Environmental hazards can include underground storage tanks (USTs), contaminated groundwater, soil contamination from industrial use, proximity to Superfund sites, electromagnetic fields from power lines, and agricultural chemicals. The federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA/Superfund) imposes strict liability on property owners for cleanup costs, even if they did not cause the contamination. Buyers should conduct environmental site assessments (Phase I and Phase II) for commercial or industrial properties.
A buyer interested in a former gas station property orders a Phase I Environmental Site Assessment, which reveals the potential presence of underground storage tanks. A Phase II assessment confirms soil contamination from leaking tanks. The cleanup cost is estimated at $200,000, which significantly affects the property's value and the buyer's decision.
Know that CERCLA imposes STRICT LIABILITY—the current owner can be responsible for cleanup even if they did not cause the contamination. This is the most tested environmental law on the exam. Phase I ESA = records review and site inspection (no testing). Phase II ESA = actual soil and water testing. Buyers should always investigate environmental history.
Related Terms
Related Concepts
Protected classes are groups of people who are legally shielded from discrimination based on specific characteristics.
The Lead-Based Paint Disclosure is a federally mandated disclosure required for all residential properties built before 1978. Sellers and landlords must disclose known lead-based paint hazards and provide the EPA pamphlet "Protect Your Family From Lead in Your Home."
A property condition disclosure is a written statement by the seller detailing the known condition of the property, including defects, repairs, and issues with major systems. Most states require sellers to complete this form.
A seller's disclosure statement is a form that sellers complete to inform buyers about the condition and history of the property, including known defects, past repairs, insurance claims, and environmental issues.
Flood zone disclosure requires informing buyers whether a property is located in a designated flood zone as mapped by FEMA. Properties in high-risk flood zones may require mandatory flood insurance.
Frequently Asked Questions
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Environmental Hazards Disclosure may have state-specific rules. Choose your state to study Mandated Disclosures with localized content: