N. Property Disclosures and Environmental Issues Flashcards
Which of these actions is a violation of the Residential Lead-Based Paint Hazard Reduction Act when a property constructed before 1978 is being marketed by a licensee?
A. The seller refuses to perform lead abatement work requested in buyer’s offer.
B. The buyer’s agent fails to complete the lead-based paint disclosure form.
C. The buyer is given more than 10 days to complete a lead inspection of the property.
D. The seller’s agent fails to provide the pamphlet, “Protect Your Family From Lead in Your Home” to prospective buyers.
D. The seller’s agent fails to provide the pamphlet, “Protect Your Family From Lead in Your Home” to prospective buyers.
Option A is incorrect because federal law doesn’t require abatement work, though the buyer and seller can negotiate this. The seller (not the buyer) is required to complete the lead-based paint disclosure form, so option B is incorrect. Buyers must have at least 10 days to complete a lead inspection if they so choose, but they can negotiate with the seller for a longer period of time, making option C incorrect. The listing agent (seller’s agent) is responsible for ensuring that buyers receive a copy of the EPA pamphlet, so option D is the correct answer.
Marilyn is reviewing the inspection report with her buyer clients. Which of the following issues in the report should Marilyn flag as most significant?
A. Presence of mold
B. Non-working sump pump
C. Broken dishwasher
D. Lack of deadbolts
A. Presence of mold
A licensee’s role when reviewing the inspection report with buyers is to review all findings, but to call particular attention to things that could have an adverse effect on health or safety, and/or that could be extremely cost prohibitive to fix. Let’s look at the answer options to see if any meet these criteria. The lack of deadbolt locks could be a safety issue, particularly in an area with significant property crimes, but this is a relatively inexpensive fix. A dishwasher can be replaced for several hundred dollars, as can a sump pump. But mold is both a serious health issue and can be very expensive to mitigate.
What property feature could lead to soil contamination?
A. Underground storage tank
B. Irrigation system
C. Multi-car garage
D. Brick pavers
A. Underground storage tank
A good strategy to use when you’re fairly certain that you know the answer is to do a quick run through of all of the other answer options, just to make sure there’s nothing that you’re missing. The answer which jumps out immediately is option A, an underground storage tank. Are any of the other answer options plausible? Irrigation systems are pipes buried underground with the intent to water lawns and plantings. These can break, but they don’t contain contaminants. A multi-car garage means more room to store possibly hazardous chemicals like paint thinner and gasoline, but the existence of the garage doesn’t create contamination. Brick pavers are not known to be made of or coated in any sort of contaminant. This means that an underground storage tank is the only possible answer. This makes sense, since they can leak chemicals into the soil.
Marcus and Lucinda decided to play a round of golf on a beautiful new course in their neighborhood. As they’re making the rounds, they notice vent pipes extending from the ground in various places. What might this signify?
A. The golf course is built on a brownfield site.
B. The course is built on a capped landfill.
C. The vents are dispersing natural gas from an oil well site.
D. There are multiple underground storage tanks under the course.
B. The course is built on a capped landfill.
The EPA would require that commercial property built on a brownfield site be remediated, and vent pipes wouldn’t be used, making option A incorrect. Similarly, vent pipes wouldn’t disperse natural gas from a well site on a golf course because of the danger of fumes and fire, making option C incorrect. Though underground tanks may be vented, typically a large number of vents dispersed around an area the size of a golf course wouldn’t indicate underground tanks, making option D incorrect. As option B notes, the most likely reason for these vent pipes is that the golf course is built over a capped landfill and the vent pipes are used to disperse the gasses naturally created as the waste decomposes.
Why is it important for buyers to know if a property is in a special flood hazard area (SFHA)?
A. Homes in a floodplain area aren’t insurable.
B. Lenders won’t fund loans on homes located in a floodplain.
C. Borrowers with homes in a floodplain must purchase flood insurance.
D. Borrowers with homes in a floodplain must purchase a standard homeowners’ policy
C. Borrowers with homes in a floodplain must purchase flood insurance.
Insurance companies will issue a standard homeowners policy on homes in a floodplain, so option A is incorrect. Lenders will fund loans on properties located in a floodplain, making option B incorrect. Standard homeowners policies don’t cover flooding, so homeowners with properties in a floodplain must either bundle flood coverage with their homeowners policy or purchase a separate policy, making option D incorrect and option C the correct answer.
Your buyer client, Harry, is making an offer on a home that uses an HVAC system manufactured in 2005. What’s important about this?
A. Clean Air Act regulations require Harry to replace the HVAC system, which is too old to operate legally.
B. Because the system is older, Clean Air Act regulations require Harry to carry extra homeowner’s insurance as a condition of his mortgage.
C. The EPA requires the seller to provide a certificate proving the old prohibited refrigerant has been replaced with the approved refrigerant before the transaction can close.
D. The EPA likely prohibits the refrigerant used in such an old system, so Harry’s home warranty may not cover necessary repairs and, if the system breaks, homeowners may have to replace rather than repair older systems.
D. The EPA likely prohibits the refrigerant used in such an old system, so Harry’s home warranty may not cover necessary repairs and, if the system breaks, homeowners may have to replace rather than repair older systems.
The Clean Air Act currently has no provisions that require replacement of systems that are operating correctly, making option A incorrect. Older HVAC systems don’t necessarily pose a threat to the property or mortgage lender, and the act has no provisions requiring additional insurance, so option B is out. The EPA doesn’t require that sellers prove replacement of R-22 refrigerant, so option C is incorrect. Home warranties may exclude coverage of older HVAC systems due to the prohibition of the R22 refrigerant, so option D is correct.
What is required of a licensee who is working with a property located near a Superfund site?
A. The licensee is required to disclose potential health threats to anyone in the area when showing the property.
B. A portion of the sale price must go to the EPA to fund cleanup of the site.
C. The licensee must disclose the existence of an environmental hazard in the area.
D. The property can’t be sold until the site is removed from the NPL.
C. The licensee must disclose the existence of an environmental hazard in the area.
Licensees aren’t health professionals and shouldn’t attempt to disclose or explain potential health threats related to a Superfund site, which eliminates option A. The Superfund is partially funded by taxes on the chemical and petroleum industries; funds from a property’s sale aren’t used for the Superfund, making option B incorrect. Owners can sell properties that are on the National Priorities List NPL, but they, the buyers, or other third parties may be held responsible for cleanup. This makes option D incorrect. Licensees and sellers must disclose the known existence of environmental hazards
Which of these statements about the Superfund Amendments and Reauthorization Act (SARA) is true?
A. Landowners who purchased a property after any contamination occurred can’t be held responsible for the contamination.
B. Buyers who are evaluating a commercial or industrial real estate purchase must have an environmental impact statement performed to ensure that no contamination exists on the property.
C. Landowners who perform due diligence when purchasing a property, including a Phase I site assessment, may be immune from liability if the property is found to be contaminated.
D. No matter what the circumstances are, SARA places liability on the current landowner for the cleanup of any contamination.
C. Landowners who perform due diligence when purchasing a property, including a Phase I site assessment, may be immune from liability if the property is found to be contaminated.
While SARA does provide some immunities from liability, landowners who knowingly purchase a contaminated property or who don’t take the necessary steps to ensure compliance once they discover the contamination can be held liable for cleanup, so option A isn’t right. An environmental impact statement evaluates the potential impact of a government construction project; it doesn’t address site contamination, making option B incorrect. SARA may protect landowners from cleanup liability under certain circumstances, so option D is incorrect. Option C correctly states that landowners who perform their due diligence when purchasing a property, including at least a Phase I site assessment, may be immune from liability for contamination that occurred prior to their purchase of the property OR if the contamination was caused without their knowledge by a third party.
Which of these scenarios would require an environmental impact statement?
A. Roger and Jean are purchasing a lot on which they’ll build a single-family home.
B. Kendrick Development has purchased a lot in a commercial district with plans to build a new restaurant.
C. Hendrickson School District is demolishing an old storage building on its property.
D. The U.S. National Park Service plans to build a new visitor center on property owned by the federal government.
D. The U.S. National Park Service plans to build a new visitor center on property owned by the federal government.
The National Environmental Policy Act (NEPA) applies primarily to new construction projects funded by federal agencies. The only option given here that relates to this type of construction is option D, the National Park Service project, making this the correct answer and options A, B, and C incorrect.
Jon and Talia are artists who are looking for a home in which the back yard is big enough for them to build a studio. Which of the following properties might they want to stay away from?
A. A lot that is adjacent to and partially on wetlands
B. A property that is 1,200 feet from an interstate highway
C. A lot with a gentle slope
D. A treed lot
A. A lot that is adjacent to and partially on wetlands
Think about what the buyers want to do with the property: They want to build a separate studio building. Any properties in which building is constrained in some way won’t meet their needs. Treed lots may need to have trees removed in order to build, but this is often done and is quite possible. Option D isn’t correct. The same thing with a gently sloping lot; builders are used to leveling before construction so this shouldn’t be an impediment. There probably aren’t any regulations that say building can’t occur near the interstate, although if Jon and Talia are looking for peace and quiet, then that might not be the best location for them. Being so close to wetlands, however, means that building regulations will be in place and the buyers may be limited into where or how large the structure can be.
What is true about a material fact that a licensee must disclose?
A. All parties considering the property would regard the material fact in the same way.
B. All material facts relate to physical conditions.
C. Material facts are only those that can be easily seen or discovered.
D. A material fact may have more or less of an effect on a buyer based on the buyer’s needs and values.
D. A material fact may have more or less of an effect on a buyer based on the buyer’s needs and values.
Start by thinking about the definition of a material fact: It’s something that, if known, might cause a buyer or seller to make a different decision. The key word here is MIGHT. Not all facts affect individuals the same way. Take, for instance, the knowledge that a residential area was going to be changed to mixed-use zoning. Some buyers who want to live in neighborhoods that are entirely residential might back away from a property in that area. But other buyers might love the idea of being able to walk to shops and restaurants. The fact is material, but the decision based on that fact varies based on the individual. This means that option A isn’t correct. Remember that material facts can be latent or patent (hidden or exposed), so option C isn’t right. Material facts can be related to physical condition, but they can also be location issues. This means that option B isn’t the correct answer. That leaves option D. And as we just learned, material facts affect different buyers in different ways
You’ve listed a 1918 Craftsman with some significant foundation issues—so significant that the buyers walked away after the inspection. They provided you and your sellers with a copy of the inspection report, which also points out some wiring concerns. At today’s open house, a prospective buyer asks to see a copy of any inspections done on the property. What should your response be?
A. You should provide an inspection report, but only when you’re specifically asked for one.
B. You should disclose any adverse material facts, but you don’t have to provide the report.
C. You should provide an inspection report to all prospects along with seller disclosures.
D. You should ask the buyers who walked away whether you can provide a copy to other potential buyers.
B. You should disclose any adverse material facts, but you don’t have to provide the report.
Key here is “ownership” of the inspection report. The buyers paid for the report, so in essence it belongs to them. Buyers may provide a copy to the seller or the listing agent to review the findings, but this doesn’t count as permission to further distribute the report. Options A and C aren’t the right answers. Not only does the licensee not have permission to distribute the report to new prospects, there’s no legal obligation to give an old report to new buyers. For that reason, option D isn’t correct. The licensee has to disclose any adverse material facts that were identified in the report, but not the report itself.
