Chapter 11

HAZARDOUS  MATERIALS

POLLUTION AND HAZARDOUS SUBSTANCES - EFFECT ON REAL ESTATE TRANSACTIONS

Most states, including Massachusetts, have enacted laws requiring the disclosure and/or removal of certain hazardous materials found in buildings. For example, lead paint can result in harm to the health of the residents. Sales are contingent upon a satisfactory inspection of the property for hazardous substances and, in some cases, proof of their absence. Although disclosure is not required for other pollutants, such as radon gas, asbestos, underground fuel storage tanks, groundwater contamination and faulty septic systems, failure to disclose such hazards could result in a violation of the consumer protection laws, loss of license, or a suit for misrepresentation.

Real estate brokers and salespersons have to be particularly alert to the presence of hazardous substances in property they are listing or buying for clients. They should question owners about the possibility of hazardous substances associated with the property, in order to make proper disclosures and to advise prospects of their right to a building inspection. Licensees must be aware of their obligations regarding disclosure of hazardous materials in real estate transactions and of their potential liability for failing to comply with state requirements.

LEAD PAINT. Mass. General Laws, Chapter 111, Sections 190 to 199, deal with lead paint poisoning, its prevention and control. In children, too much lead in the body can cause serious damage to the brain, kidneys, nervous system and red blood cells.’ High levels of lead can cause retardation, confusion, coma and death.

De-Leading Requirement. The owner of any dwelling unit must remove ("abate") or cover ("contain") the lead paint if the dwelling unit is occupied by a child under six. The term "owner" includes managing agents, executors, administrators and trustees. Condominium or cooperative unit owners associations, are considered "owners" solely with respect to common areas and exterior surfaces and fixtures. However, de-leading is not required if a child under six resides in a dwelling unit on an occasional basis. The law allows owners to contain and control lead paint on an interim basis while full compliance with the law is delayed. After approving the interim plan the Department of Public Health issues a letter of interim control, which expires one year after issuance. The plan may be renewed once for an additional one year if the inspector determines that the condition of the unit has not deteriorated. Landlords may delay the commencement of new tenancies for up to thirty days in instances where de-leading must first be completed.

Duties of New Owners. If a home containing high levels of lead is sold to a family with a child under six, the new owner is responsible for the lead paint removal or containment. The owner has ninety days in which to complete the work either in full or pursuant to an interim plan. Generally, any surface containing lead paint, which is five feet or less from the ground must be de-leaded.

Compliance Letter. A dwelling owner may obtain a written statement from the Department of Public Health Lead Poisoning Prevention Program, or other public or private testing service attesting that the dwelling unit has no lead paint viola­ tions and is in compliance with the Massachusetts Lead Law. However, the compli­ance letter will become void if, subsequently, the paint begins to peel, chip or flake.

Enforcement and Penalties. The owner of any residential property in which a child under six resides is strictly liable for all damages caused by failure to abate lead hazards. An owner who fails to comply with the lead law, after being notified of a dangerous level of lead on the premises, can be subject to treble damages.

Fair Housing. The law prohibits owners and real estate licensees from refusing to sell or rent housing to families with children under six based solely on the presence of lead paint or the requirement to remove lead paint.

Liability of Secured Lenders. Mortgagees may not discriminate in the issuance of a mortgage based solely on the presence of lead on the premises. However, lenders are exempt from liability to victims of lead poisoning. Mortgagees who obtain title through foreclosure proceedings are subject to the lead paint removal law and have ninety days after acquiring title to remove the lead paint or obtain an interim control letter.

RADON GAS. Radon is a colorless, odorless gas, which enters a house through cracks in the foundation walls. In 1984 radon gas was determined to be a hazardous problem in homes, and unsafe levels were established by the U.S. Environmental Protection Agency. Radon gas is easily detected and eliminated by proper ventilation systems.

ASBESTOS. Because of its heat resistant quality, asbestos had been used for years as insulation on plumbing pipes and heat ducts and as general insulation. It was also used for shingles, and floor and roof tiles. If left undisturbed, asbestos is relatively harmless. When the asbestos starts to disintegrate from age or is broken up during removal, the resulting dust is extremely hazardous to health. It should only be removed by professionals with proper knowledge and experience.

UNDERGROUND STORAGE TANKS. Leaking underground oil or gas storage tanks, can allow toxic materials to pollute the soil and contaminate wells and groundwater. A federal program called Leaking Underground Storage Tanks (LUST) was established to regulate the installation, maintenance, monitoring, and failure of underground storage tanks. Generally, the law applies to commercial storage facilities and exempts residential heating oil tanks, which are located where the oil is consumed.

NOTE: In any federally related mortgage transaction, the lender is required to obtain a "21-E" affidavit, signed by the seller and buyer certifying that the premises have not been contaminated by the storage or dumping of hazardous wastes or substance, such as fuel oil.

In Massachusetts, a leaking, underground heating oil tank must be removed at the owner’s expense, and the tank and polluted soil must be disposed of in a hazardous waste facility.

DISCLOSURE REQUIREMENTS AND LEGAL IMPLICATIONS

LEAD PAINT DISCLOSURE REQUIREMENTS. Mass. G.L. Chapter 111, Section 197A (a, b and c) requires that all prospective purchasers of homes constructed prior to 1978 be given a written and verbal notification regarding the hazards of lead paint, and lead in plaster, soil, and other material. The seller or broker prior to the signing of an offer on a state form called the "Department of Public Health Property Transfer Notification" must give notice to the prospective purchaser. The prospective purchaser must also receive a copy of the Department's information bulletin regarding lead poisoning.

Verbal Disclosure by Real Estate Licensees. Real estate brokers and salespersons are required to verbally inform prospective purchasers of the possible lead hazards, and to obtain certification that the prospective purchaser has been so notified.

Prospective Purchaser's Ten Day Right to an Inspection. The seller and real estate agent must inform the prospective purchaser of the right to a lead paint inspection, and the seller must allow the prospect ten days or more to complete the inspection, if the prospect chooses to have it performed.

Enforcement and Penalties. Failure to comply with the disclosure requirements could result in a civil penalty of up to $1,000. Also, a violation by a real estate agent is considered an unfair or deceptive act within the meaning of the Consumer Protection Law, (Chapter 93A) , and could result in liability of treble damages.

License Surcharge. A $25 surcharge will be imposed on license fees charged to certain professionals, including real estate brokers and salespersons. The money will be used for purposes, which include lead paint education and training.

LEGAL EFFECTS FOR FAILURE TO DISCLOSE HAZARDOUS MATERIALS. As indicated, state law determines the sanctions for failing to disclose the presence of lead paint. State law does not specifically require sellers and real estate licensees to disclose the presence of radon gas, asbestos and leaking underground storage tanks. However, failure to disclose such hazards to a prospective buyer is considered a misrepresentation, which could result in a rescission of the sale or a civil action for damages. Furthermore, a seller may be held negligently liable to a person whose health is damaged as the result of a deliberate or wanton misrepresentation.

Massachusetts Consumer Protection Law, G.L. Chap. 93A. The consumer protection law effectively places a burden on real estate licensees to disclose all hazardous materials or structural defects. Because of their profession, in dealing with real estate transactions on a daily basis, licensees are held to be in a superior position to prospective buyers, and thus have a duty to discover and disclose all vital facts about the property. Thus, ignorance of a hazardous or defective condi­tion will not excuse a licensee from liability arising from a failure to disclose.

BUYER'S RIGHT TO AN INSPECTION. For the protection of all parties in a real estate transaction, the buyer should be given an opportunity, at his or her expense, to have the premises inspected by a professional prior to the purchase of the property. The usual inspection covers lead paint, structural and mechanical defects, and the presence of rodents and wood boring insects. However, the buyer may insist upon a complete environmental screening for radon gas, water quality, asbestos, sanitary system and underground storage tanks. For the protection of the seller and broker, the prospective buyer should be asked to sign a written waiver of the right to inspect if the buyer chooses not to have an inspection.

KEY WORDS AND PHRASES