No federal law requires that homeowners test for the presence of lead-based paint. However, known lead-based paint hazards must be disclosed. In 1996, the EPA and the Department of Housing and Urban Development (HUD) issued final regulations (known as the Lead-Based Paint Hazard Reduction Act of 1992) requiring disclosure of the presence of any known lead-based paint hazards to potential buyers or renters.

The Lead-Based Paint Hazard Reduction Act of 1992 requires the following:
► Landlords must disclose known information on lead-based paint and hazards before leases take effect. Leases must include a disclosure form regarding lead-based paint.
► Sellers have to disclose known information on lead-based paint and hazards before selling a house. Sales contracts must include a disclosure form about lead-based paint. (See Form F15 – Lead-Based Paint Disclosure) Buyers have up to ten days to check for lead hazards.
► Licensees provide buyers and lessees with the pamphlet created by the EPA, HUD, and the U.S. Consumer Product Safety Commission titled, "Protect Your Family From Lead in Your Home."
► Renovators must give homeowners the pamphlet, "Protect Your Family From Lead in Your Home," before starting any renovation work.
► Licensees must ensure that all parties comply with the law.
  
IN PRACTICE     As part of a settlement, a realty company was fined $20,000 for failing to provide the lead-based paint pamphlet to home buyers. Licensees must remember to always provide buyers and lessees with the pamphlet, "Protect Your Family From Lead in Your Home." In another settlement, the EPA and HUD reached a landmark disclosure settlement with one of the nation's largest property management firms in January, 2002, where more than 130,000 apartments in 47 states will be tested, cleaned, and made lead-safe. In addition, the firm will pay a $129,580 penalty. The penalty and the number of units tested and cleaned are the largest ever in a lead disclosure settlement.

A home can be inspected for lead hazards in the following ways:
► Paint Inspection—A paint inspection will provide the lead content of every different type of painted surface in a home. However, this inspection will not indicate whether the paint is a hazard or how the homeowner should deal with it.
► Risk Assessment—A risk assessment indicates whether there are any sources of serious lead exposure, such as peeling paint or lead dust. It also describes what actions can be taken to address the hazards.

EPA guidance pamphlets, a list of professionals qualified to inspect or assess for lead-based paint, and other information about lead-based hazards are available from the National Lead Information Center at http://www2.epa.gov/lead.

Radon
Radon is a radioactive gas produced by the natural decay of other radioactive substances. Although radon can occur anywhere, some areas are known to have abnormally high amounts of it. Radon is found in every state, with the highest concentrations in the plains states, the upper midwest, and northeastern United States. If radon dissipates into the atmosphere, it is not likely to cause harm. However, when radon enters buildings and is trapped in high concentrations (often in basements with inadequate ventilation) it can cause health problems. Note that high radon levels can occur anywhere in a home, whether or not a basement even exists.

Opinions differ as to minimum safe levels. But growing evidence suggests that radon may be the most underestimated cause of lung cancer, particularly for children, individuals who smoke, and those who spend considerable time indoors.

Because radon is odorless and tasteless, it is impossible to detect without testing. Care should be exercised in the manner in which tests are conducted to ensure that the results are accurate. Radon levels vary, depending on the amount of fresh air that circulates through a house, the fissures or soil density beneath the house, the weather conditions, and the time of year. Because so many factors affect the presence of radon, two houses next door to each other may have very different levels. And because the risk of radon increases as it builds up in an enclosed space, testing vacant land for radon is not an accurate indicator of the risk once a building is constructed on the site. It is relatively easy to reduce levels of radon by installing ventilation systems or exhaust fans.

Interestingly, the modern practice of creating energy-efficient homes and buildings with practically airtight walls and windows may increase the potential for radon gas accumulation. Once radon accumulates in a basement, efficient heating and ventilation systems can rapidly spread the gas throughout the building.

Home radon-detection kits are available, although more accurate testing can be conducted by radon-detection professionals. The EPA's pamphlet "A Citizen's Guide to Radon" is available from your local EPA office or at the EPA's website. There is no federal requirement that properties be tested for radon. Local health departments, however, may maintain records of radon levels identified in particular areas.

Urea-Formaldehyde
Urea formaldehyde was first used in building materials, particularly insulation, in the 1970s. It was also used in some glues, resins, preservatives, bonding agents, pressed wood, and kitchen cabinets. Gases leak out of the urea-formaldehyde foam insulation (UFFI) as it hardens, and the gases become trapped in the interior of a building. In 1982, the Consumer Product Safety Commission banned the use of UFFI. The ban was reduced to a warning after courts determined that there was insufficient evidence to support a ban. Urea-formaldehyde is known to cause cancer in animals, though the evidence of its effect on humans is inconclusive.

Formaldehyde does cause some individuals to suffer respiratory problems as well as eye and skin irritations. Consumers are becoming increasingly wary of the presence of formaldehyde, particularly if they are sensitive to it.

Because UFFI has received considerable adverse publicity, many buyers express concern about purchasing properties in which it was installed. Tests can be conducted to determine the level of formaldehyde gas in a house. Again, however, care should be exercised to ensure that the results of the tests are accurate and that the source of the gases is properly identified. Elevated levels could be due to a source other than the insulation.

Licensees should be careful that any conditions in an agreement of sale that require tests for formaldehyde are worded properly to identify the purpose for which the tests are being conducted, such as to determine the presence of the insulation or some other source. Appraisers should also be aware of the presence of UFFI.

Carbon Monoxide
Carbon monoxide (CO) is a colorless, odorless gas that occurs as a by-product of burning such fuels as wood, oil, and natural gas owing to incomplete combustion. Furnaces, water heaters, space heaters, fireplaces, and wood stoves all produce CO as a natural result of their combustion of fuel. However, when these appliances function properly and are property ventilated, their CO emissions are not a problem. When improper ventilation or equipment malfunctions permit large quantities of CO to be released into a residence or commercial structure, it poses a significant health hazard. Its effects are compounded by the fact that CO is so difficult to detect. CO is quickly absorbed by the body. It inhibits the blood's ability to transport oxygen and results in dizziness and nausea. As the concentrations of CO increase, the symptoms become more severe. More than 200 deaths from carbon monoxide poisoning occur each year.

Carbon monoxide detectors are available, and their use is mandatory in some areas. Annual maintenance of heating systems helps avoid CO exposure.

Polychlorinated
Polychlorinated Biphenyls (PCBs) were often used as an insulating material in
Biphenyls dielectric oil. PCBs may be present in electrical equipment, such as transformers, fluorescent light ballasts, and hydraulic oil in older equipment. PCBs are suspected of causing health problems and are known to linger in the environment for long periods of time. For example, in tests conducted on offspring of fish who were exposed to PCBs, the offspring also had elevated levels of PCBs.

In January, 1978, the manufacture, processing, commercial distribution, and use of PCB materials was prohibited, except when contained in a "totally enclosed manner." The Environmental Protection Agency, however, made case-by-case exceptions to these limitations if it determined that an unreasonable risk of injury to public health or the environment was not present. On January 1, 1979, the manufacture of PCBs was completely banned; commercial distribution of PCBs was banned on July 1, 1979.

In general, PCBs should not cause problems on property unless they leak out of the containers they are stored in. For example, the presence of an electrical transformer or fluorescent light ballasts on a property does not in itself indicate a problem. However, if staining is observed on the outside of an electrical transformer or fluorescent light ballast, or if these items are observed to be disposed of on a property, it can pose a health hazard. Real estate licensees should be aware that PCBs may be a potential health risk and cause environmental problems if released to the environment.

Mold
Mold can be found almost anywhere and can grow on almost any organic substance, so long as moisture and oxygen are present. Moisture feeds mold growth. If a moisture problem is not discovered or addressed, mold growth can gradually destroy what it is growing on.

In addition, molds can cause serious health problems. They can trigger allergic reactions and asthma attacks. Molds are known to produce potent toxins and/or irritants.

Some moisture problems in homes and buildings have been directly linked to recent changes in construction practices. Some of these practices have resulted in buildings that are too tightly sealed, preventing adequate ventilation. Building materials, such as drywall, may not allow moisture to escape easily. Other moisture problems include roof leaks, unvented combustion appliances, and landscaping or gutters that direct water to the building.

The Environmental Protection Agency has published guidelines for the remediation and/or cleanup of mold and moisture problems in schools and commercial buildings. See the Web site below for these guidelines.
In the past ten years, there have been approximately 9,000 toxic mold and mildew-related claims filed in the United States and Canada. Awards and settlements in mold lawsuits have ranged in the millions of dollars. In the coming years, the number and size of toxic mold lawsuits is expected to increase substantially.

Electromagnetic Fields
Electromagnetic fields (EMFs) are generated by the movement of electrical currents. The use of any electrical appliance creates a small field of electromagnetic radiation; clock radios, blow-driers, televisions, and computers all produce EMFs. A major concern regarding electromagnetic fields involves high-tension power lines. The EMFs produced by these high-voltage lines, as well as by secondary distribution lines and transformers, are suspected of causing cancer, hormonal changes, and behavioral abnormalities. There is considerable controversy (and much conflicting evidence) about whether EMFs pose a health hazard. Buyers who are aware of the controversy may, however, be unwilling to purchase property near power lines or transformers. As research into EMFs continues, real estate licensees should stay informed about current findings.

 GROUNDWATER CONTAMINATION
Groundwater is the water that exists under the earth's surface within the tiny spaces or crevices in geological formations. Groundwater forms the water table, the natural level at which the ground is saturated. This may be near the surface (in areas where the water table is very high) or several hundred feet underground. Surface water can also be absorbed into the groundwater.

Any contamination of the underground water can threaten the supply of pure, clean water for private wells or public water systems. If groundwater is not protected from contamination, the earth's natural filtering systems may be inadequate to ensure the availability of pure water. Numerous state and federal laws have been enacted to preserve and protect the water supply.

Water can be contaminated from a number of sources. Runoff from waste disposal sites, leaking underground storage tanks, septic systems, drywells, and storm drains, as well as the illegal disposal of hazardous material and regular use of insecticides and herbicides, are some of the main culprits. Because water flows from one place to another, contamination can spread far from its source. Numerous regulations are designed to protect against water contamination. Once contamination has been identified, its source can be eliminated. The water may eventually become clean. However, the process can be time-consuming and extremely expensive.

IN PRACTICE       Real estate agents need to be aware of potential groundwater contamination sources both on and off a property. These include underground storage tanks, septic systems, holding ponds, drywells, buried materials, and surface spills. Remember, because groundwater flows over wide areas, the source of contamination may not be nearby.

 UNDERGROUND STORAGE TANKS
Approximately 3 million to 5 million underground storage tanks (USTs) exist in the United States. According to the Environmental Protection Agency, approximately 40 percent of the tanks are leaking. Underground storage tanks are commonly found on sites where petroleum products are used or where gas stations and auto repair shops are located. They also may be found in a number of other commercial and industrial establishments—including printing and chemical plants, wood treatment plants, paper mills, paint manufacturers, dry cleaners, food processing plants, and chemical storage or process waste plants. Military bases and airports are also common sites for underground tanks. In residential areas, tanks are used to store heating oil.

Some tanks are currently in use, but many are long forgotten. It is an unfortunate fact that it was once common to dispose of toxic wastes by simple burial: out of sight, out of mind. Over time, however, neglected tanks may leak hazardous substances into the environment. This permits contaminants to pollute not only the soil around the tank but also adjacent parcels and groundwater. Licensees should be particularly alert to the presence of fill pipes, vent lines, stained soil, and fumes or odors, any of which may indicate the presence of a UST. Detection, removal, and cleanup of surrounding contaminated soil can be expensive.

FOR EXAMPLE     In the 1940s, a gas station in a rural town went out of business. The building fell into disrepair and was torn down. The site was vacant for several years, and its former use was forgotten. A series of commercial ventures were built on the land: a grocery store, a drive-in restaurant, a convenience store. In the late 1980s, residents of the town began noticing strong gasoline fumes in their basements, particularly after a rainstorm. Government investigators concluded that the gasoline tanks buried beneath the former gas station had broken down with age and leaked their contents into the soil. Because the town was located over a large sub-surface rock slab, the gasoline could not reach down into the soil but rather was forced to spread out under the entire town and surrounding farmland. Because the water table floated on the rock slab and the gasoline floated on the water, rains that raised the water table forced the gasoline into the soil near the residents' basements and crawlspaces, resulting in the unpleasant and potentially unhealthy fumes. When the gasoline fumes ignited and destroyed a local manufacturing plant, the residents learned that the problem was not only unpleasant but dangerous as well.

State and federal laws impose very strict requirements on landowners where underground storage tanks are located to detect and correct leaks in an effort to protect the groundwater. The federal UST program is regulated by the EPA. The regulations apply to tanks that contain hazardous substances or liquid petroleum products and that store at least 10 percent of their volume underground. UST owners are required to register their tanks and adhere to strict technical and administrative requirements that govern
► installation,
► maintenance,
► corrosion prevention,
► overspill prevention,
► monitoring, and
► record keeping.

Owners are also required to demonstrate that they have sufficient financial resources to cover any damage that might result from leaks.

The following types of tanks are among those that are exempt from the federal regulations:
► Tanks that hold less than 110 gallons
► Farm and residential tanks that hold 1,100 gallons or less of motor fuel used for noncommercial purposes
► Tanks that store heating oil burned on the premises
► Tanks on or above the floor of underground areas, such as basements or tunnels
► Septic tanks and systems for collecting stormwater and wastewater

Some states have adopted laws regulating underground storage tanks that are more stringent than the federal laws.

In addition to being aware of possible noncompliance with state and federal regulations, the parties to a real estate transaction should be aware that many older tanks have never been registered; exempt tanks are not required to be registered. There may be no visible sign of their presence.

 WASTE DISPOSAL SITES
Americans produce vast quantities of garbage every day. Despite public and private recycling and composting efforts, huge piles of waste materials— from beer cans, junk mail, and diapers to food, paint, and toxic chemicals— must be disposed of. Landfill operations have become the main receptacles for garbage and refuse. Special hazardous waste disposal sites have been established to contain radioactive waste from nuclear power plants, toxic chemicals, and waste materials produced by medical, scientific, and industrial processes. Additional waste disposal sites used as on-site "garbage dumps" are located on rural property, such as farms, ranches, and residences. It is important for buyers to ask sellers about the potential existence of waste disposal sites on their property.

Perhaps the most prevalent method of common waste disposal is simply to bury it. A landfill is an enormous hole, either excavated for the purpose of waste disposal or left over from surface mining operations. The hole is lined with clay or a synthetic liner to prevent leakage of waste material into the water supply. A system of underground drainage pipes permits monitoring of leaks and leaching. Waste is laid on the liner at the bottom of the excavation, and a layer of topsoil is then compacted onto the waste. The layering procedure is repeated again and again until the landfill is full, the layers mounded up sometimes as high as several hundred feet over the surrounding landscape. Capping is the process of laying two to four feet of soil over the top of the site and then planting grass or some other vegetation on it to enhance the landfill's aesthetic value and to prevent erosion. A ventilation pipe runs from the landfill's base through the cap to vent off accumulated natural gases created by the decomposing waste.

IN PRACTICE       Environmental issues have a significant impact on the real estate industry. In 1995, a jury awarded $6.7 million to homeowners whose property values had been lowered because of the defendant tire company's negligent operation and maintenance of a hazardous waste dump site. The 1,713 plaintiffs relied on testimony from economists and a real estate appraiser to demonstrate how news stories about the site had lowered the market values of their homes. Nationwide, some landfill operators now offer price guarantees to purchasers of homes near waste disposal sites. A university study found that a home's value increases by more than $6,000 for each mile of its distance from a garbage incinerator.
 
Federal, state, and local regulations govern the location, construction, content, and maintenance of landfill sites. Test wells around landfill operations are installed to constantly monitor the groundwater in the surrounding area, and soil analyses can be used to test for contamination. Capped landfills have been used for such purposes as parks and golf courses. Rapid suburban growth has resulted in many housing developments and office campuses being built on land-fill sites. Most newer sites are well documented, but the locations of many older landfill sites are no longer known.

FOR EXAMPLE      A suburban office building constructed on an old landfill site was very popular until its parking lot began to sink. While the building itself was sup-ported by pylons driven deep into the ground, the parking lot was unsupported. As the landfill beneath it compacted, the wide concrete lot sank lower and lower around the building. Each year, the building's management had to relandscape to cover the exposed foundations. The sinking parking lot eventually severed underground phone and power lines and water mains, causing the tenants considerable inconvenience. Computers were offline for hours, and flooding was frequent on the ground floor. Finally, leaking gases from the landfill began causing unpleasant odors. The tenants moved out, and the building was left vacant, a victim of poorly conceived landfill design.

Hazardous and radioactive waste disposal sites are subject to strict state and federal regulation to prevent the escape of toxic substances into the surrounding environment. Some materials, such as radioactive waste, are sealed in containers and placed in "tombs" buried deep underground. The tombs are designed to last thousands of years, built according to strict federal and state regulations. These disposal sites are usually limited to extremely remote locations, well away from populated areas or farmland.

IN PRACTICE     In 2002, Congress approved the development of the nation's first long-term geologic repository (underground disposal facility) for high-level radioactive waste at Yucca Mountain in Nevada. The Congressional vote overrode the state's veto of the plan.

 OLD INDUSTRIAL SITES
For decades, old industrial sites have plagued communities as "eyesores" and as potentially dangerous and hazardous property. These old industrial sites are known as brownfields and are defined as defunct, derelict, or abandoned commercial or industrial sites. Many of the sites have toxic wastes. According to the U.S. General Accounting Office, there may be more than 500,000 brownfields across the country.
 
In 2002, the Brownfields Legislation became law. The law gives states and localities up to $250 million a year for five years to clean up polluted industrial sites. In the future, more funds may be allocated for the cleanup of brownfields.

The law is also important for property owners and developers because it shields innocent developers from liability for toxic wastes that existed at a site prior to the purchase of property. In effect, if a property owner neither caused nor contributed to the contamination, the property owner is not liable for the cleanup.

Significantly, the law will encourage the development of abandoned properties, some of which are located in prime real estate areas.

 CERCLA AND ENVIRONMENTAL PROTECTION
The majority of legislation dealing with environmental problems has been instituted within the past two decades. Although the EPA was created at the federal level to oversee such problems, several other federal agencies' areas of concern generally overlap. The federal laws were created to encourage state and local governments to enact their own legislation.

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) was created in 1980. It established a fund of $9 billion, called the Superfund, to clean up uncontrolled hazardous waste sites and to respond to spills. It created a process for identifying potential responsible parties (PRPs) and ordering them to take responsibility for the cleanup action. CERCLA is administered and enforced by the EPA.

Liability.
A landowner is liable under CERCLA when a release or a threat of release of a hazardous substance has occurred on his or her property. Regardless of whether the contamination is the result of the landowner's actions or those of others, the owner can be held responsible for the cleanup. This liability includes the cleanup not only of the landowner's property but also of any neighboring property that has been contaminated. A landowner who is not responsible for the contamination can seek recovery reimbursement for the cleanup cost from previous landowners, any other responsible party or the Superfund. However, if other parties are not available, even a landowner who did not cause the problem could be solely responsible for the costs.

Once the EPA determines that hazardous material has been released into the environment, it is authorized to begin remedial action. First, it attempts to identify the PRPs. If the PRPs agree to cooperate in the cleanup, they must agree about how to divide the cost. If the PRPs do not voluntarily undertake the cleanup, the EPA may hire its own contractors to do the necessary work. The EPA then bills the PRPs for the cost. If the PRPs refuse to pay, the EPA can seek damages in court for up to three times the actual cost of the cleanup.

Liability under the Superfund is considered to be strict, joint and several, and retroactive. Strict liability means that the owner is responsible to the injured party without excuse. Joint and several liability means that each of the individual owners is personally responsible for the total damages. If only one of the owners is financially able to handle the total damages, that owner must pay the total and collect the proportionate shares from the other owners whenever possible. Retroactive liability means that the liability is not limited to the current owner but includes people who have owned the site in the past.

Superfund Amendments and Reauthorization Act
In 1986, the U.S. Congress reauthorized the Superfund. The amended statute contains stronger cleanup standards for contaminated sites and five times the funding of the original Superfund, which expired in September 1985.

The amended act also sought to clarify the obligations of lenders. As mentioned, liability under the Superfund extends to both the present and all previous owners of the contaminated site. Real estate lenders found themselves either as present owners or somewhere in the chain of ownership through foreclosure proceedings.

The amendments created a concept called innocent landowner immunity. It was recognized that in certain cases, a landowner in the chain of ownership was completely innocent of all wrongdoing and therefore should not be held liable. The innocent landowner immunity clause established the criteria by which to judge whether a person or business could be exempted from liability. The criteria included the following:
► The pollution was caused by a third party.
► The property was acquired after the fact.
► The landowner had no actual or constructive knowledge of the damage.
► Due care was exercised when the property was purchased (the landowner made a reasonable search, called an environmental or Phase I site assessment) to determine that no damage to the property existed.
► Reasonable precautions were taken in the exercise of ownership rights.

 LIABILITY OF REAL ESTATE PROFESSIONALS
Environmental law is a relatively new phenomenon. Although federal and state laws have defined many of the liabilities involved, common law is being used for further interpretation. The real estate professional and all others involved in a real estate transaction must be aware of both actual and potential liability.

Sellers, as mentioned earlier, often carry the most exposure. Innocent landowners might be held responsible, even though they did not know about the presence of environmental hazards. Purchasers may be held liable, even if they didn't cause the contamination. Lenders may end up owning worthless assets if owners default on the loans rather than undertaking expensive cleanup efforts. Real estate licensees could be held liable for improper disclosure; therefore, it is necessary to be aware of the potential environmental risks from neighboring properties, such as gas stations, manufacturing plants, or even funeral homes.
 
Additional exposure is created for individuals involved in other aspects of real estate transactions. For example, real estate appraisers must identify and adjust for environmental problems. Adjustments to market value typically reflect the cleanup cost plus a factor of the degree of panic and suspicion that exist in the current market. Although the sales price can be affected dramatically, it is possible that the underlying market value would remain relatively equal to others in the neighborhood. The real estate appraiser's greatest responsibility is to the lender, which depends on the appraiser to identify environmental hazards. Although the lender may be protected under certain conditions through the 1986 amendments to the Superfund Act, the lender must be aware of any potential problems and may require additional environmental reports.

Insurance carriers also might be affected in the transactions. Mortgage insurance companies protect lenders' mortgage investments and might be required to carry part of the ultimate responsibility in cases of loss. More important, hazard insurance carriers might be directly responsible for damages if such coverage was included in the initial policy.

Discovery of Environmental Hazards
Real estate licensees are not expected to have the technical expertise necessary to discover the presence of environmental hazards. However, because they are presumed by the public to have special knowledge about real estate, licensees must be aware both of possible hazards and of where to seek professional help.

Obviously, the first step for a licensee is to ask the owner. He or she may already have conducted tests for carbon monoxide or radon. The owner may also be aware of a potential hazardous condition. An environmental hazard can actually be turned into a marketing plus if the owner has already done the detection and abatement work. Potential buyers can be assured that an older home is no longer a lead paint or an asbestos risk.

The most appropriate people on whom a licensee can rely for sound environmental information are scientific or technical experts. Environmental auditors (or environmental assessors) can provide the most comprehensive studies. Their services are usually relied on by developers and purchasers of commercial and industrial properties. An environmental assessment includes the property's history of use, a current use review, and an investigation into the existence of reported or known contamination sources in the subject area that may affect the property: testing of soil, water, air, and structures can be conducted, if warranted. Trained inspectors conduct air-sampling tests to detect radon, asbestos, or EMFs. They can test soil and water quality and can inspect for lead-based paints. Lead inspections covered by the Residential Lead-Based Paint Hazard Reduction Act must be conducted by certified inspectors. While an environmental auditor assessment may occur at any stage in a transaction, they are most frequently a condition of closing. Not only can environmental experts detect environmental problems, but they can usually offer guidance about how best to resolve the conditions.

IN PRACTICE    Environmental assessments and tests conducted by environmental consultants can take time. Licensees should be aware of the time involved and contact environmental consultants as soon as they know such tests are needed in order to prevent delays in closing a transaction.
 
Environmental Site Assessments
An environmental site assessment is often performed on a property to show that due care was exercised in determining if any environmental impairments exist. The assessment can help prevent parties from becoming involved in contaminated property and work as a defense to liability. It is often requested by a lending institution, developer, or a potential buyer. The assessment is commonly performed in phases, such as Phase 1 or Phase 2.

A Phase 1 Environmental Report is requested first to determine if any potential environmental problems exist at or near the subject property that may cause impairment. Additional phases are performed, as warranted and requested.

There are no federal regulations that define what an environmental assessment must include. However, one of the most accepted industry standards is provided by the American Society for Testing Materials International. For standards and other information, visit www.astm.org.

Disclosure of Environmental Hazards
State laws address the issue of disclosure of known material facts regarding a property's condition. These same rules apply to the presence of environmental hazards. A real estate licensee may be liable if he or she should have known of a condition, even if the seller neglected to disclose it. Property condition disclosures are discussed in Chapter 4.

 SUMMARY
Environmental issues are important to real estate licensees because they may affect real estate transactions by raising issues of health risk or cleanup costs. Some of the principal environmental hazards include asbestos, lead, radon, urea-formaldehyde foam insulation (UFFI), mold, underground storage tanks (heating oil, fuel), on-site waste disposal (dry wells, septic systems, dump areas), electromagnetic fields (EMFs), and off-site contamination problems (landfills, industrial areas, area releases of hazardous materials).

Licensees who are involved with the sale, management, financing, or appraisal of properties should be aware of specific federal regulations regarding potential environmental problems, such as the Residential Lead-Based Paint Hazard Reduction Act for homes constructed before 1978. Involved parties must also be aware that states may have specific regulations pertaining to environmental issues of a real estate transaction.

CERCLA established the Superfund to finance the cleanup of hazardous waste disposal sites. Under the Superfund, liability for those found to have created unlawful hazardous waste sites is strict, joint and several, and retroactive. However, purchasers of a property may have a defense to such liability if a due diligence (Phase 1 Environmental Site Assessment) is conducted prior to taking ownership.