Real Estate Exam: Environmental Regulations, Lead Paint, Asbestos, CERCLA, Radon

Federal law requires sellers and landlords of residential property built before 1978 to disclose known information about lead-based paint and lead-based paint hazards. Sellers must provide buyers with a copy of the EPA pamphlet "Protect Your Family From Lead in Your Home," disclose any known lead paint or hazards, share available reports or records, and include a lead paint warning in the sales contract. Buyers must be given a ten-day period to conduct a lead inspection at their own expense.

The Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA, also known as Superfund, establishes liability for cleanup of contaminated properties. CERCLA imposes strict, joint and several, and retroactive liability, meaning current owners can be held responsible for contamination even if they did not cause it and even if the contamination occurred before they purchased the property. Past owners, operators, transporters, and generators of hazardous waste are all potentially responsible parties.

A Phase I Environmental Site Assessment is an investigation of a property's environmental condition conducted before purchase or refinancing to identify potential contamination risks. It includes a review of historical records, aerial photographs, government environmental databases, and regulatory files, plus a physical site inspection and interviews with owners and occupants. A Phase I does not involve soil or groundwater testing. If potential contamination is identified, a Phase II assessment with sampling and laboratory analysis may follow.

Radon is a colorless, odorless radioactive gas that occurs naturally from the decay of uranium in soil and rock. It enters buildings through cracks in foundations, gaps around pipes, and other openings, and can accumulate to dangerous levels indoors. The Environmental Protection Agency estimates that radon causes about 21,000 lung cancer deaths annually in the United States, making it the second leading cause of lung cancer after smoking. The EPA recommends mitigation when indoor radon levels reach 4 picocuries per liter of air or higher.

Asbestos is a naturally occurring mineral fiber used extensively in building materials before the 1970s for insulation, floor tiles, roofing, and pipe insulation. When disturbed, asbestos fibers become airborne and can cause serious lung diseases including mesothelioma. While federal law does not require sellers to test for asbestos, sellers and their agents must disclose known asbestos or asbestos-containing materials. The Asbestos Hazard Emergency Response Act, or AHERA, requires schools to inspect for and manage asbestos.

Underground storage tanks, or USTs, are containers buried beneath the ground surface that hold petroleum products or hazardous substances. Leaking underground storage tanks can contaminate soil and groundwater, creating serious environmental liability for property owners. The EPA regulates USTs under the Resource Conservation and Recovery Act, requiring registration, leak detection, spill prevention, and financial responsibility for cleanup. Properties with current or former gas stations, auto repair shops, industrial uses, and farms commonly have USTs.

The Clean Water Act regulates the discharge of pollutants into navigable waters and protects wetlands, both of which directly impact real estate development. Section 404 requires a permit from the Army Corps of Engineers before filling, dredging, or building on wetlands. Developers who disturb wetlands without a permit face fines, mandatory restoration, and criminal penalties. Properties near waterways or containing wetlands may have development restrictions that significantly affect value and use.

Mold is a fungus that grows in damp conditions and can cause health problems including allergic reactions, asthma attacks, and respiratory infections. While there is no federal law specifically requiring mold disclosure in residential sales, most state disclosure laws require sellers to reveal known material defects that affect health and safety, which includes known mold problems. Real estate agents have an independent duty to disclose known mold. Mold is commonly found after water damage from leaks, floods, or high humidity.

The Endangered Species Act protects threatened and endangered plants and animals and their critical habitats, which can significantly restrict real estate development on land where protected species are present. The United States Fish and Wildlife Service designates critical habitat areas where development may be limited or prohibited. Property owners cannot destroy or modify habitat if it would harm a listed species without obtaining an incidental take permit through a habitat conservation plan. ---