Chapter Overview

In this chapter, we will discuss common environmental issues and how

they should be disclosed to your clients.
Chapter Objectives

1. Explain the importance of disclosure, early disclosure, the proper

use of disclosure forms, and the exposure pathways.
2. Define radon and lead paint’s characteristics and why they are
major environmental health hazards.
3. Discuss asbestos, electric and magnetic fields (EMFs), geological
hazards, carbon monoxide, and polychlorinated biphenyls (PCBs).
4. Explain CERCLA, environmental audits, and the remaining
environmental hazards.

Environmental Issues and the Real

Estate Professional

In today's world, being a real estate professional means more than

bringing a seller and buyer together in a mutually satisfactory and
beneficial deal. Through the age of information, the real estate market
has seen numerous changes—in everything from how we do business to
the ways in which we can help and reach our customers. The age of
information means that not only do we have more resources at our
fingertips, but our buyers and sellers have access to more information
than they've ever had before.
Environmental issues are a hot topic in today's real estate world. Keeping
updated on the latest in regulations, laws, and rules can be a challenge,
even for an expert in the environmental industry. So, how are you
supposed to stay on top of everything, with all the other information you
have to continually know for your work in real estate?
Believe it or not, you CAN do it.
For real estate professionals, learning as much as possible about
environmental challenges and issues—from radon to electromagnetic
fields, from lead-based paint to underground storage tanks—is vital. If
this sounds daunting to you, you're not alone. Our goal is to explain the
information succinctly, accurately, and in terms of how it will directly
pertain to you and your customers and clients.
In this chapter, we are going to discuss the "nuts and bolts" of
environmental issues, about which today's real estate professional
should be knowledgeable. Without delving too deeply into individual
regulations, we will lay the groundwork for a strong base of knowledge
from which you can draw when necessary. The information you retain
from this chapter will allow you to speak capably to your customers
regarding various environmental issues.

Too Much or Too Little Information?

For your customers and clients, too much information or, conversely, too little information
could prove detrimental to their real estate transactions. For those clients without any idea
about which environmental concerns could affect them at what time, your education into
these matters will prove invaluable. Some customers think environmental issues only affect
faraway places that glow like radioactive waste. These customers need to be informed of the
possibility that environmental issues can affect their home sale or purchase.
Likewise, there will be the Web surfers who have downloaded information from every
"environmental issue" Web site they could find, and these clients will be overwhelmed with
too much information. These people may suffer from information overload, sending them
into a Chicken Little-type panic. It will be your job to give them accurate and pertinent
information. They need to know what is important and what isn't. What important
environmental issues they need to be aware of, and what regulations actually pertain to them?
This is where you, the informed real estate professional, come in.

Dealing With Environmental Issues

A good real estate professional must be willing and ready to deal with
environmental hazards head-on. You are not doing yourself or your client
any favors by pretending that environmental hazards do not exist. It is
easy, in the reams of contractual paperwork involved in the sale or
purchase of a home, for the buyer to get so overwhelmed that they either
forget about these issues or make the assumption that if environmental
hazards existed on the property, it would be obvious. This is a dangerous
assumption—not just for the real estate professional's career and
reputation, but for the homeowner's health and financial well-being.
As any good real estate professional knows, making assumptions about
a property can be a sure path to disaster. This can be especially true in
regard to potential environmental hazards, as even the sellers may not
be aware of existing hazards. Even if the sellers are aware of a problem,
slightly varied wording can have your buyer signing off on something
about which they have been misinformed.
Real estate professionals are under increasing pressure to understand
the implications of environmental issues, according to Barry Chalofsky,
environmental planner, and Joel Finestine, real estate appraiser, authors
of The Real Estate Guide to the Environment. The authors have found
that real estate agents have been trained to understand and provide
information on neighborhoods, schools, social amenities, and housing
values, but that it can be easy for environmental issues to fall by the
wayside.
Environmental hazards abound. Landfills, lead paint, radon, lead in
water, polychlorinated biphenyls (PCBs), asbestos, mold,
electromagnetic fields, underground hazards, hazardous waste sites,
abandoned landfills, air quality, and carbon monoxide all pose risks to
people. Add to this list floodplains, steep slopes, wetlands, and high
water tables, and you'll begin to understand why some knowledge of
these areas is vital to a real estate professional's career. If and when
environmental issues arise, the clients invariably turn to the "experts" in
homes—the real estate professionals. While it is NOT (we repeat, NOT)
your job to assess a potential environmental hazard, you must be able to
show them you have knowledge of the issues, and resources to which
they can turn to learn more.

The Importance of Understanding the

Issues

In their book, Chalofsky and Finestine write: "Most people worry about
whether they can afford to buy a house, or whether they will get a
mortgage. In many cases, however, the environmental considerations of
home buying can be more crucial than the price."
Unfortunately, buyers often don't uncover the environmental concerns
until after their new house or land is purchased. This is unfortunate for
all involved—buyers may feel misled or cheated, and even if the risk of
environmental hazards was honestly overlooked by the real estate
professional, new homeowners are not going to take kindly to putting
themselves and their family at risk. A disaster of this sort can be harmful
to both your reputation as a knowledgeable real estate professional and
your goodwill with homeowners, who surely won't call you again for future
real estate transactions. Nor will you be recommend with glowing praise
at the office party.
Although it's easy to be overwhelmed at the thought of learning about the
numerous environmental concerns, it's not as if you are the only real
estate professional out there who hasn't read the latest studies by the
Environmental Protection Agency or the Centers for Disease Control.
Many real estate professionals have not been trained in more specialized
concerns like environmental hazards, say Chalofsky and Finestine.
Remember: Just as with your Too-Much-Information-Web-Surfer clients,
all you need is the right amount of information. You don't need to spend
your evenings memorizing the latest EPA studies, yet you do need to
have a reliable information base on which you can draw when necessary.
A little information can go a long way. For example, if you know that radon
can affect any type of home, with any foundation, in any neighborhood
(regardless of how neighbors' homes have tested for radon), without
anyone being aware of it, you will surely address this issue with your
buyers and sellers. Does this mean you need to cite exact statistics from
the American Lung Association regarding how many people are
estimated to have died from lung cancer because of radon exposure? Of
course not. It is enough to simply have the basics and know where to find
more information should your client or customer request it.

The Consumer's Need to Know

Some customers will request more information. Once you've completed
this unit, you will not only have a good deal of knowledge to share with
them, but you will also have a plethora of resources at your fingertips.
Let's say Mr. and Mrs. Prospective Homebuyer are purchasing a house
built in 1960. They have heard some murmurs about lead-based paint
and are concerned about having their two small children in a potentially
dangerous house. You can tell them the basics of lead-based paint: "Yes,
a large percentage of houses built before 1978 do have lead-based paint,
Mr. and Mrs. P. H. You're right to be concerned. You should know that if
the paint is undisturbed, it doesn't seem to pose a hazard. However, if
you're interested in having it tested and removed if necessary, there are
a number of experts in that field."
Bingo. You just gave them a great deal of valuable knowledge on which
they can base their decisions. And in just a few short sentences!

Knowing Where to Look

Let's stay with Mr. and Mrs. Prospective Homebuyer for another moment.
Let's say Mr. P. H. is not totally convinced about the paint removal. "Well,
we could have it tested, but then my brother-in-law, Joe Schmoe, could
come over and help me sand it away."
Here is where you come in. "Well, Mr. P. H., studies have shown that
lead-based paint removal is something you should never do yourself, but
I can provide you with a list of experts to come in and get the job done
for you safely. Oh, and you'll want to have it done when the children are
at their grandmother's house—exposure to the dust is dangerous." You
hand him some brochures on lead-based paint, give him some website
addresses, phone numbers, and lead-based paint removal experts'
names and numbers, and, bam, you've done your job.
Remember, in all areas of environmental hazard issues, THIS type of
interaction will usually be the extent of your involvement. You are there
as a well-informed (but by no means, expert) source for your customers
and clients, and what you need is a basic understanding of the issues
and the regulations in your area (or at very least, how you could find them
if necessary). If you can address environmental issues with some
rudimentary knowledge of them, you're doing great. That, plus additional
"places to turn" for your home buyers and sellers, and you're good to go!
Your foray into the world of environmental issues does not need to exist
only in this type of formal online training medium. Simply taking an hour
or so once a week—or even once a month—to surf the 'Net, find out
what's new and hot in environmental concerns, and discuss these issues
with your fellow real estate professionals will increase your
understanding and grasp of the issues.

What the Public Wants

Cahners Residential Group, one of the nation's largest publishers of new
home magazines, including "Professional Builder," "Luxury Home Builder,"
"Professional Remodeler," and "[Link]," has released data from
their major environmental survey. Contrary to what we've long been told,
the study's results suggest that the public does want and will pay for
environmentally sensitive upgrades to their homes.
The results of this survey reveal that today's consumer is savvier than we
may have been led to believe in the past. Many of these consumers know
there are environmental concerns and want to address them, even if it
means money out of their own wallets. This is good news for both the
environment and you. These people will not need to be "hand-held" through
explanations about the importance of addressing environmental issues.
They know this already and are going to be willing to do what they can—to
do "their part."
The Cahners' study showed the following:

• "Energy upgrades are one of the first things that consumers would
pay extra for—up to $1,000—if they could expect to see a payback
through lower monthly energy costs in 2—3 years.
• Only 5.1% of the home buyers said they would not be willing to pay
more in upfront cost for energy efficiency upgrades that would
reduce monthly utility bills."

The builder, in most cases, assumes that consumers won't want to pay for
such upgrades. According to a statement released by Cahners Residential
Group, "The basic assumption is that green building must 'cost' more and
thereby eliminate the opportunity for cherished extras." This study, says
Cahners, suggests that home builders are "almost exactly five years behind
their customers in their prediction of consumer interest in 'green'
building."
What this tells you, the real estate professional, is that consumers are not
only becoming more aware of environmental issues in the building
industry, as we said, but that they are also becoming more specific in their
demands for their own residences.

CHAPTER START

Consumer Concerns
In the past, a buyer may not have had their residential property tested
for environmental hazards, but today's average buyer is more
knowledgeable about potential hazards and wants their new home to be
perfect. You may have noticed this as more and more customers ask an
increasing number of questions about home safety and environmental
concerns.
Residential hazards include, but are not limited to, the following:

• Indoor air quality

 • Lead-based paint
• Mold (found almost everywhere)
• Asbestos
• Proximity to industrial and commercial activities that produce
pollutants

If the property is undeveloped, potential commercial environmental

hazards are as follows:

• Wetlands
• Endangered species
• Toxic waste sites
• Water supply sources
• Storage tanks, both above and underground

It is not your duty to assess an environment for hazards, nor is it your

duty to tell your clients how to handle a particular problem. Your role is
as a coach or educator. Your knowledge of current issues and potential
hazards in the environment is valuable to your clients and customers.
They also may need you to assist them in dealing with any problems
which come to light.
Consumer protection is always a vital aspect of a real estate
professional's career. As we said, with the educated buyers and sellers
in today's marketplace, you must have the necessary information to
address their health and safety concerns. Remember that even if there
is no readily visible environmental hazard, many of them, including
radon, lead-based paint, and electromagnetic fields, are invisible to the
eye and can easily go undetected. Even if an owner is genuinely unaware
of a problem, they may not be held blameless in the event that a problem
arises. Full disclosures create level playing fields and foster an air of
mutual trust for all involved parties.

Disclosures
It is good legal and business-sense to disclose early and often. In some
jurisdictions, seller-supplied disclosure forms are accepted without
question. However, the "what you don't know can't hurt you" mindset is
quickly going the way of the T-Rex. While there is never an ideal time to
bring up environmental concerns, the rule of thumb is that the earlier, the
better. In many cases, these issues can be dealt with easily and
successfully in the transaction.
Real estate laws and environmental issues are specifically defined by
individual state common laws and statutes. Always check for exact
definitions and their applications on a local level before handling a
particular situation. If you have questions about a particular regulation, it
is best not to venture a guess as to how it might apply to your client. Safe
is always better than sorry in these cases. If someone needs to know
how a specific regulation applies to their situation—or even whether or
not it does apply—it's your job to find out. If you don't know, find someone
who does, or someone who can direct you to an authority or applicable
organization regarding that environmental issue.
When advising buyers, you should encourage them not to accept
information on the disclosure forms without question. This information is
neither a warranty nor a guarantee; it is, rather, an assignment of
responsibility. It's a subjective statement, from the seller about their
knowledge or assumptions regarding their property. Just because the
seller doesn't know about a hazard, that doesn't preclude such a hazard
from existing.
As a rule, real estate professionals aren't going to get in trouble unless
they start making decisions for their clients regarding environmental
concerns. If there is a question of whether or not to disclose something,
then disclose. If your buyer expresses concern about an issue, take it
seriously.

Disclosures
In addition to your own knowledge of such topics as radon or lead paint,
it's also helpful to let the clients and customers educate themselves. For
example, provide them with brochures and discuss mitigation techniques
so that all involved parties have a basic understanding of environmental
issues and problems raised in the disclosure forms.
Property disclosure forms:

• Can avoid problems later on by determining the buyer's attitude

toward environmental hazards and giving the opportunity to
discuss testing and mitigation if necessary.
• Assign rights and responsibilities among the parties involved in real
estate transactions—what is provided to whom and timelines, for
example.
• Can put the buyer "on notice" regarding certain issues or problems.
 • Should be presented early in the transaction—perhaps at the time
of the listing, before showing any properties.
• Should not be seen as a substitute for agent-initiated information
disclosure.

Sometimes property disclosure forms can give buyers a false sense of

security, and sometimes they are used by real estate professionals to
avoid responsibility. Many companies have established a company policy
that requires the seller to fill out a "Seller Disclosure Form," or licensees
are not allowed to take a listing and market the property.

Looking Out for Your Clients

You may get sick of hearing us say this, but it bears repeating: Your job
is as an educator in the realm of environmental issues—NOT as a
decision maker.
If there is a problem that needs to be remedied, buyers and sellers may
look to you for information about service providers. Again, this is doling
out information, not telling the client what to do. This is perfectly
acceptable. Some consider the real estate professionals to be
"gatekeepers" of sorts in these transactions. In other words, the clients
expect their real estate professional to be informed about environmental
hazards.
Real estate professionals can help their clients and customers deal with
environmental issues by:

• Being knowledgeable. Keep a close eye on your marketplace and

keep an ear open to learn of updates in testing or other
environmental issues.
• Ask the right questions. How many questions to ask depends on
what your state's rules are. Does your state operate under the
"agent should have known" philosophy or the "buyer beware"
policy? Deal with questions accordingly.
• Call the experts. There are many helplines listed throughout this
unit, and most often, the EPA has the most easily accessible
answers.
• As always, disclose early and often.
Always Be Prepared
Adopt a disclosure strategy to help both buyers and sellers stay
completely informed about environmental hazards before they make any
decisions.
These disclosures should include the following:

• Legal requirements. You must be prepared to show (in court, if

necessary) what you have done to meet the common and statutory
laws in your state.
• Ethical obligations. Regardless of what real estate professional
organizations you belong to, almost all the codes in these groups
require agents and brokers to treat parties honestly or fairly.
• Service to the client or customer. Provide up-to-date, accurate,
understandable information about environmental issues to your
clients and customers so they can make well-informed decisions.
• Ways to keep the transactions moving smoothly. Be prepared
(there are those words again) to provide information even before
they need it. If all information is provided to all parties, it helps to
facilitate a more trusting environment between the seller and buyer.
Then, if problems do arise, there is an underlying sense of trusting
groundwork already laid.

Protecting Yourself

In purchase and sale agreements, it is important to watch the definition

of key terms, like "hazardous materials" and "contamination." The seller
will usually try and limit their retained liabilities by defining the subject of
that liability narrowly. For example, hazardous materials can be limited
to only certain substances, and contamination can be limited in time and
scope. If the seller is responsible only for contamination that a regulator,
upon its own initiative, requires to be remediated, the buyer should be
aware they have likely retained responsibility for some contamination that
may affect their liability and the property's value. Be unerringly specific
in the key terms within all contracts and disclosures.
While doing this will undoubtedly take extra time and effort on your part,
the peace of mind you and your clients retain will make it well worth the
attention to detail. You cannot be too careful or specific in your wording
of these pertinent materials.
Creative attorneys are continuing to find new ways to fight for their
clients' claims against real estate licensees. Misrepresentation (whether
or not it's true) and negligence are just two types of allegations attorneys
may make.

Geographic and Environmental

Influences on Value
Appraisers need to consider at least the following geographical and
environmental influences on property value.
Climate
General climatic conditions obviously apply to the desirability of an entire
region and to any property located in that region. Purchasers and
potential users of real estate consider these conditions in choosing a
location, and property values are affected by them as a consequence.
Important features of climate are as follows:

• Rainfall
• Snowfall
• Temperature
• Humidity
• Cloud cover
• Annual days of sunshine
• Storm patterns

Soil
Drainage, soil, and subsoil conditions are truly fundamental components
of value. Unstable soils or soils with poor drainage may be unsuitable for
building. Permits for septic systems require a percolation test showing
that the soil can absorb water adequately. The presence of clay and rock,
for instance, can increase construction costs.
Water
The availability of good quality water in necessary quantities at an
affordable price is practically an essential ingredient of any real estate
use in this country. Presence or lack has a direct impact on property
value. If there is no good water supply, water has to be brought in,
increasing costs and inconvenience. Another aspect of water is the
owner’s right to access it: water rights.
Air Quality
Air pollution from industrial activities, air and road traffic, or other sources
can seriously damage the value of all properties that suffer from it. By
the same token, in an area with such problems, a property that escapes
these conditions will have its value enhanced.
Wind Patterns
Prevailing winds, wind constancy, and wind velocity can make land more
or less suitable for certain uses. Wind erosion of soil will diminish the
land’s usefulness for agricultural purposes, but the constancy and force
of the same winds may make it ideal for a wind farm. Strong and steady
winds can also affect residential properties, making a property colder or
warmer, more or less vulnerable to air pollution, more or less suited for
outdoor activities.

Geographic and Environmental

Influences on Value
Environmental Hazards
A single property or an entire area can be damaged by an environmental
hazard, a condition, situation, or feature that harms or has the potential
to harm a person's health or safety.
Some famous instances of an entire area being damaged resulting in the
loss of property value are Love Canal, New York, the site of toxic
dumping; the Three Mile Island nuclear facility, the site of a nuclear
incident; and Libby, Montana, polluted by asbestos mining.
On individual properties, environmental concerns are most likely to
involve the following:

• Asbestos
• Radon
• Lead-based paint
• Toxic mold
• Underground storage tanks
• PCBs

The presence of such hazards can:

• Modify or destroy land use.

• Make a buyer change their mind about purchasing real estate or
moving to the area at all (decrease demand).
• Cause physical damage to property or medical damage to owners
and occupants.
• Leave a stigma on the real estate and community even after the
hazard has been removed.

Hazardous Substances
Before we delve into specific environmental issues, let's look at the topic
as a whole. First, in order to best grasp items discussed in this unit, we're
going to discuss hazardous substances as a whole.
A hazardous substance is a threat to human health only if people are
exposed to it. However, this exposure only happens if the following three
conditions apply:

• The substance is released from its container;

• The substance is transported by some means, such as air, water,
or the food chain, from its original source to human beings; and
• The substance is taken into the human body by breathing, eating,
drinking, or contact with the skin.

Waste is hazardous if it is as follows:

• Toxic. Can cause death or violent illness or cancer

• Corrosive. Can cause burning of the skin
 • Reactive. Can cause explosions and toxic fumes when mixed with
water
• Ignitable. Danger from heat, smoke, or friction

Exposure Pathways
An exposure pathway is the means by which the hazardous substance
travels from its safe containment to, and then into, a human being.
Exposure pathways include the following:

• Air pathways. Within this category, there are more narrow

classifications. In the soil-air pathway, exposure can begin with a
release of a volatile chemical, or by wind-blown, contaminated
dust. In the air-food pathway, contaminants may reach human
beings either directly or through animals. Another air pathway is
the air-surface-water pathway, in which air contaminants are
deposited into surface water, such as ponds or lakes.
• Soil pathways. Exposure begins with either a release from buried
contaminants or as a spill on the ground. Direct exposure may
come from eating or touching contaminated soil. A narrower
classification in this category is the soil-food pathway, which is
applicable if contaminated soil supports edible plants.
Contaminated dust may establish a soil-air pathway.
• Drinking water pathways. Those in which liquid contaminants or
contaminants washed from the soil by rainwater migrate through
the soil to groundwater. There, they have the potential to establish
what is known as a soil-groundwater-drinking water pathway.
• Food pathways. Exist if the contaminant runs off into a lake or
stream, which is used for irrigation, the watering of animals, or
fishing. In this case, a soil-water-food pathway results.

Usually, the chemical involved is the determining factor in the type of

exposure pathway which is taken. More volatile chemicals are likely to
evaporate and take to the air, while less volatile chemicals are more apt
to sink into the ground and groundwater.

Radon
Of all the environmental hazards facing us, the easiest to detect and
mitigate is radon. Radon is an odorless, colorless, tasteless, and
radioactive gas created in the ground where uranium and radium exist.
Radon can be an extremely deadly gas for humans, causing lung cancer
after prolonged exposure. In certain homes, it can build to dangerous
levels. Because radon cannot be seen or smelled, it's impossible to
sense the presence of radon without testing for it.
The potential for elevated radon levels within a building soil rises with the
more uranium found beneath the soil upon which the home is
constructed. The uranium breaks down into radium, which then decays
into radon gas. The radon gas moves up through the soil into the
atmosphere, where it dilutes and is of little concern. The problem exists
when it enters a building constructed on top of the soil, where it can
accumulate and present health concerns for occupants.
When the radon breaks down into several radioactive elements called
"radon decay products," these solid particles become suspended in the
air. RDPs are extremely small and can be easily inhaled into the lungs,
where they can attach to lung tissue. Because of their very short "half-
lives," radon decay products further decay and expose the lungs to
radiation.

Where Is Radon Found?

Radon has been found in homes all over the United States. It is naturally
occurring in many different types of soils and rocks, which is why radon
is not confined to just one geographical area. Any home new or old, with
or without basements, can have a radon problem. Even if another home
in a certain neighborhood is tested, there's no guarantee that all the
houses have a safe level of radon. Buildings other than homes, such as
commercial buildings, schools, and apartments, can also have radon
concerns.
A radon problem can develop, surprisingly, from a very small amount of
radium, which makes it even more difficult to predict which areas and
homes might have a problem. Depending on what driving forces help
move the radon, and the nature of the pathways open to it, radon can
travel varying distances. Houses actually draw radon inside them by
acting as a vacuum.
Radon can enter the house through the following:

• Cavities in walls
• Joints in construction materials
• Gaps in suspended floors
• Gaps around utility pipes and wires
• Crawl spaces that open directly into the building
• Openings around pipes or sump pumps
• Cracks in concrete floors or foundation

Radon Testing and Public Awareness

Many people wait until the time comes to sell their home or buy a new
one before they educate themselves on radon. This is one reason it's
important for real estate professionals to learn about radon, so they can
properly answer questions during real estate transactions and avoid
potential liability problems.
Radon can be resolved and should not stand in the way of any real estate
transaction being seen through to completion. By being knowledgeable
and providing information, real estate agents can minimize the potential
for delaying or derailing closings because of radon.
Environmental Protection Agency (EPA) Recommendations for Real
Estate Professionals
The U.S. EPA makes the following recommendations for those buying or
selling a home:
 1. If you are buying a home or selling your home, have it tested for
radon.
2. For a new home, ask if radon-resistant construction features were
used and if the home has been tested.
3. Fix the home if the radon level is 4 picocuries per liter (pCi/L) or
higher.
4. Radon levels less than 4 pCi/L still pose a risk and, in many cases,
may be reduced.
5. Take steps to prevent device interference when conducting a radon
test.

What NOT to Say in Regard to Radon

In addition to these four helpful hints, here are some statements that
could land you in trouble. Try your hardest to avoid saying these
regarding radon and the home in question:

• The house tested safe before.

• There is no radon in the home.
• A house down the street tested okay, so it's probably okay.
• Let's see what we can do to get you a safe reading.

Instead of these statements, stick with the safer, less misleading

approach: "Radon can be a concern in any area, so you might want to
discuss a radon test with a state health official or other objective radon
testing company. Here are some brochures with additional information."
This is a more accurate response, as well as being safer in terms of
protecting your own career and reputation.

Environmental Lead and Lead-Based

Paint Concerns
The EPA and the Department of Housing and Urban Development (HUD)
say that approximately seventy-five percent of homes built before 1978
contain some lead-based paint. Although when it is properly maintained
and managed, this paint poses little risk, there are still an estimated 1.7
million children with blood-lead levels above safe limits, mostly due to
exposure to lead-based paint hazards. Today's home buyers and renters
receive specific information on lead-based paint hazards if their real
estate transactions involve housing built before 1978.
It is the responsibility of the sellers, landlords, and their agents to provide
this information to the prospective buyers or lessees in each case before
sale or lease.
As a real estate professional, it is essential that you be aware of the
constantly changing laws and regulations that affect your industry.

Notification and Disclosure of Lead

Hazards During Real Estate
Transactions
One of the most important environmental regulations of which real estate
professionals should be aware is the Notification and Disclosure of Lead
Hazards During Real Estate Transactions (Section 1018 of Title X). The
final rule, issued by HUD and the EPA, became effective in 1996 and is
known as the Residential Lead-Based Hazard Reduction Act of 1992.
This regulation pertains to housing built before 1978.
Residential Lead-Based Hazard Reduction Act of 1992

1. Sellers and landlords must disclose known lead-based paint and

known lead hazards and provide available reports to buyers and
renters, for property built prior to 1978.
2. The pamphlet developed by the EPA, HUD, and the Consumer
Product Safety Commission entitled "Protect Your Family from
Lead in Your Home" must be given to buyers and renters.
3. Purchasers and tenants must receive the disclosure and
acknowledgment, and this document should be signed by the buyer
and seller or lessee and lessor.
4. If buyers or tenants desire a lead inspection or risk assessment,
they are entitled to do so at their own expense.
5. If either the inspection or assessment is ordered at buyer expense,
the buyer has 10 days. In this case, the lead-based paint
addendum should be used to give the parties the opportunity to
renegotiate if the results are not favorable.

Important Notes

• The law says that the seller may NOT accept an offer from the
buyer to purchase if the disclosure and pamphlet have not been
given prior to the buyer being obligated under contract.
• Although it is the law that sellers give the disclosure, it is up to the
real estate licensees, both listing and selling associates, to see that
this happens.
• The broker should retain the signed form in the file with other
important disclosures. Federal law says 3 years.
• A purchase contract is NOT binding if the disclosure has not been
given to the purchaser.

Lead Protection for Your Clients' and

Customers' Families
Following is some information to pass onto your families in homes that
may contain high levels of lead:

• Get young children tested for lead

 • Wash children's hands, toys, and other items frequently
• Wipe shoes before entering house
• Don't sand painted surfaces that could contain lead
• NEVER try to remove lead-based paint yourself
• Get your home checked for lead-related hazards
• If your work or hobby involves lead, change clothes and use
doormats before entering your home
• Eat a balanced diet rich in calcium and iron

Remember that even children who seem healthy can have dangerous
levels of lead in their bodies. In fact, exposure to lead can harm unborn
babies. Surprisingly, in many cases, undisturbed lead-based paint is not
harmful. Be sure your clients and customers realize that the improper
removal of lead-based paint can be hazardous and is a job best left to
the experts.
The Centers for Disease Control's pamphlet, "Preventing Lead Poisoning
in Young Children" (October 1991), offers more information on these
topics.

Federal Regulations Regarding Lead-

Based Paint
Residential real estate properties built before January 1, 1978 may
present exposure to lead-based paint. Because of this, every purchaser
or lessee with interest in these properties must be notified of the
possibility of exposure to lead-based paint. Federal regulations stipulate
that the seller or lessor must provide to the buyer or tenant the HUD-
approved pamphlet, "Protect Your Family From Lead In Your Home."
As a real estate professional representing the seller (or receiving any
compensation from the seller), you are required to inform the seller of the
disclosure obligation. It is your duty to ensure compliance with this
regulation. If you are acting on behalf of the lessor in the transaction, you
are also required to inform them of the disclosure, and then ensure
compliance.
There are some exceptions to this rule:

• New housing built on or after January 1, 1978

• Housing for the elderly and disabled, unless a child under the age
of 6 is in the home
 • Short-term leases of 100 days or less where no renewal or
extension can occur
• Lease renewals in which the lessor has already made the
disclosure

Sample Lead-Based Paint Disclosure

Form
Disclosure of Information on Lead-Based Paint and Lead-Based
Paint Hazards
Lead Warning Statement
Every purchaser of any interest in residential real property on which a
residential dwelling was built prior to 1978 is notified that such property
may present exposure to lead from lead-based paint that may place
young children at risk of developing lead poisoning. Lead poisoning in
young children may produce permanent neurological damage, including
learning disabilities, reduced intelligence quotient, behavioral problems,
and impaired memory. Lead poisoning also poses a particular risk to
pregnant women. The seller of any interest in residential real property is
required to provide the buyer with any information on lead-based paint
hazards from risk assessments or inspections in the seller's possession
and notify the buyer of any known lead-based paint hazards. A risk
assessment or inspection for possible lead-based paint hazards is
recommended prior to purchase.
Seller's Disclosure
(a) Presence of lead-based paint and/or lead-based paint hazards
(check (i) or (ii) below):
(i) ______ Known lead-based paint and/or lead-based paint
hazards are present in the housing
(Explain).__________________________________________
___________________________
(ii) _____ Seller has no knowledge of lead-based paint and/or
lead-based paint hazards in the housing.
(b) Records and reports available to the seller (check (i) or (ii)
below):
 (i) ______ Seller has provided the purchaser with all available
records and reports pertaining to lead-based paint and/or lead-
based paint hazards in the housing (list documents below).
__________________________________________________
___________________________
(ii) _____ Seller has no reports or records pertaining to lead-
based paint and/or lead-based paint hazards in the housing.
Purchaser's Acknowledgment (initial)
(c) ________ Purchaser has received copies of all information listed
above.
(d) ________ Purchaser has received the pamphlet Protect Your
Family from Lead in Your Home.
(e) Purchaser has (check (i) or (ii) below):
(i) _____ received a 10-day opportunity (or mutually agreed
upon period) to conduct a risk assessment or inspection for the
presence of lead-based paint and/or lead-based paint hazards;
or
(ii) _____ waived the opportunity to conduct a risk assessment
or inspection for the presence of lead-based paint and/or lead-
based paint hazards.
Agent's Acknowledgment (initial)
(f) ________ Agent has informed the seller of the seller's obligations
under 42 U.S.C. 4852(d) and is aware of their responsibility to
ensure compliance.
Certification of Accuracy
The following parties have reviewed the information above and certify, to
the best of their knowledge, that the information they have provided is
true and accurate.
_________________________________________________________
__________________
_________________________________________________________
__________________
Seller Signature and
Date______________________________________________________
_
Purchaser Signature and
Date___________________________________________________
Agent Signature and Date
______________________________________________________

Asbestos

Although the removal of asbestos-containing materials (ACMs) from

buildings has been an active industry for well over a decade, many
buildings still contain asbestos-containing materials in some form.
Employers and building owners must continue to be concerned with
asbestos exposure when planning a renovation or demolition project.
The term "asbestos" refers to a unique group of minerals that are widely
useful because of their special properties. Asbestos minerals are fibrous
silicates with a crystalline structure and are found in rock formations
throughout the United States and the world. However, concentrations
high enough to make commercial mining practical exist only in certain
locations. As a result of both natural occurrence and commercial use,
asbestos is commonly found throughout the United States in water
supplies and in outside and indoor air.
People are regularly exposed to asbestos. In fact, human exposure to
asbestos may be caused by air, wind, and water erosion from naturally
occurring deposits, as well as by the mining, manufacture, and use of
some asbestos-containing products.

Where Could Asbestos Hazards Be in

Your House?
According to the Asbestos Institute, the following are some places
asbestos can be found in the home:

• Some roofing and siding shingles are made of asbestos cement.

• Houses built between 1930 and 1950 may have asbestos as
insulation.
• Asbestos may be present in textured paint and in patching
compounds used on wall and ceiling joints. (Their use was banned
in 1977.)
• Artificial ashes and embers sold for use in gas-fired fireplaces may
contain asbestos.
• Older products, such as stove-top pads, may have some asbestos
compounds.
• Walls and floors around wood-burning stoves may be protected
with asbestos paper, millboard, or cement sheets.
• Asbestos is found in some vinyl floor tiles and the backing on vinyl
sheet flooring and adhesives.
• Hot water and steam pipes in older houses may be coated with an
asbestos material or covered with an asbestos blanket or tape.
• Oil and coal furnaces and door gaskets may have asbestos
insulation.

The OSHA Construction Standard for Asbestos (29 CFR 1926.1101)

details training requirements, medical monitoring, respiratory protection,
prohibited activities, and work practices for dealing with ACMs. It also
requires building owners to notify employees and contractors of the
presence of asbestos in their building.

Asbestos Hints
The Asbestos Institute, American Lung Association, Consumer Product
Safety Commission, and the U.S. EPA offer the following advice for
homeowners:
 • If you think asbestos may be in your home, don't panic. Usually,
the best thing is to leave asbestos material that is in good condition
alone.
• Generally, material in good condition will not release asbestos
fibers. There is no danger unless fibers are released and inhaled
into the lungs.
• Check material regularly if you suspect it may contain asbestos.
Don't touch it but look for signs of wear or damage such as tears,
abrasions, or water damage.
• Damaged material may release asbestos fibers, especially in cases
where the material is disturbed by being hit, rubbed, or handled, or
if it is exposed to extreme vibration or airflow.
• Sometimes, the best way to deal with slightly damaged material is
to limit access to the area and not touch or disturb it. Discard
damaged or worn asbestos gloves, stove-top pads, or ironing board
covers. Check with local health, environmental, or other
appropriate officials to find out proper handling and disposal
procedures.
• If asbestos material is more than slightly damaged, or if you are
going to make changes in your home that might disturb it, repair or
removal by a professional is needed.
• Before you have your house remodeled, find out whether asbestos
materials are present.

Asbestos Do's and Don'ts

• Do keep activities to a minimum in any areas having damaged material that may
contain asbestos
• Do take every precaution to avoid damaging asbestos material
• Do have removal and major repairs done by people trained and qualified in handling
asbestos (it is highly recommended that sampling and minor repair also be done by
asbestos professionals)
• Don't dust, sweep, or vacuum debris that may contain asbestos
• Don't saw, sand, scrape, or drill holes in asbestos materials
• Don't use abrasive pads or brushes on power strippers to strip wax from asbestos
flooring or its backing; never use a power stripper on a dry floor
• Don't sand or try to level asbestos flooring or its backing (when asbestos flooring
needs replacing, install a new floor covering over it, if possible)
• Don't track material that could contain asbestos through the house (if you cannot
avoid walking through the area, have it cleaned with a wet mop: if the material is
from a damaged area, or if a large area must be cleaned, call an asbestos professional)
Electric and Magnetic Fields (EMF's)
Electric and magnetic fields, also known as "electromagnetic fields" or
"EMFs," are invisible lines of force that surround any electrical device.
They can be caused by power lines, electrical wiring, and appliances,
which produce EMFs. EMFs have different properties and possibly
different ways of causing biological effects. Even though electric fields
are shielded or weakened by conducting objects, particularly those that
are grounded, such as trees and buildings, magnetic fields are not. While
electric fields over 20 kV/m will cause a tingling sensation, magnetic
fields are not felt.
Electromagnetic fields are yet another invisible hazard, and perhaps one
that is easier to fathom. After all, we can see what microwave frequencies
do to a cup of coffee, and we can observe the static present in the
atmosphere during a thunderstorm. Yes, that's right—these are
examples of EMFs. Let's take a closer look at their energy fields and what
you, as a real estate professional, should know about them. As with all
the other environmental hazards, this is just a summation of the basics,
so you can speak knowledgeably to this topic with your clients.

Potential for Harm

AC fields create weak electric currents in the bodies of people and
animals. This is one of the reasons why there is a potential for EMFs to
cause biological effects. Currents from EMFs are distributed differently
within the body, and because the current is too weak to penetrate cell
membranes, it is present only between the cells. The amount of this
current, even if you are directly beneath a large transmission line, is
small.
Magnetic fields are measured in Teslas, gauss, and milligauss (mG)
(10,000 gauss equals 1 Tesla). Studies indicate negative health risks at
3 mG. However, the International Radiation Protection Association has
issued draft exposure guidelines for power frequency EMFs of 5 kV/m for
continuous exposure to electric fields and 2 gauss for magnetic fields.
There continues to be a great deal of scientific exploration into possible
health impacts from electromagnetic fields. Several studies do indicate
that health risks exist. However, there is little concurrence as to why the
risks are present. One draft study by the EPA, which reviewed 50
epidemiological studies and hundreds of biological studies,
acknowledged that low-level electromagnetic fields may increase the risk
of cancer. However, the study indicated the need for additional research
into understanding the risk components and exposure levels.
Although some might think that if EMFs promote cancer, the increasing
use of electricity would have caused a corresponding rise in cancer rates.
However, this is not necessarily accurate, say experts. Even though
electrical use has grown over the years, EMF exposures have probably
not increased in the same way. In some cases, changes in the way that
buildings are wired and in the way electrical appliances are made have
resulted in lower magnetic field levels. Also, the rates for various types
of cancer have shown both increases and decreases over the years.

EMFs: Hints for Around the House

Both electric and magnetic fields do weaken with increasing distance
from the source. It is for this reason that a primary strategy is to increase
the distance between sources of EMFs and parts of the home where
people spend the most time. Reducing the sources of EMFs can also be
accomplished to a limited extent. Here are some additional hints for
lowering EMFs in a house:

• Place electric meters and subpanels on walls or spaces where

occupants spend the least time (both sides of the wall should be in
low usage regions because EMFs are not blocked by walls)
• Keep heater/air conditioner blowers away from high usage areas
of the house
• Do no locate first-floor fluorescent ceiling fixtures under second-
floor areas of high use at floor level (for example, a child's
playroom)
• Locate the overhead secondary service wire or the underground
secondary service trench in a little-used area of the yard
• Locate the wiring in the walls, floor, and ceiling away from high-use
areas of the home (if practical, run wires under the roof and drop
them down through the walls to reach switches and outlets)
• Locate kitchen appliances on a wall away from high use areas that
may adjoin the kitchen such as bedrooms or living rooms

The recommended course of action at present is "prudent avoidance."

This means that the wisest choice, at present, is to pursue no-cost or
minimal-cost strategies that reduce exposure to EMFs. Major
investments in minimization strategies are not considered "prudent" while
there still exists a lack of adequate understanding about what is or is not
safe.

PCBs
PCBs are mixtures of synthetic organic chemicals with the same basic
chemical structure and similar physical properties ranging from oily
liquids to waxy solids. In 1976, PCBs led Congress to enact a section of
the Toxic Substances Control Act (TSCA) in which prohibitions on the
manufacture, processing, and distribution in commerce of PCBs were
mandated. Thus, TSCA legislated true "cradle to grave" (from
manufacture to disposal) management of PCBs in the United States.
Because of their nonflammability, chemical stability, high boiling point,
and electrical insulating properties, PCBs were used in hundreds of
industrial and commercial applications including electrical, heat transfer,
and hydraulic equipment; in paints, plastics and rubber products; in
pigments, dyes, and carbonless copy paper; and in various other
applications. In fact, more than 1.5 billion pounds of PCBs were
manufactured in the United States prior to 1977, when they were no
longer produced.
PCBs have been shown to cause a variety of adverse health effects.
They've been shown to cause cancer in animals, and a number of serious
non-cancer health effects in animals, including effects on the immune
system, reproductive system, nervous system, and endocrine system.
Studies in humans also provide supportive evidence for potential
carcinogenic and non-carcinogenic effects of PCBs.

Geological Hazards
Landslides
Sometimes homes are built on or close to the top of a cliff because of the
awesome views. However, if the soil is unstable, this could spell disaster
after a heavy rainfall. Torrents of rain could cause the ground to shift
downhill, resulting in foundation damage to the home or worse.
If a licensee lists or shows a home that is located on a steep slope, they
should look for signs that the ground has shifted. These signs might
include soil erosion, cracks or dips in the ground, or leaning trees.
A geologist consultation might be helpful to determine how serious the
problem might be. Also, if a licensee lists a home that shows signs of
ground movement, it should be viewed as a latent defect that must be
disclosed to potential buyers.
Flooding
Any property located in a floodplain may be cause for concern. Licensees
should check for any evidence of flood damage, especially along the
foundation or in the basement. The licensee might also want to check the
records to see how recently or how often floods have occurred in the
area. If a licensee lists a property in a flood plain, they should be sure to
disclose that fact as a latent defect.

Geological Hazards
Subsidence
Subsidence is the collapse of the ground into underground cavities. It
can happen if there is an underground storage tank that collapses or if
an underground tank was removed, but the hole was not filled properly.
It happens commonly in areas that have been mined. If an area is noted
for acres of abandoned mines, it would be wise for developers or builders
to get maps from government agencies to show where old mines are
located before they attempt any new construction projects.
Earthquakes
Earthquakes are potentially the most destructive of all geological
hazards. Unfortunately, they are difficult to predict and impossible to
control. Because the problem can affect large areas of land rather than
just an individual property, disclosure to potential buyers is not very
effective.
However, there is a lot that can be done to protect buildings from
earthquakes. Contractors can actually bolt parts of a home's frame to the
foundation, making any home located in an earthquake-prone area more
desirable. Seismic retrofitting, as it is called, can do much to increase a
home's value and appeal to potential buyers.
Sinkholes
Sinkholes are depressions or holes in the ground that form when the
limestone below the surface dissolves. The lack of limestone causes the
land above to collapse. Many sinkholes are large enough to engulf an
entire home.
Compared with earthquakes, sinkholes are a much more prolific hazard
to Kentucky homeowners. Bowling Green’s National Corvette Museum
fell victim to a 40-foot-deep sinkhole in 2014.
If a sinkhole opens up on a person's property, they should report this to
their property insurance company. Repair of the sinkhole depends on the
size and depth of the hole.

Carbon Monoxide
Carbon monoxide (CO) is an odorless, colorless, and toxic gas. Because
it is impossible to see, taste, or smell the toxic fumes, CO can kill a
person before they are aware it is in the home. At lower levels of
exposure, CO causes mild effects that are often mistaken for the flu.
These symptoms include headaches, dizziness, disorientation, nausea,
and fatigue. The effects of CO exposure can vary greatly from person to
person depending on age, overall health, and the concentration and
length of exposure.
Sources of CO in the Home
Homeowners and potential homeowners should be aware of these
potential sources for CO in the home.

• Unvented kerosene and gas space heaters

• Leaking chimneys and furnaces
• Back-drafting from furnaces, gas water heaters, wood stoves, and
fireplaces
• Gas stoves
• Generators and other gasoline-powered equipment
• Automobile exhaust from attached garages
• Tobacco smoke

Incomplete oxidation during combustion in gas ranges and unvented gas

or kerosene heaters may cause high concentrations of CO in indoor air.
Worn or poorly adjusted and maintained combustion devices, such as
boilers and furnaces, can also be significant sources, or if the flue is
improperly sized, blocked, disconnected, or is leaking.
CO can be detected by a unit similar to a smoke alarm. Every home
should be equipped with at least one of these detectors.

Groundwater Contamination
Ground water is an important resource in our environment. It replenishes our streams, rivers,
and habitats and also provides fresh water for irrigation, industry, and communities. For
many Americans, ground water is also the primary source of drinking water. However,
ground water is highly susceptible to contamination from septic tanks, agricultural runoff,
highway deicing, landfills, and pipe leaks. Persons who drink contaminated water may suffer
symptoms that range from mild stomachs to kidney and liver damage, cancer, or even death.
The EPA protects the ground water supply from pollutants in a number of ways. The agency
sets and enforces water standards, offers guidance to private well users, regulates the storage,
transportation, treatment, and disposal of solid and hazardous wastes that may infiltrate
groundwater systems, and offers resources and expertise to facilitate the rehabilitation of
contaminated ground water sources.
If there is a private well on the property, the homeowner or potential homeowner should be
advised to have the water tested by a health or private laboratory at least once a year. If a
well becomes contaminated, the owner may be forced to have a new well dug.
Illegal Drug Manufacturing
Methamphetamine is a drug that is simple to make, requiring easy-to-get
ingredients and rudimentary chemistry. The chemicals used to make
meth and other illegal drugs are highly toxic. The effects of contamination
from these drugs can last a long time. Continued exposure to toxic fumes
from such drug manufacturing labs can cause fatal burns to the lungs,
damage the liver and spleen, and lead to learning disabilities.
If a property is currently being used to manufacture drugs, the
government can confiscate the property, even if the owner has no
knowledge of what's going on. This could easily happen if a renter is
manufacturing the drugs, and the landlord has no knowledge of it.
If a licensee suspects that a property was a drug manufacturing site, the
property should not be sold or leased until an investigation is done, and
the possible health hazards have been disclosed to the potential buyers.

Mold

Mold is a fungus that grows under moist conditions and causes allergic
reactions in some people. When mold spores land on a damp spot
indoors, they may begin growing and digesting whatever they are
growing on in order to survive. Molds can grow on wood, paper, carpet,
and foods. When excessive moisture or water accumulates indoors, mold
growth will often occur, particularly if the moisture problem is not
discovered or taken care of. There is no practical way to eliminate all
mold spores in the indoor environment. The most effective way to control
indoor mold growth is to control moisture.
The EPA has a publication called, "A Brief Guide to Mold, Moisture, and
Your Home." This guide provides information and guidance for
homeowners and renters on how to clean up residential mold problems
and how to prevent mold growth.
If licensees are aware of any mold problems in a home, they should
disclose that information as a latent defect. Licensees should also
disclose any knowledge of flooding or water damage because those
kinds of incidents can start mold growing. In many cases, mold grows
where it can't be seen–inside walls or ductwork. It may not be discovered
during an inspection, so it's even more important for the licensee to make
those disclosures.

Underground Storage Tanks

An underground storage tank system (UST) is a tank (and any
underground piping connected to the tank) that has at least 10% of its
combined volume underground. These storage tanks are found not only
at commercial or industrial sites but also in residential areas. Even
though most USTs today are at gas stations for the storage of gasoline,
some manufacturing sites use underground storage for their toxic liquids.
And some older homes in residential areas have underground tanks to
store fuel oil for heating.
Why Be Concerned About USTs?
Until the mid-1980s, most USTs were made of bare steel, which is likely
to corrode over time and allow the contents to leak into the environment.
Faulty installation or inadequate operation and maintenance procedures
also can cause these tanks to release their contents into the
environment.
The greatest potential hazard from a leaking UST is that petroleum or
other hazardous substances can seep into the soil and contaminate
groundwater. A leaking UST can also present other health and
environmental risks, including the potential for fire and explosion.
Removing these tanks and cleaning up the contaminated soil can be both
expensive and time-consuming. Therefore, it's important for potential
buyers to know both the health and financial risks of purchasing a
property with a UST.

Urea Formaldehyde
Urea formaldehyde foam insulation (UFFI) is a thermal insulation
material that is no longer used because of formaldehyde gas emission.
At one time, UFFI insulation was blown into the walls of older homes to
improve insulation qualities. Because of the problems, UFFI insulation
has not been used since 1980. Because formaldehyde gas emissions
from UFFI decrease with time, most homes insulated with UFFI no longer
have a significant source of formaldehyde gas.
In homes, the most significant sources of formaldehyde are likely to be
pressed wood products, such as

• Particleboard: used as subflooring and shelving and in cabinetry

and furniture
• Hardwood plywood paneling: used for decorative wall covering and
used in cabinets and furniture
• Medium density fiberboard: used for drawer fronts, cabinets, and
furniture tops

Other household items such as plastic furniture, new carpeting, and

many other plastic or vinyl materials also emit formaldehyde gases
(and other chemicals) during the first few months after they are
installed. Older formaldehyde products are not considered to be
dangerous.
Formaldehyde can cause watery eyes, burning sensations in the eyes
and throat, nausea, and breathing difficulty with exposure at elevated
levels. High concentrations may trigger attacks in people with asthma.
Other health effects include fatigue, skin rash, and severe allergic
reactions.

CERCLA: The Superfund

The Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA) is an important environmental law affecting real
estate transactions. Administered by the EPA, the law is also known as
the "Superfund" law. Initially, $9 billion dollars was set aside for the
cleanup of sites with hazardous substances. The law was enacted in
1980.
CERCLA establishes a National Priority list of the most contaminated
sites. Although the original list had 413 sites, today, there are in excess
of 1,500 Superfund sites listed on the NPL. These sites are cleaned up
by the government with money from the Superfund. These dollars are
then recouped from the "potentially responsible parties" (PRPs). Let's
look at responsibility.
Anyone in the chain of title for a contaminated site can be responsible
for the entire cleanup. The liability is strict, joint, and several, as well as
retroactive.

1. Strict liability means that the government does NOT need to prove
that the hazardous condition was caused by the landowner.
2. Several liability means that any single party can be responsible for
the entire cost of cleanup. If only one landowner can pay, that
landowner is charged the cost of cleanup.
3. Joint means that the cost of cleanup can be shared among multiple
owners.
4. Retroactive liability means that if the hazardous waste condition
existed prior to the CERCLA statute being enacted, it is still
covered under the law.

CERCLA: The Superfund

By 1985, the original act had expired, and the fund was out of money for
cleanup. Congress reauthorized the Superfund, and the new act, called
the Superfund Amendments and Reauthorization ACT (SARA), with
five times the funding, was passed. The new law recognized that certain
landowners were completely innocent and not responsible for property
contamination; for example, a mortgage lender who acquired a property
through a foreclosure action.
Included in the reauthorization was the "innocent landowner" defense.
To be eligible, the property owner has to establish or satisfy at least one
of the following:

• At the time of purchase, the new property owner did not know or
had no reason to know about the contamination of the site.
 • The new property owner is a government entity that acquired the
contaminated property through condemnation.
• The new property owner acquired the contaminated property
through inheritance.
• The pollution was caused by another.
• The pollution was done before the current owner acquired the
property.

For the above reasons, it becomes important for a real estate licensee to
be aware of the laws and take appropriate action to protect buyers from
liability.
A real estate agent is not expected to have the expertise to know whether
or not a hazardous substance is on the property. A licensee is expected
to recognize warning signs and be aware if a former contaminating
business was located on a site. Examples include gas stations or any
other business with underground storage tanks, dry cleaners, paint
manufacturers, and chemical plants. Other warning signs might be stains
on the soil, pipes sticking up from underground, or contaminated water
on or under a property.
A real estate licensee may become liable by failing to make a full
disclosure of known problems or by failing to take proper steps to protect
a buyer.

Environmental Audits
A buyer or licensee must take action to avoid liability. When it is
suspected that a property might be contaminated, an environmental audit
should be performed. The audit can consist of many phases.

• Phase I is the basic inspection to determine whether a problem

exists. This is the one requirement necessary to qualify for the
"innocent landowner defense."
• Phase II is the next phase, and this phase evaluates problems
found in phase I.
• Phase III is the actual cleanup.
• Phase IV deals with "land disposal restriction" (LDR) that prohibits
the disposal of hazardous waste without meeting certain standards.

Since the law was founded in 1980, it is estimated that the average cost
of cleanup when a PRP is identified is about $500,000 per property.
Example. John is a small business owner looking for a suitable piece of
property for his chiropractic business. John asks Amy, a local broker, to
help him find a commercial property that is within his price range. Amy
knows of a vacant site that is available at a reasonable price but also
knows that a paint store was located on the property for many years.
What is the first step of investigation for this property if John is
interested? What contingency should any offer allow for?

1. Answer: Order a Phase I inspection to determine the extent of any

contamination.
2. Answer: A "subject-to clause" that allows John to withdraw without
penalty if the Phase I identifies contamination.

Geographic Regional Features

Affecting Value
City Layout
How a city is organized, used, and developed has a major impact on real
estate worth. That is why zoning is so significant. For example:

• A new highway or road may create more noise pollution. Noise

pollution is one example of a nuisance, a condition which disturbs
a party's legal right to quiet enjoyment.
• A new government building or project may even lead to eminent
domain, a threat to the value of ownership.
• Accessibility to major travel corridors influences the demand for a
particular house, office, or corporate headquarters. This
accessibility is known as linkage.
• The features and amenities of the city or town, and the general
attractiveness of the whole municipal area, are perceived as being
available to or lacking to a subject property in the city or town.
• Natural barriers, such as mountains, lakes, rivers, and oceans,
have much to do with city layout, neighborhood quality, and local
site utility.

Amenities and Services

Parks, recreational and cultural facilities, clubs, libraries, public
buildings, art, hospitals, shopping centers, schools, communications
facilities, restaurants, cafes, bookstores, and other such amenities and
services add value to all the real estate in an area.
Transportation Systems
Transportation systems like bus, rail, tram, and airport systems enable
movement within the region and link the region to the wider world. The
quality of such systems, or the lack thereof, affects how attractive a
family or a business will find the region.

Check Your Understanding Answers

1. You discover there is asbestos in your home. What should you do?

Do keep activities to a minimum in any areas having damaged material that may
contain asbestos.
Do take every precaution to avoid damaging asbestos material.
Do have removal and major repair done by people trained and qualified in
handling asbestos. It is highly recommended that sampling and minor repair
also be done by asbestos professionals.

2. Why is radon difficult to discover?

Radon is an odorless, colorless, tasteless gas, so it's impossible to sense the

presence of radon without testing for it.

3. Name the four exposure pathways.

Air, soil, drinking water, and food.

4. How can a real estate professional help their clients deal with environmental issues?

Be knowledgeable, ask the right questions, call the experts, and disclose early
and often.

5. How many phases are in an environmental audit?

There are four total phases.

Chapter Summary
This concludes Chapter 11. Below is a brief summary that you can
review before taking your quiz.
Consumers are not only becoming more aware of environmental issues in
the building industry, but they are also becoming more specific in their
demands for their own residences.
Residential hazards include, but are not limited to:

• Indoor air quality

• Lead-based paint
• Mold
• Asbestos
• Proximity to industrial and commercial activities which produce
pollutants

If the property is undeveloped, potential commercial environmental

hazards are as follows:

• Wetlands
• Endangered species
• Toxic waste sites
• Water supply sources
• Storage tanks, both above and underground

Property disclosure forms:

• Can avoid problems later on by determining the buyer's attitude

toward environmental hazards and giving the opportunity to discuss
testing and mitigation if necessary.
• Assign rights and responsibilities among the parties involved in real
estate transactions—what is provided to whom and timelines, for
example.
• Can put the buyer "on notice" regarding certain issues or problems.
• Should be presented early in the transaction—perhaps at the time of
the listing, before showing any properties.
• Should not be seen as a substitute for agent-initiated information
disclosure.

Adopt a disclosure strategy to help both buyers and sellers stay completely
informed about environmental hazards before they make any decisions.
Waste is hazardous if it is as follows:
 • Toxic: Can cause death or violent illness or cancer
• Corrosive: Can cause burning of the skin
• Reactive: Can cause explosions and toxic fumes when mixed with
water
• Ignitable: Danger from heat, smoke, or friction

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Chapter Summary
Of all the environmental hazards facing us, the easiest to detect and
mitigate is radon. Radon is an odorless, colorless, tasteless, and radioactive
gas created in the ground where uranium and radium exist. Radon can be
an extremely deadly gas for humans, causing lung cancer after prolonged
exposure.
Today's home buyers and renters receive specific information on lead-
based paint hazards if their real estate transactions involve housing built
before 1978.
The term "asbestos" refers to a unique group of minerals that are widely
useful because of their special properties. Asbestos minerals are fibrous
silicates with a crystalline structure and are found in rock formations
throughout the United States and the world.
Both electric and magnetic fields do weaken with increasing distance from
the source. It is for this reason that a primary strategy is to increase the
distance between sources of EMFs and parts of the home where people
spend the most time.
Carbon monoxide (CO) is an odorless, colorless, and toxic gas. Because it is
impossible to see, taste or smell the toxic fumes, CO can kill a person before
they are aware it is in the home.
For many Americans, ground water is also the primary source of drinking
water. However, ground water is highly susceptible to contamination from
septic tanks, agricultural runoff, highway deicing, landfills, and pipe leaks.
Molds can grow on wood, paper, carpet, and foods. When excessive
moisture or water accumulates indoors, mold growth will often occur,
particularly if the moisture problem is not discovered or taken care of.
The greatest potential hazard from a leaking underground storage tank is
that the petroleum or other hazardous substance can seep into the soil and
contaminate groundwater.
Urea formaldehyde foam insulation (UFFI) is a thermal insulation material
that is no longer used because of formaldehyde gas emission. At one time,
UFFI insulation was blown into the walls of older homes to improve
insulation qualities. Because of the problems, UFFI insulation has not been
used since 1980.
The Comprehensive Environmental Response, Compensation, and
Liability Act is an important environmental law affecting real estate
transactions. Administered by the EPA, the law is also known as the
"Superfund" law. Initially, $9 billion dollars was set aside for the clean-up
of sites with hazardous substances.
Geographic factors such as the design of the city or town, community
amenities like nice parks, libraries, and schools, and access to
transportation systems all can positively or negatively impact individual
home values and overall price trends.
Click here if you would like to open this summary as a pdf, which you
can then print or save to your device: Chapter 11 Summary
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