New York’s 2025 Climate Disclosure Laws Are Transforming Real Estate Transactions – Are You Prepared?

The landscape of real estate transactions in New York is undergoing a dramatic transformation as new climate disclosure laws reshape how properties are bought and sold. New York state’s proposed climate disclosure rules show some states are moving ahead on green policies despite US government pushback, with two bills reintroduced in New York’s senate that would require climate disclosure rules similar to those adopted by California in 2023. These changes represent one of the most significant shifts in property transaction requirements since the original Property Condition Disclosure Act was enacted over two decades ago.

The New Climate Disclosure Framework

New York’s Climate Corporate Data Accountability Act (Senate Bill S3456) establishes requirements for certain business entities within the state to annually disclose scope 1, scope 2 and scope 3 emissions. This legislation specifically impacts real estate companies and regional firms that may not operate in California but conduct business in New York. Some companies in New York that don’t operate in California, such as real estate and regional hedge funds, would be required to disclose, creating new compliance obligations for the property sector.

Climate-related financial risk means material risk of harm to immediate and long-term financial outcomes due to climate change, including risks to real estate, supply chains, capital and financial investments, and financial markets. For real estate professionals and property owners, this definition encompasses everything from flood risks to energy efficiency concerns that could affect property values and transaction viability.

Enhanced Property Disclosure Requirements

The most immediate impact on consumers comes through enhanced property disclosure requirements that took effect in March 2024. With recent flooding events and risk of future flooding events in New York due to climate change, New York lawmakers have made three significant changes to the PCDS that are intended to help purchasers make informed choices when purchasing a home.

Several new questions or categories related to the property’s flood condition are added to the disclosure process, with property sellers obligated to disclose whether the property is in a FEMA-designated 100-year or 500-year floodplain, whether it is obligated to comply with federal flood insurance requirements, and if the property has any history of procurement of flood insurance.

Importantly, sellers can no longer choose to opt-out of delivering the PCDS in exchange for issuing a $500 credit, making full disclosure mandatory for all qualifying residential transactions.

Impact on Real Estate Transactions

These new requirements are fundamentally changing how real estate transactions are conducted. The concern for sellers in completing a PCDS is the potential for liability under various causes of action, such as fraud or fraudulent misrepresentation and breach of contract, with willful misstatements in the PCDS potentially leading to litigation that will bring home sellers and buyers into court even years after closing.

For buyers, the enhanced disclosures provide unprecedented transparency about climate-related risks. In New York, real estate sales are governed by specific laws that require sellers to provide potential buyers with detailed disclosures about any particular property, designed to ensure transparency, allowing buyers to understand a property’s condition before making a purchase, with the state’s approach emphasizing the protection of the buyer’s interests.

Building Emissions and Energy Efficiency

Beyond individual property disclosures, New York’s broader climate initiatives are affecting larger real estate holdings. Local Law 97 requires most buildings over 25,000 square feet to meet greenhouse gas emissions limits by 2024, with stricter limits coming into effect in 2030, and requires all buildings larger than 25,000 square feet to meet ambitious carbon reduction targets beginning in 2024.

LL97 (Local Law 97) restrictions will start coming into effect in 2025, including penalties for not meeting the required emissions criteria by 2024, with about 5,300 buildings in the city expected to receive financial penalties. This creates additional compliance considerations for commercial real estate transactions and multi-family residential properties.

Why Professional Legal Guidance Is Essential

Given the complexity of these new requirements, working with experienced legal counsel has become more critical than ever. The Frank Law Firm P.C., based in Old Brookville and serving Long Island, Nassau County, Suffolk County, and Queens, understands these evolving regulatory challenges. The Frank Law Firm P.C. is a team of professional attorneys and support staff that provide legal services for businesses on Long Island, in New York City, and the surrounding areas, with lawyers having extensive experience handling cases involving corporate disputes, contracts, foreclosure, bankruptcy, residential and commercial real estate, financing, and much more.

For property owners and buyers navigating these new disclosure requirements, having a knowledgeable Real Estate Attorney Long Island can make the difference between a smooth transaction and costly legal complications. The firm simplifies the complexities of business law, breaking down legal jargon and processes into understandable terms, with a proactive approach to legal issues that means they anticipate challenges and provide solutions before they become problems.

Looking Ahead: Preparing for Continued Changes

Having two major states with similar climate reporting rules would send “strong market signals to companies about what the expected way of doing business is”, suggesting that New York’s climate disclosure requirements may become the template for other states. Many states and Americans recognize the material impact that climate change has on the economy, with state action likely to increase as it is up to states to “pick up the slack” from the federal government.

Real estate professionals, property owners, and buyers must adapt to this new regulatory environment. The key is working with legal professionals who understand both the technical requirements and practical implications of these changes. At The Frank Law Firm P.C., they have the qualifications, resources, knowledge, and expertise to be a dedicated team for all legal issues, with lawyers having extensive experience in civil litigation cases so they can effectively represent best interests in corporate disputes, financial transactions, real estate dealings, foreclosure prosecution, bankruptcy or business reorganization proceedings, contract issues, civil lawsuits, and much more.

As New York continues to lead the nation in climate disclosure requirements, staying informed and properly represented will be essential for successful real estate transactions. The intersection of environmental law and real estate practice is becoming increasingly complex, making experienced legal counsel not just helpful, but necessary for protecting your interests in today’s evolving market.