The Illinois State Senate welcomed the new year with a new flood disclosure law, just one of several new laws that went into effect on January 1, 2025. If you own rental property in Chicagoland, you must understand and adhere to these new requirements. Here’s what you need to know about the new Illinois Flood Disclosure Law (SB2601) and how it might apply to your rental homes.

What’s A Flood Zone?

The Federal Emergency Management Agency (FEMA) identified zones prone to flooding. These zones are classified into different categories, with the most hazardous areas designated as Special Flood Hazard Areas (SFHAs) or the so-called 100-year floodplain.

According to FEMA experts, properties within the boundaries of SFHA zones stand a 1 percent chance of sustaining flooding in any given year. In addition, structures standing within SFZAs have a 26 percent chance of suffering flood damage during a normal 30-year period, which coincidentally is also the standard mortgage timeframe.

As you might have guessed, SFHAs feed into Flood Insurance Rate Maps (FIRMs). Identified flood hazard areas have a 100 percent chance of higher insurance rates to cover their properties within SFHAs.  

You can determine if your property sits within an SFHA by entering your property address into the FEMA search site. FEMA also included a helpful tutorial for those who want to learn how to read the actual FIRMs.

What is the Illinois Flood Disclosure Law?

The new flood disclosure law, an amendment to the Landlord Tenant Act, was created to help prospective tenants make educated housing decisions. This way, they’re not caught off-guard about the potential dangers of renting in flood-prone regions.  

The new Illinois state flood disclosure law has implications for every landlord with property in potential flood zones. It requires landlords to provide flood information on their rental homes to prospective tenants, especially if the property sits within a FEMA SFHA.

It also requires landlords to provide information on the potential for flooding for lower-level units below ground level that may be prone to flooding. This includes basement or garden apartments.  

Chicago landlords and property managers need to be aware of whether the new law impacts their rental properties and, if so, how to follow the new disclosure requirements.

What Are Landlord Requirements Under the New Law?

According to the new law, if a landlord knows that a property is subject to flooding, then they must share that information with potential tenants prior to signing the lease agreement. They must also share the frequency with which the unit has flooded.

Again, disclosing this information is a requirement for properties located within FEMA flood zones. However, it’s also a requirement for properties with lower-level units that could be vulnerable to flooding, even if those properties are not located in a designated flood zone.

That’s because something as simple as a backed-up gutter can cause just as much damage to a lower-level unit as floodwaters. Because water always finds a way to flow downhill until it has nowhere else to go.

Steps Landlords Must Take to Comply with the Flood Disclosure Law

To comply with the flood disclosure requirements, landlords and property managers must follow a few key steps. If you own rental property in Illinois, here’s what you need to do:

1. Determine the Flood Risk for Your Property

To ensure you comply with the new law, first determine whether your property is located in a FEMA-designated flood zone. You can use FEMA’s Flood Map Service Center to check if your property is in a high-risk area. For lower-level units, even if they are not in a flood zone, landlords should assess the risk of flooding based on their location, history of flooding in the area, and the type of construction (e.g., basements or garden-level apartments).

2. Disclose the Flood Risk to Tenants

You’ve confirmed your property is located in a FEMA flood zone or has lower-level units susceptible to flooding. Now, you must provide a flood disclosure to approved applicants before they sign a lease.

The disclosure must clearly state that the property is located in a flood-prone area or has flood risks. You must provide this information in writing (and any other required disclosures), and the tenant should acknowledge the disclosure as part of the lease agreement. The flood disclosure should include any known history of flooding as well as whether the property is covered by flood insurance.

3. Timing of Disclosure

The law requires that the landlord or property manager provide the flood disclosure before the tenant signs the lease agreement. Landlords cannot wait until after a tenant has expressed interest in renting a unit. Instead, landlords need to disclose any flooding information as part of the application process or during the showing of the property. Providing this information early ensures that tenants are well-informed about potential flood risks before committing to the rental.

4. Document the Disclosure

Like all things associated with being a landlord, it’s important to document the flood disclosure process to protect yourself. This includes keeping records of the disclosure made, such as signed forms or acknowledgments from tenants. In case of future disputes, proper documentation will serve as evidence that you complied with the law.

Keep a copy of the signed flood disclosure form with your lease agreement and store it in the tenant’s file for future reference.

Avoiding Penalties: Practical Advice for Compliance

Failing to comply with the Flood Disclosure Law can result in serious consequences, including fines and legal action. To ensure you’re fully compliant and avoid any penalties, follow these practical tips:

1. Keep Up with Changes to Flood Zones

Flood zones can change over time. FEMA regularly updates maps with new information about local flood risks. As a property owner, it’s essential to regularly check FEMA’s Flood Map Service Center to stay updated on your property’s status. If a property’s flood zone designation changes, you must update your disclosures to any potential tenants accordingly.

2. Provide Clear and Detailed Information

When disclosing flood risks, keep the information clear, consistent, accurate, and complete. Avoid vague language or generalizations. If you’re unsure about the level of flood risk, err on the side of caution and disclose as much information as possible. Include details about the property’s flood history, whether it’s covered by flood insurance and any actions you’ve taken to reduce flood risks.

3. Educate Your Tenants

Flood risks can be hard for tenants to understand fully, so it’s important to educate them. First, make sure YOU fully understand the flood zones, where your property falls, and what you need to provide in a flood disclosure. This way, you can clearly articulate information to potential tenants. Offer your tenants any additional resources about flood preparedness and emergency plans. After all, you care about their safety, and you want them to have the information they need. However, providing this information can also help prevent future disputes regarding flood risk.

4. Consult with a Professional

FEMA has done a good job outlining ways owners can check if their properties are in a flood zone. But if you’re unsure about your property’s flood risk or how to disclose it properly, consider consulting a professional property management company like GC Realty & Development. We can help you assess the flood risk, ensure you comply with all disclosure laws, and help manage tenant relations.

Help from Professional Property Managers You Can Trust

The Flood Disclosure Law is an important regulation that affects Illinois landlords and property managers. While it impacts all rental homes, it’s especially important to rental properties in Chicago and other flood-prone areas. By providing clear, accurate, and timely flood disclosures to tenants, landlords can ensure they are compliant with the law and help tenants make informed decisions about their living arrangements.

At GC Realty & Development, we understand the complexities of managing rental properties in Chicago and can assist you with navigating new regulations, including flood risk management and compliance. If you have any questions or need help understanding your flood disclosure requirements, feel free to reach out to our team for expert advice and support by calling 630-587-7400 or completing our online form.

Contact us today to ensure your properties meet all legal requirements, your processes protect you from potential penalties, and your property makes you the most money possible.