4.4 Environmental Issues and Special Topics

Why Environment Matters in Michigan

Michigan borders four of the five Great Lakes and sits atop extensive groundwater, so contamination from its industrial past directly affects property value, financing, and disclosure duties. The state regulator is the Department of Environment, Great Lakes, and Energy (EGLE) — the agency formerly known as the MDEQ. Confusing EGLE with LARA (licensing) or MDCR (civil rights) is a common exam error; each agency owns a different lane.

Part 201 — Environmental Remediation and Due Care

Most Michigan environmental cleanup law lives in the Natural Resources and Environmental Protection Act (NREPA), Public Act 451 of 1994. Part 201 governs the identification, liability, and cleanup of contaminated "facilities." A buyer who acquires contaminated property can avoid liability for prior contamination by conducting a Baseline Environmental Assessment (BEA) before or within 45 days of purchase — but still owes ongoing due-care obligations:

Exam point: A BEA shields a new owner from liability for pre-existing contamination; it does not excuse due care going forward.

Wetlands — Part 303 and Section 404

Michigan is one of the few states authorized to administer the federal wetlands program itself. Part 303 of NREPA regulates inland wetlands, and a state permit is generally required to dredge, fill, or drain a regulated wetland. This parallels Section 404 of the federal Clean Water Act, administered by the U.S. Army Corps of Engineers. Wetlands status can sharply limit buildable acreage, so agents should flag it during due diligence.

Underground Storage Tanks (USTs)

Leaking USTs are a leading source of groundwater contamination in Michigan, so the rules are strict.

A leaking underground storage tank (LUST) can saddle an owner with cleanup costs that exceed the property's value and can block financing, so a buyer of older commercial or former-gas-station property should investigate tank history.

Federal Lead-Based Paint Disclosure (Pre-1978)

For any housing built before 1978, the federal Residential Lead-Based Paint Hazard Reduction Act requires the seller/agent to:

Michigan's Seller Disclosure Act

Michigan's Seller Disclosure Act (Public Act 92 of 1993) requires sellers of 1-4 unit residential property to deliver a written Seller's Disclosure Statement describing the condition of the home and known defects — including environmental items such as water, wells, septic systems, and known hazardous conditions. Key points:

• The duty is on the seller, but the agent must not help conceal a known material defect (latent defect) that a buyer could not discover by ordinary inspection.
• The statement is a disclosure of known conditions, not a warranty.
• Radon has no Michigan disclosure mandate, but testing is recommended, especially for basements; a high reading can be mitigated with a sub-slab system.

Worked Scenario

An agent lists a 1965 ranch and learns from the seller that a buried home-heating-oil tank sits in the backyard and once leaked. Two duties trigger: (1) the federal lead-paint disclosure because the home predates 1978, and (2) disclosure of the known UST/contamination as a material defect under the Seller Disclosure Act. Staying silent to "protect the sale" would expose both seller and agent to liability and LARA discipline. The right move is full written disclosure plus referral to an environmental professional.

Other Special Topics Tested on the State Portion

Several Michigan-specific items round out this chapter and recur on the 35-question state section:

• Property transfer tax. On most sales Michigan imposes a State Real Estate Transfer Tax (SRETT) of $3.75 per $500 of value ($7.50 per $1,000), plus a county transfer tax of $0.55 to $0.75 per $500. The seller customarily pays these stamps.
• Land contracts. Michigan still widely uses the land contract (installment sale), in which the seller (vendor) retains legal title until the buyer (vendee) completes payments while the buyer holds equitable title and possession — a frequent exam contrast with a mortgage.
• Foreclosure. Michigan permits foreclosure by advertisement (non-judicial) for mortgages with a power-of-sale clause, followed by a statutory redemption period — commonly 6 months for residential property (longer if substantially abandoned rules differ, shorter for high-equity or agricultural situations).
• Mechanic's liens. Contractors and suppliers who improve real property can file a construction (mechanic's) lien; agents should recognize that unpaid construction work can cloud title at closing.

Putting It Together

Environmental and special-topic questions reward the candidate who can match a fact pattern to the right body of law: EGLE for contamination and wetlands, the federal pre-1978 rule for lead paint, the Seller Disclosure Act for known defects, and the public trust and riparian doctrines for waterfront. When a scenario combines several triggers — an old waterfront home with a buried tank, for example — disclose everything in writing and refer technical questions to qualified professionals rather than guessing.