Unit 21 - Exam Questions Environmental Issues and the Real Estate Transaction

Federal and state laws regarding storage of hazardous substances or liquid petroleum products apply to underground storage tanks that have at LEAST what percentage of their volume underground? A) 10% B) 50% C) 60% D) 25%

The answer is 10%. Federal and state laws that impose strict requirements on underground storage tanks containing hazardous substances or liquid petroleum products apply when a tank stores at least 10% of its volume underground.

At least how much of a tank must be underground for it to be considered an underground storage tank? A) 10% B) 35% C) 15% D) 25%

The answer is 10%. The official definition of an underground storage tank is at least 10% of the tank is underground.

Lead-based paint is found in about 75% of all private housing built before A) 1996. B) 1992. C) 1985. D) 1978.

The answer is 1978. The federal government estimates that lead is present in about 75% of all private housing built before 1978, the year the Federal government banned the use of lead in interior paints.

The EPA requires that water suppliers report any situation that poses a public health risk within how many hours of its discovery? A) 24 hours B) 48 hours C) 36 hours D) 12 hours

The answer is 24 hours. The Environmental Protection Agency (EPA) requires that water suppliers report any health risk situation within 24 hours.

Which of the following is FALSE regarding underground storage tanks? A) EPA regulations apply to tanks that contain hazardous substances or liquid petroleum products that store at least 25% of their volume underground. B) Some states have adopted laws that are even more stringent than the federal laws. C) A contingency requiring inspection or removal of any underground storage tanks by the seller before closing could save the purchaser from a great deal of later expense for detection, removal, and cleanup of surrounding contaminated soil. D) State and federal laws impose strict requirements on landowners whose property contains underground storage tanks.

The answer is EPA regulations apply to tanks that contain hazardous substances or liquid petroleum products that store at least 25% of their volume underground. State and federal laws impose strict requirements on landowners whose property contains underground storage tanks (USTs). EPA regulations apply to tanks that contain hazardous substances or liquid petroleum products that store at least 10% of their volume underground. Some states have adopted laws that are even more stringent than the federal laws.

Which of these is responsible for administering the Superfund? A) HUD B) CERCLA C) PRP D) EPA

The answer is EPA. The Superfund is administered by the Environmental Protection Agency (EPA). CERCLA is the law that established the Superfund.

H stores toxic chemical waste in a large steel tank that has only 15% of its volume underground. J lives in the wilderness and has a gas pump connected to a 1,500-gallon tank of gasoline buried ten feet underground near the garage. L keeps three large tanks filled with formaldehyde and battery acid in the basement. Which of these property owners are covered by federal regulations regarding USTs? A) H and L B) J only C) L only D) Hand J

The answer is H and J. Because H's tank is more than 10% underground, storage of toxic chemical waste is covered by the law. J's tank is completely underground, so it is covered. Because L's tanks are in the basement, rather than underground, L is not covered.

A prospective buyer of commercial or industrial property should include in an offer to purchase A) a request for an affidavit by the seller that there are no contaminants on the property. B) a contingency to allow for an environmental site assessment. C) a waiver from future liability for any contamination found on the property. D) the establishment of a trust account to cover the cost of any property decontamination.

The answer is a contingency to allow for an environmental site assessment. A prospective purchaser should perform all of the examinations and tests required to show due diligence in discovering any possible contamination—and be prepared to possibly walk away from the transaction if there exists the possibility of future liability for cleanup of hazardous wastes.

Real estate professionals should always recommend testing the water supply when it is not part of A) a shared well system. B) a privately owned well system. C) a spring-fed stream. D) a municipal water supply.

The answer is a municipal water supply. Real estate professionals should always recommend testing the water supply when it is not part of a municipal water supply.

Contamination from underground storage tanks is A) addressed by EPA regulations. B) found only in petroleum stations. C) only caused by tanks currently in use. D) easily detected and eliminated.

The answer is addressed by EPA regulations. The federal underground storage tank 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% of their volume underground.

All of the following are true about lead-based paint EXCEPT A) all residential buildings must be tested for lead-based paint. B) renovation by a contractor of a residence that has lead-based paint requires education and certification. C) it was commonly used in residences before 1978. D) it is most dangerous when ingested.

The answer is all residential buildings must be tested for lead-based paint. The EPA requires that sellers or landlords must disclose known information on lead-based paint and hazards for residential buildings built before 1978.

A federally funded project requires A) a brownfield study. B) an environmental site assessment. C) a lead-based paint audit. D) an environmental impact statement.

The answer is an environmental impact statement. The environmental impact statement (EOS) will detail the impact the project will have on such environmental concerns as air quality, noise, public health and safety, energy consumption, population density, wildlife, vegetation, and the need for sewer and water facilities.

The Superfund Amendments and Reauthorization Act (SARA) created A) a responsible party status. B) an innocent landowner immunity status. C) an innocent government immunity status. D) a liable party status.

The answer is an innocent landowner immunity status. The Superfund Amendments and Reauthorization Act (SARA) recognizes that a landowner in the chain of ownership could be completely innocent of all wrongdoing and therefore should not be held liable for environmental problems associated with the presence of undisclosed landfills and hazardous waste sites.

The parties to a real estate transaction should be aware that many older tanks have never been registered A) but are always visible. B) and when discovered must always be registered. C) and may not comply with federal and state laws. D) but are always capable of being located.

The answer is and may not comply with federal and state laws. Many older tanks have never been registered and may not comply with federal and state laws.

To avoid liability associated with environmental issues, the real estate professional should A) avoid transactions involving commercial and industrial sites. B) become qualified to perform an environmental audit. C) become familiar with common environmental problems. D) not be involved with a transaction involving possibly contaminated property.

The answer is become familiar with common environmental problems. By becoming familiar with common environmental problems found in the real estate professional's area of practice, the licensee will recognize signs of environmental contamination and know when to suggest that an environmental audit be performed. The licensee should never claim to be an environmental expert, but should know enough to recognize warning signs of environmental issues.

If a potentially responsible party (PRP) refuses to pay the expenses of cleaning up a toxic site, the EPA may A) bring a criminal action and have the PRP jailed for up to 10 years. B) have no legal recourse. C) bring an administrative action and be awarded the actual cost of the cleanup, plus court costs. D) bring a civil action and be awarded three times the actual cost of the cleanup.

The answer is bring a civil action and be awarded three times the actual cost of the cleanup. A PRP is a potentially responsible party. If the PRP does not clean up the site, the EPA bills the PRP for the cost. Then, if the PRP still refuses to pay, the EPA can seek damages in court for up to three times the actual cost of cleanup.

Defunct, derelict, or abandoned commercial or industrial sites, many of which are suspected to contain toxic wastes, are called A) blackfields. B) capped-fields. C) wastefields. D) brownfields.

The answer is brownfields. The Small Business Liability Relief and Brownfields Revitalization Act (Brownfields Law) was signed into law in 2002 and provides funds to assess and clean up brownfields, clarify liability protections, and provide tax incentives toward enhancing state and tribal response programs.

Defunct, derelict, or abandoned commercial or industrial sites, many of which are suspected to contain toxic waste, are called A) greenfields. B) redfields. C) blackfields. D) brownfields.

The answer is brownfields. The Small Business Liability Relief and Brownfields Revitalization Act, the Brownfields Law, provides funds to assess and clean up brownfields, clarifies liability protections, and provides tax incentives toward enhancing state and tribal response programs.

Waste disposal sites are A) lined for aesthetic reasons. B) never owned by private enterprise. C) capped with soil for legal reasons. D) capped with soil for aesthetic reasons.

The answer is capped with soil for aesthetic reasons. Lining prevents seepage, and both private industry and governments own and operate sites.

Which of these is the byproduct of fuel combustion that may result in death if such equipment is not properly vented? A) Urea-formaldehyde foam insulation B) Radon C) Carbon monoxide D) Lead

The answer is carbon monoxide. Carbon monoxide (CO) is a colorless, odorless, and tasteless gas that is a byproduct of incomplete combustion. High concentrations of CO can lead to death.

Which of these is a source of polychlorinated biphenyls (PCBs)? A) Plywood and particle board B) Small home appliances, such as hair dryers or food processors C) Computers D) Caulking compounds

The answer is caulking compounds. Sources of PCBs include caulking compounds, electrical transformers, and hydraulic oil in older equipment.

What causes mold problems in buildings? A) Fiberglass building materials B) Air pollution C) Insects D) Chronic moisture problems

The answer is chronic moisture problems. Moisture, oxygen, and a cellulosic food source feed mold growth. Mold can gradually destroy virtually anything on which it is growing.

Federal and state laws have defined many of the liabilities related to hazardous waste; although, A) local municipalities are establishing their own interpretation. B) common law is being used for further interpretation. C) they are incomplete and even common law offers no help. D) clarification may be required from Congress.

The answer is common law is being used for further interpretation. Federal and state laws have defined many of the liabilities related to hazardous waste; however, common law is being used for further interpretation.

Under CERCLA, as amended, the rule that regardless of whether hazardous contamination is the result of the landowner's actions or those of others, the owner can be held responsible for the cleanup, A) does not apply to a subsequent purchaser to avoid creating a restraint on alienation of the property. B) does not apply to someone who is an innocent landowner. C) applies only when the landowner has actual knowledge of the contamination. D) applies to all property owners who have conducted a title search before the purchase of the property.

The answer is does not apply to someone who is an innocent landowner. The Superfund Amendments and Reauthorization Act (SARA) created an "innocent landowner" immunity status when the certain criteria are met.

Sealing off asbestos instead of removing it is called A) irresponsible remediation. B) extended liability. C) capping. D) encapsulation.

The answer is encapsulation. Encapsulation is the sealing off of disintegrating asbestos. Capping is covering over the top of a landfill with dirt and landscaping..

Real estate professionals and their buyers should be particularly alert to evidence of the presence of an underground storage tank (UST), such as A) rural location. B) presence of motor vehicles. C) extensive agricultural use. D) fill pipes and stained soil.

The answer is fill pipes and stained soil. Real estate professionals and their buyers should be particularly alert to evidence of the presence of a UST, such as fill pipes and vent lines, stained soil, and fumes or odors.

The process used to extract natural gas from deep layers of rock is known as A) tacking. B) fracking. C) grounding. D) geo-forming.

The answer is fracking. Fracking is also known as hydraulic fracturing. The EPA maintains an ongoing study of the effect on groundwater of the byproducts produced by fracking.

Those who could be liable for damages related to environmental hazards include A) attorneys. B) title agents. C) escrow agents. D) hazard insurance carriers.

The answer is hazard insurance carriers. Those who could be liable for damages from environmental issues include hazard insurance carriers, if such coverage was included in the initial policy.

CERCLA regulations for administration of the Superfund, which helps pay for cleanup of uncontrolled hazardous waste sites, A) make no provision for recovering Superfund expenses incurred in cleanup operations. B) release from liability those owners of contaminated property who did not actually cause known contamination. C) exempt from responsibility those sites that contaminate neighboring properties. D) impose strict, joint and several, and retroactive liability on potentially responsible parties.

The answer is impose strict, join and several, and retroactive liability on potentially responsible parties. 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.

Which of the following is TRUE regarding asbestos? A) HUD requires that all asbestos-containing materials be removed from all residential buildings. B) The level of asbestos in a building is affected by weather conditions. C) Asbestos causes health problems only when it is eaten. D) Improper removal of asbestos can cause further contamination of a building.

The answer is improper removal of asbestos can cause further contamination of a building. Removal must only be done by skilled, licensed contractors. Once disturbed, asbestos can remain suspended in air for long periods of time before settling and then being disturbed once again.

Where in the United States does radon occur? A) Mostly in the western states B) Only in large urban areas C) Mostly in the warm southern and southwestern regions D) In every state in the United States

The answer is in every state in the United States. Radon has been found in every state, although it's more likely to be found in some states than in others. The only way to know for sure if it is present is to have the home tested.

What is the purpose of the Brownfields Law enacted in 2002? A) It is specifically dedicated to cleaning up PCB spills and dumps. B) It distributes funds to clean up polluted industrial sites so they can be restored to productive use. C) It establishes incinerators to destroy UFFI, DDT, and other persistent chemicals. D) It restores wilderness and agricultural areas damaged by toxic waste.

The answer is it distributes funds to clean up polluted industrial sites so they can be restored to productive use. Brownfields are defined as defunct, derelict, or abandoned commercial or industrial sites. Many have toxic wastes.

All of the following are true about underground water contamination EXCEPT A) any contamination of underground water can threaten the supply of pure, clean water from private wells and public water systems. B) protective state and federal laws concerning water supply have been enacted. C) real estate professionals need to be aware of potential contamination sources. D) it is a minor problem in the United States.

The answer is it is a minor problem in the United States. According to the EPA, approximately 40% of the 3 million to 5 million underground storage tanks that exist in the United States are leaking.

In regulations regarding lead-based paints, HUD requires that A) homeowners test for its presence. B) only homeowners deal with its removal. C) known lead-based paint hazards be disclosed. D) paint be removed from surfaces before selling.

The answer is known lead-based paint hazards be disclosed. HUD issued the Lead-Based Paint Hazard Reduction Act of 1992, which requires disclosure of any known lead-based paint hazards to potential buyers or renters.

Special disclosure rules apply in the sale or lease of residential dwellings built before 1978 because of the possible presence ofA) mold. B) lead-based paint. C) urea-formaldehyde foam insulation. D) asbestos.

The answer is lead-based paint. The Lead-Based Paint Hazard Reduction Act of 1992 (LBPHRA) requires disclosure of possible lead-based paint hazards and the presence of any known lead-based paint hazards to potential buyers or renters. Renovators of certain property containing lead-based paint must first complete EPA training and certification.

Federal underground storage tank (UST) regulations require that A) home fuel oil tanks in basements be registered with the EPA. B) states not develop regulations more stringent than the federal requirements. C) septic tanks be pumped every five years. D) liquid petroleum tanks that store at least 10% of their volume underground be in compliance.

The answer is liquid petroleum tanks that store at least 10% of their volume underground be in compliance. Federal regulations impose strict requirements on landowners about USTs. States may impose even more stringent controls. Exceptions to federal regulations include septic tanks and home heating oil tanks.

All of the following may contribute to the growth of mold EXCEPT A) roof leaks. B) presence of EIFS. C) low humidity. D) improperly installed gutters.

The answer is low humidity. Mold grows where there is moisture, such as where a roof leaks, or where water is not routed away properly by the gutters. EIFS is a building material that can trap moisture in a house.

Asbestos dust can cause A) radiation sickness. B) skin cancer. C) AIDS. D) lung disease.

The answer is lung disease. Lung disease can be caused by asbestos dust.

The water table A) is never near the surface. B) is usually always near the surface. C) is usually several hundred feet underground. D) may be several hundred feet underground or near the surface.

The answer is may be several hundred feet underground or near the surface.

Which of the following is generally a concern for someone with allergies? A) Mold B) Carbon monoxide C) Asbestos D) Lead

The answer is mold. Purchasers of real estate who are subject to allergies and asthma should consider including a contingency on the disclosure and removal of any existing mold problems.

According to the U.S. General Accounting Office, brownfields plague communities and A) result in only a temporary decline in value. B) are easily remedied by prompt effort. C) their effect on property values is unknown. D) often contribute to a decline in property values.

The answer is often contribute to a decline in property values. The U.S. General Accounting Office has reported that several hundred thousand brownfields plague communities as eyesores as well as hazardous conditions and often contribute to a decline in property values.

MOST seller property disclosures are required for A) residential properties and vacant land. B) only residential properties. C) both commercial and residential properties. D) residential properties and retail centers.

The answer is only residential properties. There are fewer protections mandated for commercial properties, since buyers of commercial properties are assumed to be using good business judgment.

Under the EPA classification, PRPs are A) potentially responsible parties. B) principal responsible parties. C) probable responsible parties. D) possible responsible parties.

The answer is potentially responsible parties. Once the EPA determines that hazardous material has been released into the environment, the agency attempts to identify the potentially responsible parties (PRPs).

Tombs buried deep underground contain materials such as A) plastic and other non-biodegradable items. B) radioactive waste. C) wastewater. D) used electronics.

The answer is radioactive waste. Tombs, buried deep underground, contain materials such as radioactive waste and are designed to last thousands of years.

Which of the following is a hazardous substance produced by the decay of radioactive materials? A) Asbestos B) Lead C) Radon D) Carbon monoxide

The answer is radon. The decay of radioactive materials produces radon, which is found in varying amounts throughout the country. Concerns about cancer cause some buyers to require an inspection for radon. If found, the solution—adequate ventilation of the gases—is relatively simple.

Exposure to risk as it relates to environmental hazards is created for individuals involved in other aspects of real estate transactions, such as A) surveyors. B) transaction coordinators. C) title searchers. D) real estate appraisers.

The answer is real estate appraisers. Exposure to risk is created for individuals involved in certain aspects of real estate transactions, such as real estate appraisers. The other individuals noted are not typically in contact with the actual improvements on a property.

Lead-based paint disclosure is A) a requirement of most HOAs. B) required by federal law. C) voluntary. D) required by state law.

The answer is required by federal law. Federal law requires disclosure of known lead-based paint hazards for any residential property built before 1978.

As it relates to environmental hazards, A) local governments carry the most exposure to liability. B) buyers often carry the most exposure to liability. C) sellers often carry the most exposure to liability. D) real estate professionals carry the most exposure to liability.

The answer is sellers often carry the most exposure to liability. As it relates to environmental hazards, sellers often carry the most exposure to liability.

With the exception of the innocent landowner, liability under the Superfund is A) joint and several and retroactive, but not strict. B) strict, joint and several, and retroactive. C) voluntary. D) limited to the owner of record.

The answer is strict, joint and several, and retroactive. Strict means that the victim's fault does not reduce the violation; joint and several means that if everyone associated with the problem is judged responsible, any one of the parties might have to pay the entire fine and all damages, not just a party's proportionate share; retroactive means that present violations can be charged as well as violations that occurred before the laws were passed. The Superfund Amendments and Reauthorization Act (SARA) created an exception for the innocent landowner who is completely innocent of all wrongdoing and thus should not be subject to liability.

Tanks that are exempt from federal regulation do NOT include A) tanks that store heating oil burned on the premises. B) farm and residential tanks that hold 1,100 gallons or less of motor fuel used for noncommercial purposes. C) tanks that hold 200 gallons. D) tanks on or above the floor of underground areas, such as basements or tunnels.

The answer is tanks that hold 200 gallons. Federal regulation applies to tanks that hold 200 gallons.

Federal regulation of numerous environmental hazards is carried out by A) the CFPB. B) the EPA. C) the FHA. D) the VA.

The answer is the EPA. The Environmental Protection Agency (EPA) is charged with federal regulation of numerous environmental hazards. Rules of the Department of Housing and Urban Development (HUD) also come into play.

The federal underground storage tanks (UST) program is regulated by A) the Department of Housing and Urban Development. B) the Federal Housing Administration. C) the Environmental Protection Agency. D) the Consumer Product Safety Commission.

The answer is the Environmental Protection Agency. The federal UST program is regulated by the EPA.

The federal legislation which was passed to protect public health by regulating the nation's public drinking water supply was A) the Public Water Supply Act. B) the Water Preservation Act. C) the Safe Drinking Water Act (SDWA). D) the Safe Public Water Act.

The answer is the Safe Drinking Water Act (SDWA). The federal legislation which was passed to protect public health by regulating the nation's public drinking water supply was the Safe Drinking Water Act (SDWA).

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) was created in 1980 and established A) the Clean Water Act. B) the Superfund. C) the Brownfields Act. D) the Clean Lands Fund.

The answer is the Superfund. The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) was created in 1980 and established a $9 billion fund called the Superfund.

When a release or a threat of release of a hazardous substance has occurred on a property, under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the responsible party for cleanup is A) the landowner. B) the state government in which the property is located. C) the local municipality. D) the U.S. government.

The answer is the landowner. When a release or a threat of release of a hazardous substance has occurred on a property, under CERCLA, the responsible party for cleanup is the landowner.

Groundwater that exists under the earth's surface forms the water table, which is A) the natural level at which the ground becomes saturated. B) never found near the surface. C) usually subject to only subsurface contamination. D) never found less than several hundred feet underground.

The answer is the natural level at which the ground becomes saturated. Groundwater that exists under the earth's surface within the tiny spaces or crevices in geological formations forms the water table, the natural level at which the ground becomes saturated.

Which of these would disqualify someone from claiming innocent landowner immunity under the Superfund Amendments and Reauthorization Act (SARA)? A) The owner took reasonable precautions in the exercise of ownership rights. B) The owner exercised due care when the property was purchased. C) The pollution was caused by a third party. D) The owner had only constructive knowledge of the damage.

The answer is the owner had only constructive knowledge of the damage. Landowners cannot claim innocent landowner immunity if they had actual or constructive knowledge of the damage.

What do urea-formaldehyde foam insulation (UFFI), lead-based paint, and asbestos have in common? A) They all were banned in 1978. B) All three were used in insulating materials. C) They all pose a risk to humans because they may emit harmful gases. D) They were all used at one time in residential construction.

The answer is they were all used at one time in residential construction. Only UFFI and asbestos are insulating materials. Only UFFI emits harmful gas. Only lead-based paint was banned in 1978. But all three of these materials were once used in residential construction.

Which of the following describes the process of creating a landfill site? A) Waste is buried in an underground concrete vault. B) Waste is liquefied, treated, and pumped through pipes to tombs under the water table. C) Waste and topsoil are layered in a pit, mounded up, and then covered with dirt and plants. D) Waste is compacted and sealed in a container, then placed in a tomb designed to last several thousand years.

The answer is waste and topsoil are layered in a pit, mounded up, and then covered with dirt and plants. Putting down alternate layers of waste and topsoil in a pit, and then capping it with soil and vegetation, creates a landfill.