chapter 27 - Disclosure, Insurance, and Risk Management

do sellers have to disclose in writing any information about known lead paint in a home

sellers must disclose in writing any information about known lead paint in the home. If sellers have performed lead tests, they must share the test results.

what is the first step to properly ensuring environmental risk management is effective within the organization

identify the most critical assets of the enterprise

When a licensee presents an offer on a home that has hazards present, it is the licensee's responsibility to do all except... A.) recognize potential hazards. B.) recommend an attorney's advice. C.) conduct inspections. D.) recommend an environmental specialist's advice.

C.) conduct inspections.

Site-specific Pollution Liability policies routinely provide coverage for:

- All primary and ancillary facilities - sometimes without the need to schedule individual locations - On-site cleanup of new and preexisting pollution conditions - Business interruption resulting from pollution conditions - Both sudden and gradual pollution conditions - Third-party claims for bodily injury, property damage and cleanup costs arising from on-site or off-site pollution conditions - Defense of third-party claims up to the limit of the policy - Transportation and non-owned disposal sites (NODS) Mold and microbial matter

potential consequences of environmental loss can include:

- Direct losses: Legal defense costs add up quickly; so can unexpected cleanup expenses and damage payments to third parties. - Indirect losses: Pollution events can trigger a variety of consequential losses; for example, contamination can render facilities unusable, causing business interruption losses, loss in rental income and costs associated with relocation. - Property devaluation: Environmental liabilities can dramatically impact the overall value of large asset holdings or the transferability of individual assets.

disclosures should include:

(1) 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. (2) 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 and fairly. (3) 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.

During a licensee's career in real estate, he or she will make listing presentations and present offers on homes that have environmental hazards present. What are the licensee's responsibilities

(1) Recognize any potential hazards (2) Recommend that sellers obtain expert advice from an attorney who specializes in environmental issues or some other expert knowledgeable about these hazards

Environmental risks, such as historic contamination, and the associated stigma attached to such issues, are intangible, hard to quantify and therefore very hard to effectively manage. What can be done

A comprehensive environmental risk management plan and risk financing strategy

Real estate agents who take listings of homes built prior to 1978 must have their sellers fill out what

A disclosure form about their knowledge or lack of knowledge about the presence of lead-based paint in the home.

Who should a client contact to determine requirements associated with providing radon measurements and/or radon mitigation/reduction in his or her state? A.) The state radon contact B.) The home inspector C.) The listing agent D.) The EPA

A.) The state radon contact

What type of policy addresses the risk exposures faced by the real estate industry? A.) Liability insurance policies B.) Environmental insurance policies C.) Economic insurance policies D.) Universal insurance policies

B.) Environmental insurance policies

What type of risks in real estate are hard to quantify and therefore very hard to effectively manage? A) Property disclosure risks B.) Environmental risks C.) Utility risks D.) Loan risks

B.) Environmental risks

What is not a potentially hazardous operation? A.) Dry cleaners B.) Grocery stores C.) Gas stations D.) Car repair facilities

B.) Grocery stores

If a licensee is aware of any mold problems in a home, he or she should disclose that information as... A.) a material fact. B.) a latent defect. C.) an adverse condition. D.) a hazardous risk.

B.) a latent defect.

Policies for mold will cover what

Bodily injury, remediation expense, business interruption, and the clean up of new conditions

who released rules to implement section of the Residential Lead-Based Paint Hazard Reduction Act in 1996: A.) HUD B.) EPA C.) HUD and EPA D.) NEPA

C.) HUD and EPA

What section in a Lead-Based Paint Disclosure is where all parties sign the disclosure? A.) The Agent's Acknowledgement B.) The Purchaser's Acknowledgement C.) The Certification of Accuracy D.) The Signature Acknowledgement

C.) The Certification of Accuracy

Site-specific Pollution Liability Policies routinely provide coverage for all except A.) mold and microbial matter. B.) sudden and gradual pollution conditions. C.) radon exposure. D.) all primary and ancillary facilities.

C.) radon exposure.

Companies and organizations must assess, mitigate, and monitor what

Certain risks involved with their daily operations

Home sellers or real estate agents must give home buyers or lessors a copy of the EPA publication called A.) "Know the Hazards in Your Home." B.) "The Risks of Buying a Home." C.) "The Residential Lead-Based Paint Act." D.) "Protect Your Family From Lead in Your Home."

D.) "Protect Your Family From Lead in Your Home."

What must sellers fill out that discusses their knowledge or lack of knowledge about the presence of lead-based paint in the home? A.) An EPA Addendum B.) A Property Disclosure C.) An Environmental Hazard Disclosure D.) A Lead-Based Paint Disclosure

D.) A Lead-Based Paint Disclosure

What option for handling environmental risk management includes outsourcing certain aspects of the company's operations? A.) Selling the operation to an insurance company B.) Purchasing sectors outside of an environmental risk area C.) Identifying critical assets D.) The transfer of risks to another party

D.) The transfer of risks to another party

An organization must establish procedures that manage the uncertainty of its operations and apply them to day-to-day activities that may be... A.) an asset to the operation. B.) a threat to their industry. C.) a tool to ensure proper disclosures. D.) a threat to the environment.

D.) a threat to the environment.

Environmental coverage can also bolster indemnity agreements for what

Preexisting known and unknown environmental liabilities, while protecting new owners from future exposures

How can property disclosure forms help avoid problems concerning environmental hazards

Property disclosure forms can help avoid problems by determining the buyer's attitude toward environmental hazards and giving the opportunity to discuss testing and mitigation.

Explain the Residential Lead-Based Paint Hazard Reduction Act of 1992.

Set procedures for disclosing the presence of lead-based paint when selling properties built before 1978. HUD and the EPA released rules to implement section of the Act in 1996. These regulations require that home sellers provide lead disclosures to home buyers who are purchasing a home built before 1978.

TRUE or FALSE Potentially hazardous operations include dry cleaners, gas stations, car repair facilities, photography development centers

TRUE

All professionals have a fundamental duty to address readily obtainable and readily observable issues and clearly inform the client of what

Their level of due diligence within the scope of work requested

If a licensee is aware of any mold problems in a home, he or she should do what

disclose that information as a latent defect The licensee should also disclose any knowledge of flooding or water damage, since those kinds if incidents can start mold growing

when should property disclosure forms be presented

early on in the transaction ex. at the time of listing, before showing other properties

The Residential Lead-Based Paint Hazard Reduction Act of 1992 set procedures for what

for disclosing the presence of lead-based paint when selling properties built before 1978

Storage tanks above and below ground are frequently utilized to store potential pollutants such as...

fuels, heating oil, lubricants and chlorine or other pool additives

can property disclosure forms be used as substitutes for the agent-initiated information disclosure

no

what is the Purchaser's Acknowledgment section

the buyers acknowledge by initialing that they have received copies of reports and other pertinent information, that they have received the EPA pamphlet and that they have received or waived their right to the 10-day risk assessment period.

what is the Agent's Acknowledgment section

the real estate licensee initials to indicate that he or she has inform the sellers as required and is aware of his or her responsibility to ensure compliance

Another option for handling environmental risk management includes...

transfer of risks to another party

up to how many days must a seller or lessor be given to check a house for hazards

up to 10 days

when may pollutants be encountered

when land is disturbed this discovery may trigger regulatory notification requirements and cleanup obligations.

Property owners, real estate managers and developers be held liable for conditions they had little to do with or knew little about

yes

are property disclosure forms mandatory

yes

In the case of contaminated property, even though the property will not be transferred until after the clean up is completed, could new owners could be held responsible for additional cleanup costs, even though they had no part in the contamination

yes, it's critical that potential buyers understand the magnitude of the liability they may be assuming.

Property disclosures should include all except... A.) legal requirements. B.) city ordinances. C.) ethical obligations. D.) service to the client or customer.

B.) city ordinances.

When a licensee makes a listing presentation for a home that has an environmental hazard present, it is the licensee's responsibility to recognize any potential hazards and... A.) report them to the EPA. B.) recommend that the sellers obtain an expert's advice. C.) list them on the seller's agreement. D.) inform the HOA of these hazards.

B.) recommend that the sellers obtain an expert's advice.

An issue in the acquisition of sights with historical contamination that is now a priority enforcement target for regulators is A.) proper disclosures. B.) the intrusion of volatile vapors. C.) code restrictions. D.) RESPA violations.

B.) the intrusion of volatile vapors.

Pollutants for sites once used for industrial purposes may be encountered when the land is... A.) purchased. B.) encroached upon. C.) sold. D.) disturbed.

D.) disturbed.

Hazardous materials can be limited to only certain substances , and contamination can be limited... A.) in time and management. B.) in land size. C.) in cost and results. D.) in time and scope.fx

D.) in time and scope.

On mold-specific insurance policies, the definition of a pollutant has been modified to include... A.) ozone. B.) radon. C.) lead. D.) microbial matter.

D.) microbial matter.

Explain environmental risk hazards in renovation

Demolition or removal of materials containing lead, asbestos, and other hazardous substances or by vapors or gasses emitted by newly installed materials

what do you do if your client is interested in finding a qualified radon service professional to test his or her home

have the client contact your State Radon Contact to determine what are, or whether there are, requirements associated with providing radon measurement and or radon mitigation/reduction in your state

what is the Seller's Disclosure section

the sellers check whether or not they have any knowledge of the presence of lead-based paint in the home. They also indicate whether or not they have any reports that pertain to lead-based paint in the home and if so, that they have provided the buyers with all available records

what is the Certification of Accuracy section

where all parties sign the disclosure.

What section of a Lead-Based Paint Disclosure is where the buyers acknowledge that they have received copies of reports and other pertinent information, that they have received the EPA pamphlet and that they have received or waived their right to the 10-day risk assessment period? A.) The Agent's Acknowledgment section B.) The Certification of Accuracy section C.) The Purchaser's Acknowledgment section D.) The Seller's Disclosure section

C.) The Purchaser's Acknowledgment section

What is paramount in determining the environmental risks associated with specific types of events? A.) Management B.) Cost C.) Vulnerability D.) Disclosure

C.) Vulnerability

Site-specific Pollution Liability Policies routinely provide coverage for all except... A.) mold and microbial matter. B.) sudden and gradual pollution conditions. C.) radon exposure. D.) all primary and ancillary facilities.

C.) radon exposure.