The Best of the Legal Hotline: Environmental Issues


 May 06, 2010
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Chinese drywall 

The broker has heard reports that there are remediation standards for homes containing Chinese drywall. How can a homeowner know if there is defective drywall and what are the recommendations for remediation? 

In January 2010, the United States Department of Housing and Urban Development (HUD) and the U.S. Consumer Product Safety Commission (CPSC) issued guidance for identifying problem drywall in homes. Signs to look for include the blackening of copper electrical wiring and/or air conditioning evaporator coils, and the installation of new drywall between 2001 and 2008. Chinese drywall often creates a sulfur, or rotten egg, smell in the home. The full guidelines are available online at http://portal.hud.gov/portal/page/portal/HUD/documents/InterimIDGuidance012810.pdf.

In April 2010, HUD and the CPSC issued interim remediation guidance for homeowners attempting to rid their properties of problems resulting from installation of defective drywall. The interim protocol recommends that consumers remove all possible problem drywall form the home. In addition, homeowners should replace electrical components and wiring, gas service piping, fire suppression sprinkler systems, smoke alarms and carbon monoxide alarms. 

The Drywall Information Center website at http://www.cpsc.gov/info/drywall/index.html has been created to assist homeowners with health and safety resources. More information about Chinese drywall is available in the August 2009 Legal Update, ‚ÄúEnvironmental Concerns 2009,‚ÄĚ at http://www.wra.org/legal/Legal_Updates/pdf/2009/August2009LU.pdf.

Nitrates in the water 

The offer to purchase included the Addendum B standard safe water test contingency (for Coliform/E. coli only). Although the plumber who was hired by the sellers was told to test for only Coliform/E. coli, he made a mistake and had the nitrate level tested as well. The test results came back bacteriologically safe, however the nitrate level was over 15 parts per million (over the 10 parts per million recommended by the EPA). The broker assumes that the sellers will now need to disclose this to the buyer since it is now a known defect. However, if the buyer requests it, do the sellers then have the responsibility to remedy the issue since it was unknown at the time the offer was written? Or, since the issue was not part of the original offer, would it be the buyer’s responsibility? 

Wis. Stat. § 709.035 requires the sellers to amend the Real Estate Condition Report (RECR) prior to the acceptance of a contract if the sellers obtain information or become aware of any condition that would change a response on their RECR. The sellers may choose to attach a copy of an inspection report or test results to the RECR to accomplish disclosure for future transactions. If the sellers amend the RECR for this transaction, it would give the buyer the right to rescind the offer to purchase.

If the seller does not amend the RECR, the broker in the transaction has a duty to disclose material adverse facts to the parties, in writing and in a timely manner. If the sellers fail to make complete disclosure, the licensee is required to disclose the material adverse facts revealed in the inspection report.¬† The broker may refer to the December 2002¬†Legal Update¬†"2002 REALTOR¬ģ Highlights," online at www.wra.org/LU0212, or zipForm¬ģ for a sample material adverse fact disclosure letter.

The presence of the higher nitrate level may be treated as a mutual mistake of fact because neither party apparently was aware of this at the time the offer was written and accepted. When both parties are mistaken as to a basic factual assumption on which the contract was made and the mistake has a material effect on their performances, the contract is voidable by the party adversely affected. Under this theory, both parties must have been mistaken. A mistake by only one of the parties makes a contract voidable only if the party who causes the mistake has reason to know the other party is proceeding based on that mistake. The mistake must be based upon a past or present fact.

For additional information and resources, see the April/May 2008 Legal Update, ‚ÄúAddendum B Revisions: Wells and POWTS,‚ÄĚ at www.wra.org/LU0804 and the Department of Natural Resources information at http://dnr.wi.gov/org/water/dwg/priweltp.htm.

Abandoned wells 

The broker has a property with a well in a shed that is no longer used. The seller has disclosed this in the Real Estate Condition Report (RECR). What must she do to have the abandoned well closed? 

Abandoned wells can pose a threat to ground water quality and safety and must therefore be properly closed. According to the DNR, when a well is removed from service it must be removed/closed. The abandonment of the well, not the sale, triggers the necessity to remove the well. The abandonment procedures are set forth in Wis. Admin. Code chapter NR 814. Although the DNR does not mandate abandonment before sale, local ordinances may contain this requirement. The broker may refer the parties to the local municipality to determine if the wells must be abandoned before the sale of the property. 

More DNR information about well abandonment may be viewed at http://dnr.wi.gov/org/water/dwg/Forms/wellabandonment.pdf and http://www.dnr.state.wi.us/org/water/dwg/wellaba.htm. Additional information is available on pages 4-5 of the April 2008 Legal Update, ‚ÄúAddendum B Revisions: Wells and POWTS,‚ÄĚ at www.wra.org/LU0804 and the October 2002¬†Legal Update¬†‚ÄúDrinking Water and Wells,‚ÄĚ online at www.wra.org/LU0210.¬†¬†

Underground storage tanks 

The broker is working with a seller who, the broker believes, took out an underground storage tank (UST) without using a certified tank remover. The broker is going to have the sellers disclose this to the potential buyer. What are the ramifications for the new owners if the prior owner didn’t properly remove the UST? 

An out-ofservice UST used for storing heating oil or an out-of-service UST of 1,100 gallons or less used for storing motor fuel for noncommercial purposes is required by Wisconsin law to be registered and closed (usually removed) by a certified tank professional.  According to the Department of Commerce (DComm), which administers the UST regulations, the best thing to do if an abandoned UST is discovered is to call a certified tank remover. The certified UST remover can give estimates for the work needed to be done to comply with the UST regulations, handle the notifications and paperwork required, remove and properly dispose of the UST and generally see that the job is done properly. If the UST is removed without complying with the UST regulations, licensees will generally be obligated to disclose this fact to all parties pursuant to Wis. Admin. Code § RL 24.07(2), and buyer financing may be jeopardized without expert confirmation that there was no leakage or contamination from the improperly removed UST.

 The DCOMM UST Closure page (http://commerce.wi.gov/ER/ER-BST-Closure.html) includes the following information about the implications of self help removal and transfer of property:

I was not aware of the rules and had my tank removed by a contractor who is not certified. What do I need to do to satisfy the requirements?

‚ÄúThe remover must complete the Removal Checklist (ERS-8951) and the owner must complete the tank inventory form (ERS-7437). Both forms must be submitted to Commerce along with a letter explaining the circumstances. Upon review of all information submitted, Commerce will determine if the removal and documentation are satisfactory. A site assessment may be ordered to satisfy the closure, in the case where it would not have been required if procedures under the rule had been complied with.‚ÄĚ

What is a closure ‚Äúsite assessment‚ÄĚ?

‚ÄúSoil samples from the tank bed are collected by a Certified Site Assessor following Wisconsin DNR protocol. The results of soil sample analysis will determine if further investigation of site contamination is necessary.‚ÄĚ

I purchased property with an out-of-service UST. Since I have never used the tank, am I responsible for having to close the tank now? Will I be held responsible for any contamination that may be present?

‚ÄúThe property owner of record at the time the noncompliance becomes a regulatory issue is responsible for compliance and environmental remediation. Legal action against the previous owner by the current owner may be an option to recover costs.‚ÄĚ

See http://commerce.wi.gov/ER/ER-BST-Closure.html and http://commerce.wi.gov/ER/ER-BST-ResTk.html for further information.

Radon testing 

The buyer was told that a radon test should be taken in the lowest finished living space and not the basement if the basement is not finished. Is there anything to this belief? 

A radon test per federal law is to be taken at the lowest living level. This generally means the basement, regardless of whether it is finished, partly finished, or not finished at all.

The EPA website at http://www.epa.gov/radon/pubs/hmbyguid.html#3.b. states: ‚ÄúMake sure that the test is done in the lowest level of the home that could be used regularly. This means the lowest level that you are going to use as living space whether it is finished or unfinished. A state or local radon official or qualified radon tester can help you make some of these decisions.‚ÄĚ

The EPA website advises that, ‚ÄúThe test kit should be placed in the lowest lived-in level of the home (for example, the basement if it is frequently used, otherwise the first floor). It should be put in a room that is used regularly (like a living room, playroom, den or bedroom) but not your kitchen or bathroom‚ÄĚ at http://www.epa.gov/radon/pubs/citguide.html#howtotest.

Asbestos  

The home inspector indicates that the insulation in the attic appears to be vermiculite and tells the buyer that the EPA website states that if there is vermiculite insulation in a home it should be assumed to contain asbestos. The buyer requests that the seller pay for the insulation to be tested and, if found to contain asbestos, that the seller pay to remove the asbestos. What is the seller‚Äôs legal obligation and, if this deal falls through, what‚ÄĒif anything‚ÄĒis the seller obligated to disclose?

Asbestos cannot be identified simply by looking at it unless it is labeled, so the only way to know for sure is to get a sample analyzed. Generally, only asbestos material that is damaged or will be disturbed need be tested. Undisturbed asbestos which is in good condition typically will not release asbestos fibers and may best be handled by leaving it alone. Problems with friable or damaged asbestos may be treated by either repair or removal. Repair usually consists of sealing or covering the asbestos-containing material.

However, under the newly revised asbestos rules in Wisconsin that went into effect on May 1, 2009, vermiculite insulation is assumed to be asbestos-containing material unless proven otherwise in accordance with EPA recommended sampling and analysis protocols specific to vermiculite insulation. At this time, EPA has not published any official guidance for sampling and testing vermiculite insulation. Therefore, vermiculite insulation must be treated as asbestos-containing material. This may necessitate the use of certified asbestos workers for any projects disturbing or impacting the insulation. Information about the new asbestos rules and certification requirements for asbestos workers is found at www.dhs.wisconsin.gov/asbestos. For more information regarding asbestos, see the Wisconsin Asbestos page at http://dhs.wisconsin.gov/asbestos/index.htm, the EPA Asbestos information at www.epa.gov/asbestos, the August 2009 Legal Update, ‚ÄúEnvironmental Concerns 2009,‚ÄĚ at www.wra.org/LU0908 and Wis. Admin. Code¬†Chapter DHS 159 (repealed and recreated effective May 1, 2009) at www.legis.state.wi.us/rsb/code/dhs/dhs159.pdf.

Tracy Rucka is Director of Professional Standards and Practices for the WRA.

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