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.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Mandated Disclosures Question
Background Knowledge for Mandated Disclosures
Real World Application in Mandated Disclosures
Common Mistakes to Avoid on Mandated Disclosures Questions
Related Topics & Key Terms
Key Terms:
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?
A buyer's agent discovers through public records that the property his client is under contract to purchase was built on a former landfill site that was remediated to EPA standards 15 years ago. The seller's disclosure form makes no mention of this history. What is the buyer's agent's primary obligation?
A buyer's agent discovers that a listed property contains an in-law suite that was built without permits and generates rental income for the seller. The agent also determines that the local zoning ordinance prohibits accessory dwelling units used as rental units in this residential zone. What are the buyer's agent's disclosure obligations?
A Georgia licensee representing the seller knows that the property experienced repeated sewage backups causing damage to the lower level. The seller instructs the licensee not to volunteer this information, arguing that the buyer can discover it through inspections. Under Georgia law, how should the licensee handle this situation?
Buyer's agent Tom learns from a neighbor that the property his client wants to purchase was the site of a suicide two years ago. The seller has not disclosed this information. What are Tom's obligations under Georgia law?
- → A Georgia licensee learns that a property has a known foundation crack that could affect structural integrity. The seller insists this is not a big deal and points out that a previous occupant died on the property, suggesting the licensee should focus on disclosing that instead. Under Georgia law, which statement correctly describes the licensee's disclosure obligations?
- → A Georgia licensee is preparing disclosures for a townhome sale. The property is located in an area where flood maps have recently been updated, the seller previously experienced minor water intrusion but considers it resolved, and certain environmental conditions are documented in public records. Which statement best describes the licensee's disclosure obligations?
- → At a brokerage training session in Augusta, Riley is given a Georgia scenario. Example 13 is under review. The office is debating the claim that consumers should rely solely on the licensee for mold, engineering, or survey conclusions because referrals show weakness. It is comparing that claim with the rule that flood-zone and map-related issues should be described carefully, with consumers directed to reliable sources rather than to unsupported personal interpretation. The review topic is flood maps, changing conditions, historical seller knowledge, and the limits on a licensee’s interpretation of technical data. Which statement is correct?
- → At a brokerage training session in Augusta, Avery is given a Georgia scenario. Example 12 is under review. The office is debating the claim that consumers should rely solely on the licensee for mold, engineering, or survey conclusions because referrals show weakness. It is comparing that claim with the rule that known material facts are not erased simply because the issue also appears in public records. The review topic is flood maps, changing conditions, historical seller knowledge, and the limits on a licensee’s interpretation of technical data. Which statement is correct?
- → Buyer's agent Mark discovers through public records that the property his clients want to purchase has an active code violation for an unpermitted addition. The listing doesn't mention this violation. What should Mark do under Georgia disclosure and representation requirements?
- → Broker Sarah discovers that a property she is listing has a history of flooding that occurred 3 years ago, which the seller failed to mention. The seller insists it's not relevant since repairs were made. Under Georgia law, what is Sarah's obligation regarding this information?
- → A buyer's agent is aware that a property sits in a FEMA-designated flood zone based on publicly available flood maps. The seller's disclosure form does not mention flooding. When the buyer asks the agent about potential flood risk, which approach best reflects the licensee's duty under Georgia law?
- → A seller informs his listing agent that a persistent condition in the neighborhood significantly disrupts normal use and enjoyment of the property. The seller asks whether this condition must be disclosed to prospective buyers. How should the agent advise the seller under Georgia disclosure requirements?
- → Seller Mike believes that failing to disclose a death on his property could result in the buyer suing him later. His agent tells him that Georgia law requires disclosure of all deaths to avoid future liability. Is this advice correct?
- → A buyer asks a Georgia licensee whether any registered sex offenders live near a property listed for sale. Under O.C.G.A. § 44-1-16, how should the licensee handle this inquiry?