A developer is selling a newly constructed home in a subdivision where a Phase I Environmental Site Assessment previously identified a recognized environmental condition (REC) from a former dry-cleaning operation on an adjacent parcel. The developer did not include this information on the Seller's Disclosure Statement, arguing that the REC was found on a neighboring property, not on the subject property itself. A buyer purchases the home and later discovers the omission. Under Michigan law, which statement most accurately describes the developer's disclosure obligation?
Correct Answer
A) The developer was required to disclose the REC as a known environmental condition that could materially affect the value or use of the subject property, regardless of its location on an adjacent parcel.
Under the Michigan Seller Disclosure Act (MCL 565.957) and the agent's duty under MCL 339.2512, the disclosure obligation extends to known environmental conditions that materially affect the value or use of the property being sold—even if the contamination source is located on an adjacent parcel. A recognized environmental condition (REC) from a neighboring dry-cleaning operation can affect soil and groundwater on the subject property, making it a known material fact. Michigan courts and LARA-BPL have consistently held that proximity to environmental contamination is a disclosable material condition. The developer's knowledge of the REC from the Phase I assessment removes any 'unknown' defense.
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Related Concepts
A stigmatized property is one that has an undesirable reputation due to events that occurred on the property or nearby, such as a murder, suicide, alleged haunting, or proximity to a registered sex offender. The stigma is psychological, not physical.
An as-is clause in a real estate contract states that the buyer accepts the property in its current condition without requiring the seller to make any repairs. However, an as-is sale does NOT eliminate the seller's obligation to disclose known defects.
Asbestos disclosure involves informing buyers about the presence of asbestos-containing materials (ACMs) in a property. Asbestos was commonly used in construction materials before 1980 and poses health risks when fibers become airborne.
More Mandated Disclosures Questions
A buyer asks a Georgia licensee to interpret a FEMA flood zone map and determine whether the property is at risk of flooding. The licensee has no specialized training in flood mapping or hydrology. How should the licensee handle this request?
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