lecture recording on 23 June 2025 at 13.22.56 PM

Environmental Issues in Real Estate

Overview

• Environmental issues are health issues that have become real estate issues.
• Real estate professionals should be familiar with state and federal environmental laws and regulatory agencies.
• The Environmental Protection Agency (EPA) was created in 1970 to oversee environmental laws.
• HUD rules also apply.
• State laws mandate disclosures about property conditions and environmental issues.
• Real estate professionals should be aware of problems and ask questions, informing buyers of the need for inspections.
• Sellers disclose what they are aware of, but buyers are responsible for discovering any hazards.

Asbestos

• Asbestos: A fire-resistant mineral used extensively as insulation and to strengthen materials.
• Used in over 3,000 types of building materials.
• First used in the early 1900s and found in construction from the early 1940s until banned in 1978.
• EPA estimates asbestos in many schools and commercial buildings.
• Used in pipes, ducts, heating, hot water units, floor tiles, siding, roofing, and joint compounds.
• Asbestos is highly friable, meaning it easily breaks down into tiny filaments when disturbed.
• Inhaling asbestos fibers can cause deadly respiratory diseases decades later.
• No federal guidelines for asbestos in residential properties.
• Removal requires state-licensed technicians in sealed environments.
• Encapsulation: Sealing off disintegrating asbestos as an alternative control method.
• Asbestos is a fire resistant mineral.
• Asbestos was banned in 1978.
• Asbestos is highly friable.
• Deadly respiratory diseases can come from asbestos.
• Encapsulation is sealing off that asbestos to control it.

Lead-Based Paint

• Prohibited for use in housing as of 1978.
• Used as a pigment and drying agent in paint, stains, and varnishes.
• Commonly found on doors, windows, and woodwork.
• Estimated to be present in 75% of private housing built before 1978 (57,000,000 homes).
• Children under six are most vulnerable to lead exposure, leading to learning disabilities, developmental delays, and poor hearing.
• Adults can experience anemia, hypertension, and reproductive problems.
• Lead dust can be ingested, inhaled, or consumed via water supply due to lead pipes or solder.
• Soil and groundwater may be contaminated by lead plumbing, landfills, and discarded materials.
• EPA and HUD issued regulations under the Lead-Based Paint Hazard Reduction Act of 1992, requiring disclosure of known lead-based paint hazards.
• Sellers must disclose any known information on lead-based paint hazards before leases or sales take effect.
• Sales contracts must include a completed disclosure form about lead-based paint.
• Buyers have ten days for inspection.
• Real estate professionals must provide buyers and tenants with the "Protect Your Family From Lead in Your Home" pamphlet.
• Anyone paid to disturb paint in pre-1978 housing must be trained and certified in EPA lead-based work practices.
• Renovation, Repair, and Painting (RRP) program involves pre-renovation education.
• Real estate professionals must ensure compliance with the law.
• Inspection methods include paint inspection and soil testing.

Radon

• Radon is a naturally occurring, colorless, odorless, tasteless, radioactive gas produced by the decay of other radioactive substances.
• Measured in picocuries per liter of air.
• Found in every state, with outdoor air averaging about 4 pCi/L. Radon level is acceptable if it's less than 4 pico curies per liter of air.
• Fans and thermal stack effect pulls radon into buildings through cracks.
• Potential for lung cancer depends on extent and length of exposure.
• Radon is a Class A known human carcinogen.
• EPA suggests an action level of 4 pCi/L.
• Mitigation system is less expensive during construction.
• Mitigation involves a fan installed in a pipe from the basement to the attic.

Formaldehyde

• Formaldehyde is a colorless chemical with a strong odor used in building materials and household products.
• It's a common volatile organic compound (VOC) and a hazardous air pollutant.
• Classified as a probable human carcinogen.
• Can trigger respiratory problems, shortness of breath, wheezing, chest tightness, and asthma, as well as eye and skin irritation.
• Major contributor to sick building syndrome.
• Largest source is off-gassing from presswood products (particleboard, plywood paneling).
• Used in carpeting and ceiling tiles.
• HUD regulates plywood and particle board formaldehyde emission levels in prefabricated homes since 1985.
• Urea-formaldehyde foam insulation (UFFI) is rarely used but can cause strong emissions if incorrectly mixed.
• Formaldehyde emissions generally decrease over time.

Carbon Monoxide

• Carbon monoxide is a colorless, odorless, tasteless gas produced by burning fuel due to incomplete combustion.
• Inhibits blood's ability to transport oxygen, causing dizziness and nausea.
• High concentrations can cause death.
• Sources include furnaces, water heaters, space heaters, fireplaces, and wood stoves.
• Improper ventilation or equipment malfunctions can release large quantities quickly.
• Portable generators and kerosene heaters also pose a risk.
• Working smoke detectors and carbon monoxide detectors are essential. Carbon monoxide detectors can save lives.

Polychlorinated Biphenyls (PCBs)

• More than 200 chemical compounds not found naturally.
• Flame-resistant, used in electrical equipment (transformers, motors, refrigerators), caulking compounds, and hydraulic oil.
• Classified by EPA as reasonably carcinogenic.
• Implicated in lower fertilities and shortened lifespans.
• Commercial distribution banned in 1979, but PCBs remain in the environment.
• Burning at over 2400^{\circ} in a closed environment is the only known way to destroy them.
• More likely a concern for commercial and industrial property managers.

Chlorofluorocarbons (CFCs)

• Nontoxic, nonflammable chemicals used as refrigerants in air conditioning and freezing.
• Also used in aerosol sprays, paint solvents, and foam blowing applications.
• Inert in the lower atmosphere but broken down by ultraviolet light in the upper atmosphere, depleting the ozone layer.
• Newer air conditioners use different products.
• Older appliances may leak CFCs and should be disposed of properly.

Mold

• Can be found almost anywhere and grow on any organic substance given moisture, oxygen, and an organic food source.
• Moisture feeds mold growth.
• Can destroy whatever it grows on and cause serious health problems like allergic reactions and asthma attacks.
• Some molds produce potent toxins or irritants.
• Tightly sealed buildings with inadequate ventilation can contribute to mold growth.
• Drywall, vinyl wallpaper, and synthetic stucco can trap moisture.
• Homeowners insurance policies generally exclude mold from coverage.
• No federal requirements to disclose mold contamination; few states require it.
• Real estate professionals should advise buyers of their right and burden to discover mold.
• Licensees are urged not to disturb the mold.

Groundwater Protection

• Groundwater is water under the earth's surface in geological formations, forming a water table.
• Contamination threatens pure water supply for wells and public systems.
• Sources of contamination include waste disposal runoff, leaking underground storage tanks, septic systems, and illegal disposal of hazardous materials.
• The Safe Drinking Water Act (1974, amended 1996) protects public health by regulating the nation's drinking water supply. This act was created to protect our drinking water.
• EPA sets national health-based standards for drinking water.
• Hydraulic fracturing or fracking byproducts concern the EPA because it can contaminate drinking water.

Underground Storage Tanks (USTs)

• Commonly found where petroleum products are used, such as gas stations and auto repair shops.
• The Resource Conservation Recovery Act authorizes the EPA to manage USTs.
• Federal and state laws impose requirements on landowners with USTs.
• Regulations apply to tanks containing hazardous substances or liquid petroleum products stored at least 10% underground.
• Owners must register tanks and adhere to technical and administrative requirements.
• Exempt tanks include those holding less than 110 gallons, farm or residential tanks holding 1,100 gallons or less of motor fuel for noncommercial purposes, and tanks storing heating oil burned on the premises.
• Real estate professionals should be alert to fill pipes, vent lines, stains, soil fumes, or odors indicating a UST.
• Detection, removal, and cleanup can be expensive which the seller is responsible for fixing before the due diligence period/before closing.

Waste Disposal Sites

• Landfills begin as enormous holes lined with clay or synthetic liners to prevent leakage.
• Underground drainage pipes monitor leaks.
• Waste is laid on a liner, covered with topsoil, and compacted.
• Capping involves laying soil over the site and planting grass.
• Ventilation pipes vent accumulated natural gases.
• Test wells monitor groundwater and soil analysis.
• Landfills have been used as parks and golf courses.
• Hazardous waste disposal sites contain radioactive waste, toxic chemicals, and waste from medical, scientific, and industrial processes, and also have limited access and are remote away from populated areas.
• These sites are subject to strict state and federal regulations.

Environmental Liability

• The Comprehensive Environmental Response Compensation Liability Act (CERCLA) established the Superfund to clean up uncontrolled hazardous waste sites and respond to spills.
• Administered and enforced by the EPA.
• Landowners are liable under CERCLA when a release or threat of release occurs on their property.
• Liability includes cleanup of both the landowner's and neighboring properties.
• The landowner can seek reimbursement from previous landowners or the Superfund.
• EPA can take remedial action and identify responsible parties.
• If responsible parties don't cooperate, the EPA can hire contractors and bill the responsible parties.
• Liability to the Superfund is strict, joint, several, and retroactive.
• The Superfund Amendment and Reauthorization Act created innocent landowner immunity status.
• Criteria for immunity include pollution caused by a third party, property acquired after the fact, no prior knowledge of damage, and due care exercised during purchase.
• Real estate professionals can encourage buyers to consult the epa.gov super fund to determine whether property of interest is located near a super fund site, and buyers should also speak with neighbors about the activities that have taken place on near their property.

Chesapeake Bay

• The Chesapeake Bay is Nearly 200 miles long fed by 48 major rivers, 100 smaller rivers and thousands of tributaries. The Chesapeake covers 64,000 square miles and it provides a habitat for myriad species of plants and animals.
• This identifies the critical areas of all land within 1,000 feet of the average high water line with tidal waters or the land with edge of tidal wetlands and all waters of and lands under the Chesapeake Bay and the tributaries.
• They tighten the rules about where new housing can be located. One of the statutory requirements that affect every licensee is that all contracts for the sale of property suitable for one to two single family unit contain the notice of buyers concerning the Chesapeake and Atlantic Coastal Bay's critical area quoted in full regardless of where in Maryland the property is located.
  Properties within the critical area that need to have their septic systems replaced are required to install a nitrogen removal system known as BAT Meaning best available technology.
• Legislation has designated the buffer as a 100 foot natural vegetation forested zone extending from the mean high waterline landward from tidal waters and tidal wetlands. The buffer zone is now 200 feet.
• Many of these environmental issues directly and indirectly affect the availability of residential housing. Preserving agricultural space and wetlands reduce the amount of land available for development. And the present policy of Maryland is not just to maintain, but to increase the total area of all state wetlands.