceeds certain limits upon a mortgagees request; amends the effectiveness thereof.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A2056
SPONSOR: Hunter TITLE OF BILL:
An act to amend the real property law, in relation to prohibiting mort-
gagees from requiring mortgagors of certain real property to purchase
flood insurance exceeding certain limits; and to amend a chapter of the
laws of 2024 amending the real property law relating to prohibiting
mortgagees from requiring mortgagors of certain real property to
purchase flood insurance exceeding certain limits, as proposed in legis-
lative bills numbers S. 7125-A and A. 5073-A, in relation to the effec-
tiveness thereof
PURPOSE:
The purpose of this bill is to amend Chapter 557 of the laws of 2024 to
effectuate the intent of the law.
SUMMARY OF PROVISIONS:
Section 1 provides for a technical amendment to clarify that the insur-
ance coverage must equal the lesser of the property's replacement value
or the remaining mortgage balance at the start of the policy year.
Section 2 amends the effective date from immediately to 90 days.
JUSTIFICATION:
This chapter amendment would limit a homeowner's requirements when
purchasing compulsory flood insurance and provide notice of the minimum
insurance liability that is required. The homeowner's insurance coverage
must equal the lesser of the property's replacement value or•the remain-
ing mortgage balance at the start of the policy year. This transparency
ensures homeowners are not burdened by additional coverage by insurance
companies and banks when mandated to purchase flood insurance.
Additionally, in notifying the homeowner of minimum flood insurance
requirements, the notice would include a statement informing the home-
owner that minimum flood insurance may not cover the full value of the
home or the belongings inside. Homeowners are encouraged to purchase
additional insurance if they desire greater coverage.
LEGISLATIVE HISTORY:
New bill.
FISCAL IMPLICATIONS:
Undetermined.
EFFECTIVE DATE:
This act shall take effect immediately; provided, however, that section
one of this act shall take effect on the same date and in the same
manner as a chapter of the laws of 2024 amending the real property law
relating to prohibiting mortgagees from requiring mortgagors of certain
real property to purchase flood insurance exceeding certain limits, as
proposed in legislative bills numbers S. 7125-A and A. 5073-A, takes
effect.
STATE OF NEW YORK
________________________________________________________________________
2056
2025-2026 Regular Sessions
IN ASSEMBLY
January 14, 2025
___________
Introduced by M. of A. HUNTER -- read once and referred to the Committee
on Judiciary
AN ACT to amend the real property law, in relation to prohibiting mort-
gagees from requiring mortgagors of certain real property to purchase
flood insurance exceeding certain limits; and to amend a chapter of
the laws of 2024 amending the real property law relating to prohibit-
ing mortgagees from requiring mortgagors of certain real property to
purchase flood insurance exceeding certain limits, as proposed in
legislative bills numbers S. 7125-A and A. 5073-A, in relation to the
effectiveness thereof
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 283 of the real property law, as added by a chapter
2 of the laws of 2024 amending the real property law relating to prohibit-
3 ing mortgagees from requiring mortgagors of certain real property to
4 purchase flood insurance exceeding certain limits, as proposed in legis-
5 lative bills numbers S. 7125-A and A. 5073-A, is amended to read as
6 follows:
7 § 283. Limits on amount of flood insurance required by mortgagee. No
8 mortgagee shall require a mortgagor to whom the mortgagee makes,
9 increases, extends, or renews any loan or line of credit secured by
10 improved residential real property to purchase or pay for flood insur-
11 ance on such residential real property: (1) at a coverage amount that
12 exceeds the lesser of the replacement value of the residential real
13 property or the outstanding principal mortgage balance as of the begin-
14 ning of the year for which the policy shall be in effect; or (2) that
15 includes coverage for contents. In each instance where a mortgagee
16 requires a mortgagor to purchase or pay for flood insurance on such
17 residential real property, the mortgagee shall provide notice to the
18 mortgagor at the time the mortgagee is notified of the need to purchase
19 or pay for flood insurance that states the following in clear and
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD02840-02-5
A. 2056 2
1 conspicuous print: ['Please note that the] 'The flood insurance we are
2 requiring you to purchase [will only protect your creditor or lender's
3 interest in your property. The insurance] may not be sufficient to pay
4 for many needed repairs after a flood and may not compensate you for
5 your losses in the property due to the flood. If you wish to protect
6 your home or investment, you may wish to purchase more flood insurance
7 than the amount we are requiring you to buy.'
8 § 2. Section 2 of a chapter of the laws of 2024 amending the real
9 property law relating to prohibiting mortgagees from requiring mortga-
10 gors of certain real property to purchase flood insurance exceeding
11 certain limits, as proposed in legislative bills numbers S. 7125-A and
12 A. 5073-A, is amended to read as follows:
13 § 2. This act shall take effect [immediately] on the ninetieth day
14 after it shall have become a law.
15 § 3. This act shall take effect immediately; provided, however, that
16 section one of this act shall take effect on the same date and in the
17 same manner as a chapter of the laws of 2024 amending the real property
18 law relating to prohibiting mortgagees from requiring mortgagors of
19 certain real property to purchase flood insurance exceeding certain
20 limits, as proposed in legislative bills numbers S. 7125-A and A.
21 5073-A, takes effect.
