What Are Hazardous Substances?
Hazardous substances is a broad term that includes a variety of
chemicals, wastes, materials, and toxins. Consequently, such common
businesses a d dry-cleaning plants, nurseries, and service stations pose
contamination risks through their use of toxins. Contamination problems
result for the following:
1. Intentional or accidental release or disposal of hazardous wastes and
other toxic substances.
2. Leaks from underground storage tanks.
3. Past widespread use of asbestos in building materials (Asbestos is
addressed in a separate section of this booklet).
Simply, hazardous substances are those materials that can pose a
short-term or long-term danger to personal health or the environment if
they are not properly managed.
The EPA (Environmental Protection Agency) maintains a National
Priorities List (NPL) of sites that require hazardous substance cleanup
action. The NPL includes on the worst sites with the highest priority
for cleanup. State agencies with cleanup programs have identified may
additional sites.
The ability to remove hazardous substances from real estate property
depends on the kinds, amounts, and sources of the wastes that are
present. Generally, the removal of hazardous substances from a given
area is beyond the capability of an individual property owner. If not
removed, some hazardous substances can cause death - even if ingested in
small amounts. Toxic wastes have been linked to elevated risks of
cancer, permanent damage to internal organs, respiratory difficulties,
skin rashes, birth defects, and diseases that attack the central nervous
system.
Toxic Contamination Liability
The Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA) of 1980, commonly known as Superfund, provided strict
guidelines regarding the responsibility of past and present property
owners, as well as others, for the cost of toxic-waste cleanup.
Superfund empowers the EPA to compel the owner of property contaminated
by hazardous substances to clean up the site. Alternatively, the EPA
itself can conduct the cleanup and obtain reimbursement from the
responsible parties. Amended in 1986 by the Superfund Amendments and
Reimbursement Act (SARA), Superfund now exempts from liability for
cleanup costs those "innocent landowners" who acquired the property
without knowledge or reason to know of contamination.
Landowners/Broker Liability for Hazardous Substances
Toxic contamination is a major concern for landowners. The presence of
hazardous materials can have a disastrous effect on property values,
expose owners and operators to lawsuits for personal injuries, and
require cleanup costs in excess of the property's value. Because toxic
contamination may not always be apparent, purchases of property also
face significant risks.
Owners of contaminated property are liable for cleanup costs but can
avoid this liability if they are deemed "innocent landowners." To
succeed, the property owners must show that they did not know, and had
no reason to know, that the hazardous substance was present on the
property at the time it was acquired.
The owners must also show that at the time of purchase they made "all
appropriate inquiry" regarding the previous uses and ownership of the
property.
Appropriate inquire takes into account the purchasers' specialized
knowledge and experience, commonly known or reasonably ascertainable
information, and "the ability to detect such contamination by
appropriate inspection."
Brokers are not considered responsible parties under Superfund and other
toxic cleanup legislation, but property owners who have been sued or
forced to clean up property are likely to seek out others to share the
expense. Brokers and agents can minimize their potential exposure to
liability by maintaining high standards of professional knowledge and
practice. This requires continuing education, as well as carefully
formulated company policies and well-crafted documented concerning
disclosure of potential contamination.
As a side note, brokers and salespeople should be aware that an
increasing number of lenders may be reluctant to fund loans for
commercial properties for fear of liability for toxic-cleanup costs. An
environmental audit before funding has become standard practice for many
commercial lenders.
Environmental Stigmatized Property Issues
A secondary issue for brokers and salespeople is the marketing of
properties that were formerly categorized as hazardous sites and are
located near hazardous areas. Although toxins may have been completely
abated, consumers often remain leery. Generally, these properties will
need special handling information regarding the status of such hazardous
areas is often available from the EPA or state and local agencies to
advise both buyers and sellers.
Guidelines for disclosure
NAR recommends that agents aware of a problem or potential cleanup
requirements on a property should report it to federal and state
agencies without delay. Brokers should develop a policy for agents
regarding communication with the sellers and buyers.
Brokers and agents cannot be expected to be experts in discovering and
explaining environmental hazards.
They can and should; however, be familiar with the most common
environmental hazards and proceed reasonably and cautiously in examining
the properties they sell for potential hazards. The Association may
serve as a resource for members, working closely with the Association
counsel.
The following are national resources for hazardous substance-related
information.
U.S. Environmental Protection Agency, Public Information Center, 75
Hawthorne Street
San Francisco, CA 95105,(415)744-1500
Call ADEQ at (602) 207-4360 with Superfund questions or (602) 207-2300,
with general information questions or (602) 207-2217 to reach the
information center regarding hazardous substances.
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