Potential Environmental Hazards in Real Property Require Investigation By Professionals Dan J. Harkey

Summary

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Understanding environmental hazards in real property is not just a matter of concern but a crucial and complex task. It involves a maze of risks, consequences, and regulations that demand the expertise of environmental science professionals to guide interested parties to the best solutions. This understanding is paramount in the real estate industry, as it can significantly impact property value and potential legal liabilities.

Risks may stem from the property's or surrounding properties' historic uses, potentially leading to long-term consequences. The materials used in the original construction and the current property usage by one or more tenants also pose significant risks.

The risks may be above or below ground, in groundwaters, the air, and construction materials, like a giant squid with tentacles reaching far and wide, with liability overlays and use limitations.

Any real property practitioner should familiarize themselves with the basic understanding of regulatory compliance and act as a prudent fiduciary for their clients.

Article:

Non-compliance with environmental regulations can lead to a situation where the cost of mitigation exceeds the property's value. This could result in litigation against the real estate agent (associate licensees), the Real Estate/Mortgage Brokerage firm, and its responsible broker, alleging negligence, breach of fiduciary duty, and constructive fraud. The (Brokerage Firm and its agents (defendants)) could be accused of failing to disclose significant risks, underscoring the importance of environmental regulations. The potential legal implications, including hefty fines, loss of reputation, and even suspension or revocation of professional licenses, are severe and should not be underestimated.

The potential for litigation due to a fiduciary's failure to disclose all material facts or engage in negligent misrepresentation should serve as a stark reminder of the need for thoroughness and caution in all real estate transactions. Breaches of fiduciary duty can lead to significant financial losses, damage to professional reputation, and even legal action. This emphasis on potential financial losses should instill a sense of urgency in the audience, highlighting the importance of regulatory compliance and the possible risks of non-compliance.

Assessment and Remediation of various contaminants has sprouted, and an entire industry of companies specializing in the evaluation and removal of toxic materials has emerged.

Why should I be concerned about things that happened long ago?

Owners, tenants, agents, real property lenders, insurance companies, and surrounding properties, extending through entire neighborhoods and municipalities, are covered by an overlay of liability.

Who do I turn to for help in identifying the risks?

Specialists licensed as environmental engineers are the go-to professionals for identifying ecological risks, reporting and assessing mitigation procedures, and communicating with property owners and agents. They work with contractors and the Environmental Protection Agency (EPA) to ensure environmental compliance, providing a reassuring and confident resource for the real estate industry. Their expertise is invaluable in navigating the complex landscape of environmental hazards in real estate.

What is an environmental professional?

An experienced specialist who draws from the disciplines of chemistry, ecology, geology, hydraulics, hydrology, microbiology, economics, and mathematics for the identification, reporting, and mitigation procedures of environmental issues relating to real properties.

The fiduciary responsibility of real estate agents, brokerage firms, and the responsible broker regarding environmental issues.

Whether in real estate sales or lending (real estate/mortgage brokerage firms, the responsible brokers and their agents are fiduciaries of the clients/ principals). They are legally and ethically accountable for acting on behalf of another to the highest standards and in the best interest of the clients/principals they serve.

Breaches of fiduciary duty happen when the agent acts in their best interest and damages the principals. Many actions by the agent will be deemed as a breach:

Failure to disclose material facts, such as property defects, cracks in the foundation, land slippage, noise, and conflicts with neighbors, among others, can be considered a breach of fiduciary duty.

Receiving secret profits and fees

Withholding offers for self-gain

What is a Phase I environmental site assessment?

An environmental professional conducting a Phase I environmental site assessment performs a thorough, preliminary, non-intrusive review. This includes a comprehensive examination of public records, past usages of the subject property, and surrounding properties, including a site inspection. The thoroughness and comprehensiveness of this process should instill a sense of security and confidence in the audience about the comprehensive nature of the assessment.

The report will be available to the principals, property owners, lenders, loan agents, and real estate agents.

The purpose is to identify environmental conditions (RECs) or risks.

RECs are defined as the presence of hazardous substances or petroleum products in, on, or at the subject property due to a release to the environment; the likely presence of hazardous substances or petroleum products in, on, or at the subject property due to a release or potential release to the environment; or the presence of hazardous substances or petroleum products in, on or at the subject property under conditions that pose a material threat of a future release to the environment."[PC1]

What is a Phase II environmental site assessment?

If concerns are discovered in the Phase I process, a Phase II environmental site assessment should be ordered. This process involves more detailed information gathering, including soil borings and sampling analysis of the soil, vapor, groundwater, and/or indoor air, to evaluate the nature and extent of any existing contamination and recommended clean-up requirements.

A report will contain a detailed description of the contamination, its severity, the cleanup requirements, and recommendations for further investigation.

What is a Phase III environmental site assessment?

Upon completing Phases I and II, the environmental professional will recommend site mitigation/remediation. This will include alternatives, relative costs, timing, and a final analysis of a remediation action plan required to address the contaminant and hazardous issues.

This Phase III assessment is crucial as it provides a roadmap for decontaminating the site, including the cost, timing, and reporting procedures to the EPA, ensuring a thorough and effective remediation process.

The environmental professional will provide a roadmap for decontaminating the site, including the cost, timing, and reporting procedures to the regulatory oversight agency.

Stories about breaches are a giant reservoir of sorrow and financial losses:

www.dre.ca.gov/files/pdf/The_Real_Estate_Brokerage_as_Fiduciary.pdf

www.nar.realtor/sites/default/files/handouts-and-brochures/2014/nar-fiduciary-duty-032213.pdf

Consumer and Agent Education:

www.mynhd.com/booklets/combined_booklets_engl.pdf

www.geo-techsolutions.com/sites/default/files/caleparesidentialenvironmentalhazardsguide.pdf

www.cdph.ca.gov/Programs/CCDPHP/DEODC/CLPPB/CDPH%20Document%20Library/ResEnviroHaz2011.pdf

Federal Oversight:

The Federal Environmental Protection Agency (U.S. EPA) plays a pivotal role in overseeing environmental issues. Its responsibility for developing and enforcing regulations, providing grants, conducting environmental studies, educating the public, and publishing materials underscores the importance of federal oversight in ecological issues. The agency's role is crucial in ensuring environmental compliance and protecting public health and the environment.

The EPA oversees the enforcement of baseline regulations, from the Clean Water Act to the Clean Air Act to Superfund. RCRA enforces a national standard for using hazardous materials, disposal of dangerous waste, and discharges to the environment.

This should make the audience feel the weight of the agency's role in ensuring environmental compliance on a Federal level.

https://www.epa.gov/aboutepa/our-mission-and-what-we-do

GeoTracker is a powerful online resource that real estate professionals must use. It provides invaluable information about environmental hazards in a specific area, empowering agents to make informed decisions and advise their clients effectively. GeoTracker can reveal past and present environmental issues, potential risks, and ongoing remediation efforts, giving agents a comprehensive view of the ecological landscape in a particular location.

"GeoTracker" is an online database system used by the California State Water Board and regional agencies to track and archive compliance data related to waste discharges to land, hazardous substance releases from underground storage tanks, and other environmental monitoring activities. It is a central repository for ecological compliance data with geographic location capabilities. (Real estate/mortgage brokerage firms and their agents) should become familiar with this resource as it can provide valuable information about environmental hazards in a specific area. Using "GeoTracker," real estate licensees can access up-to-date information about environmental compliance in a particular location, which can help them make informed decisions and advise their clients/principals effectively. This tool is invaluable for identifying potential environmental hazards and ensuring regulatory compliance in real estate and mortgage transactions.

https://geotracker.waterboards.ca.gov/map/

There are many, but the basics are as follows.

https://www.epa.vic.gov.au/for-business/how-to/manage-environmental-risk/common-hazards

Environmental Considerations in Real Estate: Managing Risks and Responsibilities - Keven Steinberg Law

Common hazards include air contaminants and toxic and hazardous materials discharged into the air from active manufacturing or stationary settings, such as those embedded in real property components.

Asbestos, a common hazard in properties built before 1978, is a serious health risk that can lead to cancer if exposed for a long time. Mitigation is crucial, and the decision to encapsulate or remove it should be made promptly.

Lead-based paint--Properties built before 1978 generally had lead-based paint on both the inside and outside. The federal government banned lead-based paint in residential properties in 1978.

Formaldehyde--

Carbon monoxide--

Radon--

Industrial pollution--

Land contamination--

Groundwater contamination--

Adjacent property and neighboring properties within many feet of the subject property.

https://www.cdc.gov/lead-prevention/prevention/paint.html

https://www.epa.gov/lead/protect-your-family-sources-lead#:~:text=In%201978%2C%20the% 20federal%20government,is%20usually%20not% 20a%20problem.

https://study.com/academy/lesson/environmental-health-hazards-risks-in-real- estate.html#:~:text=Formaldehyde%20is%20a%20gas%20found,states%20require%20disclosure%20of%20formaldehyde.

Mold is a fungus that can cause respiratory illnesses and death. It also permanently damages building materials and severely damages property.

Body of law: innocent purchaser