Unit 18 Environmental Issues

Implications Of Environmental Law

The real estate professional must be aware of the exposure of all parties involved. As mentioned earlier, sellers often carry the majority of the liability. Innocent landowners may be held responsible even though they did not know that the property had been exposed to environmental pollution. It also is necessary to advise the buyer of the potential for risk posed by neighboring properties. If the broker represents a seller whose property abuts a gas station, the broker must be aware of the possibility of a leak and make the appropriate disclosures. All possible risk should be disclosed to the buyer in any situation in which there might be an environmental problem. The days of "caveat emptor" (let the buyer beware) are dwindling. Both the statutes and the courts are taking steps to protect the innocent buyer whenever possible. The real estate professional must help protect the buyer in all situations. Liability of Real Estate Professionals Additional liability is created for other parties to the transaction. For instance, the real estate appraiser must mention and make the proper adjustments in the estimate of market value. Most of the environmental problems associated with residential units can be cleaned up, and the adjustment to market value typically reflects the cost of that work. The mortgage lender is protected under certain conditions through the 1986 amendments to the Superfund Act. But in any event, the lender must be notified of any potential problems existing with the property. Also affected may be the insurance carrier. The mortgage insurance companies will protect the lender's investment in the mortgage and may be required to carry part of the ultimate responsibility in case of a loss. More important, the hazard insurance carrier may be deemed directly responsible for damages if environmental concerns were included in the policy. All parties to the real estate transaction should be certain to ascertain that due diligence has been conducted on the property by having an environmental screening done before the purchase of the property. The environmental screening may take the form of a report or become a thorough environmental audit with complete engineering and scientific tests being conducted.

UFFIs = Urea Formaldehyde Foam Insulation (UFFI).

-very good as a tool for insulation and there's nothing wrong with it - the problem is that Formaldehyde (a carcinogen) can commit off-gassing in other words, gassing can escape into our breathing realm and our breathing range is approximately from about 3 feet to about 6 feet off the ground. Not necessarily a big problem b/c the Formaldehyde off-gassing does decrease after a certain period of time.

Terms

-Clean Air Act (CAA) - Federal law designed to control air pollution on a national level. -Chloro-flouro Carbons (CFCs) - A fluid, containing hydrocarbons that absorbs heat from a reservoir at low temperatures and rejects heat at higher temperatures. When emitted into the atmosphere, CFCs cause depletion of the stratospheric ozone layer. -Safe Drinking Water Act (SDWA) - Enacted in 1974, a federal law intended to ensure safe drinking water for the public. -Septic System - A small-scale sewage treatment system common in areas with no connection to main sewage pipes provided by local governments or private corporations. -Underground Storage Tanks - A tank and any underground piping connected to the tank that has at least 10 percent of its combined volume underground. -Asbestos - A naturally occurring mineral fiber sometimes found in older homes. It is hazardous to health when a possibility exists of exposure to inhalable fibers. Homeowners should be alert for friable asbestos and always seek professional advice in dealing with it. -Asbestosis - A chronic lung disease caused by inhaling asbestos fibers. -Lead - A material used in pipes and paint of many older homes. We now know that lead is hazardous to health. The local environmental protection agency should be consulted for guidelines on handling, removal and applicable laws. -Radon - A colorless, odorless gas that is emitted from soils, rocks and water as a result of radioactive decay in certain areas of the country. Radon is known to cause cancer. Homes should be tested for radon. The local environmental agency should be consulted on its handling, removal and any applicable laws. -Wetlands - An area that is inundated or saturated by surface or groundwater at a frequency and duration sufficient to support, and that under normal circumstances does support, a prevalence of vegetation typically adapted for life in saturated soil conditions. Wetlands generally include swamps, marshes, bogs, and similar areas, but exclude irrigation ditches unless delineated as part of an adjacent wetland. The Army Core of Engineers is responsible for protection and control of the rich wetland environments. -Due Diligence - The review and investigation of a property to evaluate any legal liability. -Underground Storage Tanks - A tank and any underground piping connected to the tank that has at least 10 percent of its combined volume underground. -Electro-magnetic Field - Created when electricity flows through a wire. -Freon - Moderately toxic gases or liquids which have typically been used as refrigerants (in air conditioning units) and as aerosol propellants. -Mold - A fungus that grows in the form of multicellular filaments called hyphae. -Groundwater - Water located beneath the earth's surface in soil pore spaces and in the fractures of rock formations. -Urea Formaldehyde Foam Insulation (UFFI) - A type of foamed in-place insulation that releases formaldehyde gas. It was banned by the Consumer Public Safety Commission in 1982 from use in residences and schools. Holding that the risks had not been proven, a Federal Court lifted the ban in 1983. The local consumer and/or environmental protection agency should be consulted for additional information on this type of insulation. -Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) - Enacted in 1980, a federal law designed to clean up sites contaminated with hazardous substances. -Mesothelioma - A cancer of mesothelial tissue, associated especially with exposure to asbestos. -Chlordane - A colorless, odorless, viscous liquid used as an insecticide. It may be toxic to humans and wildlife as a result of its effect on the nervous system. -Department of Housing and Urban Development (HUD)- Established in 1965, HUD works to create a decent home and suitable living environment for all Americans; it does this by addressing housing needs, improving and developing American communities, and enforcing fair housing laws. -Friable - Easily crumbled or reduced to powder. Asbestos is an example of a friable substance. -Environmental Impact Statement - A report addressing the potential effects on the environment of a proposed federal government project. - Poly-chlorinated Biphenyls (PCBs) - Were widely used as dielectric and coolant fluids, for example in transformers, capacitors, and electric motors. -Superfund Amendments and Reauthorization Act - Enacted in 1986, made several important changes and additions to CERCLA, including minimum cleanup requirements. -

Environmental Assessments

Env impact statement: Report detailing the effect of a proposed development on the existing environment, including possible alternative measures to remedy or repair environmental damage. This is important esp. for sensitive constructions like construction on wet lands or on a site that has been previously contaminated. New York's State Environmental Quality Review Act (SEQRA) requires the submission of an environmental impact statement for any activity where environmental concerns may be present. In such cases, a Phase I Environmental Assessment (or audit) should be performed. A Phase I Environmental Assessment is an investigation conducted by an environmental professional to determine whether hazardous substances are present on or being released from the property. It is commonly performed before commercial or industrial property is purchased. A Phase I assessment consists of reviewing the previous ownership and uses of the property by examining all deeds, easements, leases, restrictions, and covenants for a period of 50 years; aerial photographs; any recorded environmental cleanup liens; federal, state, and local government records of sites or facilities where there has been a release of hazardous substances; and a visual site inspection of the property and all its improvements. If the Phase I assessment discloses the presence or release of hazardous substances on the property, further action may be necessary to confirm the contamination. If confirmation is necessary, a Phase II Environmental Assessment will be performed, which consists of sample testing and evaluation. The Phase II assessment must be conducted by a qualified environmental engineer. Phase III includes remedying the contamination, if any is confirmed, and Phase IV includes management of the environmental hazards.

Pollution And Environmental Risks In Real Estate Transactions

Environmental concerns have come to the forefront of contemporary issues. Both actual and perceived pollution problems have the ability to stir anger, fear, and other feelings. Indeed, perhaps no other modern issue has a greater ability to elicit strong emotions. The actual dollar value of real property can be affected significantly by both real and imagined pollution. The desirability and salability of land and buildings may change drastically. Also, the cost of cleaning up and removing pollution may be much greater than the dollar value of the property. In some areas of the United States, mortgage and title insurance approvals in many cases depend on inspection of the property for hazardous substances and proof of their absence. For all of these reasons, real estate professionals should be alert to the possibility of pollution and hazardous substances on property being sold. Knowledgeable real estate professionals should ask property owners about the possibility of hazardous substances. In addition, licensees can expect increasing numbers of questions from concerned customers. Pollution is an impurity in the environment that was not there originally. The simple act of throwing a piece of paper on the ground creates an unsightly, minor form of pollution. Major pollution problems can result from hazardous substances associated with industrial and other activities, such as farming. Real estate licensees often do not have the technical expertise required to determine if a hazardous material is present on or near the property. Government agencies and private consulting firms may be contacted for information, guidance, and detailed study.

Building Green

Heightened environmental awareness combined with increasing energy costs has recently led toward a movement of building "green." The purpose behind green building is to: -minimize waste while maximizing efficiency, -utilize alternative, renewable energy sources, -improve air and water quality, and -use land and natural resources responsibly. Many newly constructed green buildings feature higher energy efficiency while minimizing negative environmental impact. For example, green buildings will use less potable water (low-flow fixtures), and many have "green roofs" on which plants can grow, resulting in less storm water runoff. Green building also focuses on ways to provide energy that can be naturally replenished, such as solar power, as a means to reduce our country's dependence on fossil fuels. Reduction in this arena will certainly provide future benefits to the environment. Properties are now being built to qualify for green building certifications and designations, such as the Leadership in Energy and Environmental Design (LEED) certification. "LEED certified" refers to a set of voluntary standards developed by the private nonprofit U.S. Green Building Council (USGBC). As of 2008, there are approximately 500 LEED-certified green buildings throughout the United States. While neither the Environmental Protection Agency (EPA) nor the Department of Energy (DOE) has yet developed mandated standards for green building, Energy Star, a joint program of the EPA and the DOE, provides a set of voluntary standards for which energy-efficient products and practices are evaluated. Increasingly, some jurisdictions are requiring energy conservation and other green features for government-funded buildings, such as New York City's PlaNYC 2030 for Sustainability.

Legal Considerations

The majority of legislation dealing with environmental problems has been enacted within the past two decades. Although the EPA was created at the federal level to oversee such problems, there are several other federal and state agencies concerned. An environmental assessment consists of investigating, testing and confirming, remedying, and managing the contamination. Federal environmental law is administered by such agencies as the U.S. Department of Transportation under the Hazardous Material Transportation Act; the Occupational Safety and Health Administration (OSHA) and the U.S. Department of Labor, which administer the standards for all employees working in the manufacturing sector; and the EPA, which administers such laws as the Toxic Substance Control Act, the federal Clean Water Act, and the Resource Conservation and Recovery Act. The need for federal legislation was recognized after the Love Canal situation developed in New York. A hazardous waste leak created untold problems from both a physical health and a property standpoint. 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 dumps and to respond to spills. It created a process for identifying potentially responsible parties and ordering them to take responsibility for the cleanup action. A landowner may become liable under this act when there has been a release or there is a threat of release of a hazardous substance. Regardless of whether the contamination is the result of the landowner's actions or those of others, the owner could be held responsible for cleaning up any resulting contamination. The liability includes the cleanup of the landowner's property and any neighboring property that has been contaminated. Superfund Amendments and Reauthorization Act (SARA) In 1986, the United States Congress passed the Superfund Amendments and Reauthorization Act (SARA), reauthorizing the Superfund. The amended statute contains stronger cleanup standards for contaminated sites and provides five times the funding of the original Superfund, which expired in September 1985. The amendments created a concept called innocent landowner immunity. It was recognized that in certain cases a landowner in the chain of ownership had been completely innocent of all wrongdoing and therefore should not be held liable. To establish that an owner is innocent, the damage must have been caused by a previous owner. The innocent landowner must not have had either actual or constructive knowledge of the damage. Most important, the innocent owner must show that due care was taken when the land was purchased (the landowner made a reasonable search—preferably an environmental audit—to determine that there was no damage to the property).

Future Concerns

Underground Storage Tanks Underground storage tanks have been used in both residential and commercial settings for many years. One estimate is that there are from three million to five million underground storage tanks in the United States that contain hazardous substances, including gasoline. The risk comes when such containers become old, rust, and start to leak. The toxic material then can enter the groundwater to contaminate wells and can pollute the soil. The most obvious source of such pollution is the millions of gas stations scattered around the United States. Older stations sometimes have steel tanks that have developed leaks through oxidation (rusting). Another major source is the underground containers that were used to hold fuel oil for older homes. Many times the homeowner has converted the heating system to natural gas and has abandoned the use of the old oil tank. This, again, raises the risk of leakage and pollution of the general area. Recent federal legislation has called for the removal of leaking tanks and all the polluted soil around them. The tank and the soil are then disposed of in a hazardous waste facility. Such a program is extremely expensive, sometimes costing hundreds of thousands of dollars to revamp a gas station, for instance. Electromagnetic Fields Electromagnetic fields are generated by the presence and movement of electrical charges, that is, electric current. Electromagnetic fields are generally associated with the use of electric power. Common sources of electromagnetic fields (aside from those generated by the earth's magnetic field) include high tension (or high voltage) transmission lines; primary and secondary distribution lines; and electric appliances inside homes, such as televisions, computers, microwave ovens, conventional electric ovens, electric blankets, and electric clocks. Currently, there is controversy over exactly what, if any, damage is caused by electromagnetic fields. There is some evidence to suggest that exposure to electromagnetic fields may cause cancer, hormonal changes, and changes in behavior. Other studies have found no damage. Reducing exposure to electromagnetic fields ranges from the simple to the impossible. For example, if a home is built near primary or secondary transmission lines, there is little the occupants can do to reduce their exposure except move. On the other hand, exposure to electromagnetic fields generated by electrical appliances can be reduced by sitting or standing farther away from them—it is generally assumed that standing a distance of two to three feet away from low-voltage electrical appliances is safe. - This is a subject that we are seeing continuous research about and generally speaking the State of NY's policy on Electro-magnetic fields is they advise 'prudent avoidance' on the part of property owners. In other words if Electro-magnetic fields are expected to be near by it is prudent, in other words it advisable to avoid living or working or acquiring real estate anywhere near that subject property, it is considered to be a hazard.

Long-standing Issues

Water Water contamination exists in every state in the United States; what varies is the degree of contamination. Contaminants that can endanger health include bacteria, viruses, protozoa, nitrates, metals such as lead or mercury, fertilizers, pesticides, and radon. Sources that can also affect the taste and odor of water include industrial discharges; runoff from urban areas (such as landfills); septic systems that are improperly located and maintained; and pesticides and fertilizers from agricultural areas. Contaminated water can cause a variety of physical symptoms, from mild stomachaches and intestinal cramping to severe nausea and diarrhea, kidney and liver damage, and death. Some adverse effects, even if nonfatal, may last for one or two weeks, others may last for months or years. There is recent evidence that water contaminants (particularly nitrates and radon) cause cancer. The quality of drinking water can be tested by a local health authority or water supplier. Federal regulations (the Safe Drinking Water Act) require that public water suppliers test the drinking water for contamination periodically. Well water can be tested by health authorities or private laboratories. Some experts advise testing private water supplies at least once a year. If water contamination is suspected, alternate sources of water should be used until it is determined that the water is safe. The term groundwater includes not only the runoff at ground level but also the underground water systems used for wells, both private and public. Underground streams are formed in the rocks, crevices, and caves under the ground and flow just as dramatically as do rivers aboveground. This underground water table can be as shallow as two or three feet below the surface or range all the way down to several hundred feet. Contamination of this water supply is a serious health threat. Water can be contaminated from a number of sources, including waste disposal sites and underground storage tanks. Heavy regulation in these areas is about the only protection the general public has against water contamination. Once contamination has been identified, its source can be eliminated, but such a process is often time-consuming and extremely expensive. Many times freshwater wells must be relocated.