Property Conditions and Environmental Hazards

Environmental issues and property conditions directly affect value and liability. This section focuses on common hazards, federal environmental laws, and the role of environmental assessments.

Hazardous Substances and Common Hazards

Hazardous substance - A material that can cause harm to people or the environment. Real estate transactions often involve these risks:

• Lead-based paint - Common in homes built before 1978. Federal disclosure rules apply.
• Asbestos - Used in insulation and flooring; dangerous if disturbed.
• Radon - A naturally occurring gas that can accumulate indoors.
• Mold - Often caused by moisture; can create health and structural concerns.

Groundwater and Storage Tank Risks

Groundwater contamination can be caused by underground storage tanks or industrial use. Cleanup costs can be substantial, and liability can attach to property owners even if they did not cause the contamination.

Waste Sites, Brownfields, and Superfund

• Brownfield - A property that is underused or abandoned due to suspected contamination.
• Superfund site - A heavily contaminated site designated under federal law for cleanup.

Properties near waste disposal sites may have reduced value and may require disclosures.

Flood Plains, Flood Zones, and Insurance

Flood risk affects insurance costs and financing. Properties in special flood hazard areas often require flood insurance.

Key points:

• Flood zones are identified on FEMA maps.
• Lenders may require flood insurance in high-risk zones.
• Buyers should verify flood zone status before closing.

Federal Environmental Laws and Agencies

Several federal laws and agencies appear on exams:

• Environmental Protection Agency (EPA) - Oversees federal environmental regulations.
• Clean Air Act - Regulates air emissions.
• Clean Water Act - Regulates water pollution and wetlands.
• CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act) - Governs hazardous waste cleanup and liability.
• SARA (Superfund Amendment and Reauthorization Act) - Updates CERCLA and expands cleanup powers.

Acronym Reference

Table: Environmental Acronyms

Environmental Site Assessments (ESAs)

Phase I Environmental Site Assessment - A research-based review of records, site history, and visible conditions.

Phase II Environmental Site Assessment - Physical testing (soil or water samples) if Phase I raises concerns.

ESAs help buyers and lenders evaluate environmental risk before purchase.

Wetlands Protection

Wetlands are regulated under federal law. Development often requires permits, and violations can lead to significant penalties.

Applied Scenario: Potential Contamination

A buyer wants to purchase a former gas station site for redevelopment. A Phase I ESA reveals an old underground storage tank. A Phase II ESA is ordered to test soil contamination. This is the standard process for environmental due diligence.

Common Exam Traps

• Confusing brownfields with Superfund sites.
• Forgetting that lead-based paint disclosures are required for older homes.
• Assuming environmental liability requires proof of fault (CERCLA can impose strict liability).

Summary

Environmental hazards can impact value, safety, and legal liability. Know the major hazards, federal laws, and the role of environmental assessments.

Environmental Liability Basics

CERCLA can impose liability even on current owners who did not cause contamination. This is called strict liability. Because of this risk, environmental due diligence is critical in commercial transactions.

Flood and Insurance Practical Notes

Flood zones can change as maps are updated. Buyers should verify current FEMA maps and understand that flood insurance costs can affect affordability.

Wetlands and Development

Wetlands are protected areas. Development often requires permits, and violations can lead to fines and restoration orders. Even unintentional damage can result in liability.

Exam Application Check

If a question asks who regulates hazardous waste cleanup, the answer is the EPA under CERCLA. If it asks which hazard triggers federal disclosure in older homes, the answer is lead-based paint.

Federal Lead-Based Paint Disclosure (General)

Federal law requires disclosure of known lead-based paint hazards in housing built before 1978. Sellers and landlords must:

• Provide the lead hazard information pamphlet
• Disclose known lead-based paint hazards
• Include lead disclosure language in the contract
• Allow a 10-day inspection period (unless waived)

Mold, Radon, and Asbestos in Practice

• Mold often results from water intrusion and should be investigated when stains or odors are present.
• Radon testing is common in certain regions; mitigation systems can reduce risk.
• Asbestos is most dangerous when disturbed; removal should be done by professionals.

Exam Application Check

If a question asks which hazard requires federal disclosure in older homes, the answer is lead-based paint.

Environmental Red Flags in Listings

Certain clues should prompt extra caution:

• Strong chemical odors or staining in garages
• Nearby industrial sites or dry cleaners
• Standing water or drainage issues
• Prior flooding or water intrusion history

Agents should not diagnose environmental issues, but they should recommend appropriate inspections or specialist testing when red flags appear.

Environmental Impact Statements (General)

Large public projects often require environmental impact statements to evaluate effects on air, water, and wildlife. This is more common in commercial or development scenarios, but it appears on exams as a federal environmental concept.

Exam Application Check

If a question asks whether an agent should advise on contamination cleanup, the answer is no. Agents should refer clients to qualified environmental professionals.