Why this matters: Learn to identify man-made environmental hazards located on and off a property and how to advise clients on the effect environmental hazards have on the value and desirability of a property and disclose environmental hazards to prospective buyers.
Follow along with an audio reading of this article adapted as a chapter from our upcoming Real Estate Practice course update.
Noxious man-made hazards
Environmental hazards are noxious or annoying conditions which are man-made hazards, not natural hazards. An environmental hazard is a condition which is either:
- injurious to the health of humans; or
- an interference with an individual’s sensitivities.
Further, environmental hazards which affect the occupant’s use and enjoyment of the property originate from sources located either:
- on the property; or
- elsewhere.
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Environmental hazards on a property
Environmental hazards located on the property which pose a direct health threat for occupants due to construction materials, the design of the construction, the soil or its location, include:
- asbestos building materials and products used for insulation, fire protection and the strengthening of materials;
- formaldehyde used in the composition of construction materials;
- radon gas concentrations in enclosed, unventilated spaces located within a building where the underlying rock contains uranium;
- hazardous waste from materials, products or substances which are toxic, corrosive, ignitable or reactive;
- toxic mold;
- smoke from the combustion of materials, products, supplies or substances located on or within the building and thirdhand smoke from tobacco or nicotine use;
- security bars which might interfere with an occupant’s ability to exit a room to avoid another hazard, such as a fire;
- lead such as found in lead-based paint;
- fuel or chemical storage tanks, such as an underground heating oil tank;
- contaminated soil or water on the subject property; and
- the contamination or manufacturing of methamphetamine or another controlled substance.
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Read more about man-made environmental hazards.
Environmental hazards off a property
Environmental hazards located off the property, but which have an adverse effect on the use of the property due to noise, vibrations, odors or some other ability to inflict harm, include:
- military ordnance sites within one mile of the property;
- industrial zoning in the neighborhood of the property;
- airport influence areas established by local airport land commissions [See RPI Form 308]; and
- ground transportation arteries which include train tracks and major highways near the property.
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The effect on value and desirability
Environmental hazards have an adverse effect on a property’s use and thus its value. As defects, known or knowable, they are material facts seller agents disclose to prospective buyers or their agents as soon as practicable (ASAP) since they might affect a prospective buyer’s decision to purchase or the terms for purchase of the property.
The disclosure to prospective buyers of environmental hazards related to a property known to a seller and seller agent is required on the sale, exchange or lease of all types of property.
While the disclosure of an environmental hazard is the obligation of the seller, the seller agent has a specific agency duty to care for and protect the seller so the seller is in compliance with the environmental hazard disclosure requirements.
Further, and more critically, the seller agent also has an additional, more limited general duty owed to prospective buyers of the marketed property. The seller agent on representing a seller personally conducts a visual inspection of the property for environmental hazards (as well as physical defects). When an agent of a seller broker does the inspection, their level of competence for observing defects and nuisances is judged as equal to a broker’s. [Calif. Civil Code §2079]
The seller agent uses a Transfer Disclosure Statement (TDS) form to advise prospective buyers of their observations and knowledge about environmental hazard conditions located on or off the property.
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See more about the TDS.
Environmental hazard booklet
To conclude the seller agent’s duty to inform the prospective buyer about environmental hazards, the seller agent delivers or confirms the buyer agent has delivered to the buyer a copy of the environmental hazard booklet approved by the California Department of Public Health (CDPH).
A provision in the purchase agreement confirms delivery of the booklet in writing. [See RPI Form 150 §10.8(a) and 316-1]
Further, a prospective buyer or buyer agent might inquire the seller agent about the disclosed environmental hazards on the property. Here, the seller agent is duty bound to respond fully and honestly to the buyer-based inquiry.
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Method of disclosure
A seller delivers the notice of environmental hazards to a buyer of the buyer agent in writing. No separate form exists for giving the buyer notice of environmental hazards, unlike natural hazards which has a form dedicated to those hazards. Until the legislature develops one, agents properly use the TDS as the vehicle for written delivery.
The seller delivers the TDS at the time a prospective buyer or their agent inquires further about a property marketed for sale. When the seller or seller broker’s first contact with the buyer is receipt of a purchase agreement offer, a counteroffer by the seller which includes the TDS with property conditions and hazard disclosures is proper. Thus, the disclosures are made prior to entering into a contract with the buyer.
The mandated TDS itemizes some environmental hazards already. Direct reference is made to hazardous construction materials and waste, window security bars and release mechanisms, and an indirect reference to environmental noise. [See RPI Form 304 §§A and C]
Separate itemization in the TDS adds all other known environmental hazards. Provisions in the purchase agreement disclose environmental hazards emanating from off-site locations, since they are typically known to buyer agents who are familiar with the area.
Editor’s note — The environmental hazard booklet is not a disclosure of known defects on the property. The booklet merely contains general information on a few environmental hazards, none of which might actually exist on the property. A seller broker or their agent voluntarily delivers it to the buyer or buyer agent, but with no legal mandate to do so. [See RPI Form 316-1]
Regardless of the method for delivery of hazard information, the seller agent gives the environmental hazard disclosures to the prospective buyer or their agent as soon as practicable (ASAP), meaning as soon as reasonably possible. As with the disclosure of natural hazards, the legislature’s intent is to make environmental hazard disclosures prior to the seller’s entry into a purchase agreement. [Attorney General Opinion 01-406 (August 24, 2001)]
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Form-of-the-Week: Lead-Based Paint Disclosure and Hazards Disclosure Booklets – Forms 313 and 316-1
Need and motivation for disclosure
An astute seller agent anticipates the need to have property disclosures already available for delivery when they become aware of a prospective buyer. The agent’s effort to gather and package property information mandated for disclosure by a seller takes place when soliciting and entering into a seller representation agreement.
The reasons and benefits for compliance with environmental hazard disclosures (and all other property disclosures) at the earliest moment, upfront and always before the seller accepts an offer or makes a counteroffer, include:
- to prevent related delays in closing;
- to avoid cancellations on discovery under buyer due diligence investigation contingencies;
- to eliminate likely renegotiations over price or offsets for corrective costs due to the seller broker’s late disclosure or the buyer’s discovery during escrow;
- to shorten the time needed for the buyer and their agent to complete a due diligence investigation; and
- to maintain seller control of remedial costs and responsibilities by terms included in the purchase agreement, not by later offsets or demands by the buyer or a court.
The seller agent needs to document in writing (for the agent’s file only) the seller’s disclosures to the agent about environmental hazards which are known or may be known to the seller. The agent’s list itemizes:
- all the environmental hazards which might possibly exist on or about a property and the construction materials which contain them;
- the age or date of construction to elicit a review of probable hazardous construction materials used at the time of construction; and
- information about the property disclosed to the seller when they purchased the property or were brought to the seller’s attention on any maintenance of the property.
The seller agent’s inquiry into hazardous materials precede the seller’s preparation of the TDS. Thus, the seller is geared to report their knowledge of hazard defects in the condition of the property. Finally, the seller agent conducts their visual inspection after the seller prepares the TDS so the observations can be discussed with the seller and entered on the TDS.
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No expert required since the seller knows
The seller has no obligation to hire an expert to investigate and report on whether an environmental hazard is present on or about the property. The seller is also not obligated to remove, eliminate or mitigate an environmental hazard, unless the seller becomes obligated under the terms of the purchase agreement with the buyer.
Again, the seller’s and the seller broker’s knowledge about the property is disclosed on the TDS. The seller living on the property typically knows the on-site environment hazards.
Off-site environmental hazards will also be known to the seller and thus the seller agent. Off-site environmental hazards include:
- an airport within the vicinity, known as an airport influence area [See RPI Form 304 §27; See RPI Form 308 §2];
- annoyances and sensitivities that may come from being in the proximity of a farm or ranch [See RPI Form 304 §28; See RPI Form 308 §3];
- inconveniences resulting from mining operations near the property [See RPI Form 304 §30; See RPI Form 308 §5];
- the proximity to an Industrial Use Zone which allows manufacturing or commercial uses [See RPI Form 304 §31; See RPI Form 308 §6]; and
- the proximity to a former state or federal ordnance location, such as those used for military training purposes. [See RPI Form 304 §32; See RPI Form 308 §7]
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Read more about environmental hazards disclosure.
Asbestos in construction materials
Asbestos is any of a diverse variety of fibrous mineral silicates which are commercially mined from natural deposits in the earth. In the 1940’s, manufacturers began mixing asbestos fibers with substances commonly used to produce materials for the construction of residential and commercial real estate improvements, such as cement, plastic, stucco, vinyl, insulation and felt roofing materials. Asbestos fibers added greater tensile strength, insulation qualities and fire protection to the construction materials which included them. [Health & S C §25925]
However, asbestos is a known carcinogen. As an occupant of a building inhales friable asbestos fiber, they increase their risk of developing negative health conditions.
Construction materials which contain friable asbestos are those which are crumbled, pulverized or reduced to powder by hand pressure when dry. Examples of friable material include:
- acoustic popcorn ceilings in homes, apartments and offices;
- thermal insulation on pipes and hot water heaters;
- wall texturing compounds; and
- sheet rock joint compounds, called “mud.”
Non-friable asbestos is not crushed by hand pressure. Examples of non-friable material include vinyl, asphalt or cement items, such as stucco plaster, vinyl tiles and asphalt roofing felts. Of course, on the removal of stucco or plaster, the asbestos may become friable since the removal disturbs and breaks down the material, creating particles which may become airborne and inhaled.
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Read more about asbestos.
The dangers of asbestos
Asbestos is only harmful to humans when the fibers are inhaled and accumulate in the lungs producing, over time and with continuous exposure, an increased risk of cancer.
Thus, asbestos-containing material used in the construction of a building is best left undisturbed by avoiding renovation or demolition. When the material is in good condition (not crumbling or deteriorating), it is best to leave it in place when redecorating or renovating a property.
The seller of a property constructed with asbestos-containing building materials is under no obligation to investigate or have a survey conducted to determine the existence of asbestos on the property — whether friable or non-friable.
Further, the seller is not obligated to remove or clean up any adverse asbestos condition. However, the condition, when known, will be disclosed. As a result, a prospective buyer may well condition the purchase of a property containing friable asbestos on its clean up and removal by the seller.
Asbestos fibers have not been used in molded thermal insulation material in spray applications for textured ceilings since 1978.
From 1940 to 1996, some homes were built with materials containing asbestos mixed with other components, such as vinyl floor tiles, backings for linoleum, HVAC duct wrapping, hot water pipe insulation, cement siding and pipes, stucco, plaster, asphalt roofing felts, ceiling and wall insulation, and taping compounds. Any removal of these components requires notification to the local air quality management district and the use of a registered contractor.
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Formaldehyde gas emissions
Formaldehyde is a colorless, pungent gas contained in most organic solvents which are used in paints, plastics, resins, pressed-wood fiberboard materials, urea-formaldehyde foam insulation (UFFI), curtains and upholstery textiles. Gas emitted from these materials and products contains formaldehyde.
Formaldehyde is a probable carcinogen which is likely to cause cancer in humans who inhale the gas emitted by formaldehyde-containing material.
The use of UFFI occurred in construction during the 1970s and was banned in residential property constructed after 1982. However, formaldehyde emissions decrease over time.
As a result, properties built during the 1970s and early 1980s with formaldehyde-containing materials give off levels of formaldehyde no greater than newly constructed homes. Over time, emissions decrease to undetectable levels. However, an increase in humidity and temperature will increase the level of emissions.
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Radon gas in the soil
Radon is a naturally occurring radioactive gas. It is not visible and has no taste or odor. Detection is by instruments only. Radon gas is in soils with a concentration of uranium in the rock, for example, granite or shale, beneath it.
Radon is a known human carcinogen. The health risk for humans is lung cancer. For smokers, the risk of cancer is increased by radon gas exposure.
Radon gas enters a building from the soil beneath the structure, be it a home, apartment building or commercial improvement. Cracks and openings for plumbing in concrete slabs and the porous nature of concrete block basement walls allow the gas from the soil to enter space at or below ground level. Thus, radon is rare in buildings of two or more floors in elevation, except for the ground floor and underground areas.
Radon sucks into ground floor residential space by interior heating on cold weather days and the use of exhaust fans in the kitchen and bathrooms. These conditions create a vacuum within the lower area of the structure drawing in radon when present in the soil.
However, California residential properties rarely experience elevated and harmful levels of radon gas emission. Radon does appear in approximately 1% of housing in California. Proper ventilation avoids the buildup of harmful concentrations of radon in a home or other enclosed space, a function of its design and operation.
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Hazardous waste onsite
Waste is hazardous when it has the potential to harm human health or the environment. Hazardous waste releases into the environment, primarily the soil, by the leaking of underground storage tanks, drum containers, poorly contained landfills or ponds, accidental spills or unlawful dumping.
Hazardous waste materials include any product, material or substance which is toxic, corrosive, ignitable or reactive. These hazardous conditions are generated by oil, gas, petrochemical and electronics industries, and dry cleaner and print shops.
Information is available to prospective buyers on their inquiry into the location and status of hazardous waste sites in the vicinity of a home from the “Cortese list” maintained by the California Environmental Protection Agency (CalEPA).
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Mold: the rogue in vogue
Mold produces spores which become airborne. Humans who enter or occupy the space within the area generating the spores inhale the spores. Many kinds of spores exist, each having differing effects on humans. Some may be a mere annoyance, irritating the sensitivities of an individual. Others might be a threat to the health of those who inhale them.
The uncertainty of the toxic nature of mold spores has led to a sort of intellectual moratorium on determining just what kinds of molds have an adverse or harmful effect on humans.
It has also spawned a number of lawsuits as inactive politicians and active lawyers allow the unknown nature of “toxic mold” to stir the fears of the public.
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Form-of-the-Week: Mold informational booklet and non-smoking addendum — Forms 564-1, 564-2 and 563-1
Inspection for toxic mold
Consider an inspection of a residential unit with conditions conducive to mold (prior dampness) which reveals the presence of mold by its growth, including an insignificant amount of toxic mold varieties.
The tenant occupying the unit goes to a doctor after suffering from a range of health problems. The doctor, on review of the mold report, attributes the ailments to the existence of toxic mold in the unit.
The tenant orders a second inspection which confirms the first inspection; the preponderance of the mold present is non-toxic, and the amount of toxic mold found is typical of normal conditions and is of a level which does not contribute to health problems.
The tenant seeks compensation for health problems, claiming the landlord neglected their duty to provide a healthful environment since they allowed the development of mold which the doctor says led to the tenant’s health issues.
Based on the insignificant amount of toxic mold, is the landlord liable for the tenant’s illness?
No, the insignificant amount of toxic mold existing in the unit and the doctor’s conclusion that the tenant’s health problems connect to toxic mold do not justify holding the landlord liable. [Dee v. PCS Property Management, Inc. (2009) 174 CA4th 390]
Editor’s note — The holding of the Dee case is apparent from the first line of the opinion, which made it clear mold is everywhere, in every breath we breathe.
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Mold investigation and disclosure
Sellers are under no obligation to investigate whether the improvements contain mold — it’s everywhere. When it is known the structure does contain mold, the seller has no obligation to determine whether the mold is a threat to human health.
The CDPH has not yet set any standards for disclosures regarding the existence of mold or guidelines for the remediation of mold threats. However, the CDPH has published multiple consumer-oriented booklets on mold on its website at cdph.ca.gov.
Until uniform disclosure standards are legislatively produced, a prospective buyer receives the generic informational brochure and seller and seller agent TDS disclosures advising the buyer of their knowledge of mold on the property. No common knowledge exists for sellers or seller agents to visually distinguish between harmful and benign molds.
When the seller is aware of mold, regardless of type, the seller discloses any awareness of the mold’s existence, as well as any other reports or knowledge about the variety of mold which exists.
To produce mold standards and guidelines, the CDPH needs to assemble a task force to investigate, review and recommend the content of the standards and guidelines. The CDPH anticipates once they select the task force, recommendations will not be forthcoming for two additional years. Thus, apart from the general booklets, no specific disclosure guidance from the state is available to brokers, agents and sellers to deliver to buyers in the foreseeable future.
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Thirdhand smoke
“Thirdhand smoke” refers to the remnants of toxic chemical residue left by tobacco smoke in the walls, carpets and other building materials. [Calif. Health and Safety Code §25417.2(a)]
The takeaway for the public is that thirdhand smoke negatively affects property and exposes occupants to toxic chemicals. This is indicated by the smell of smoke in the home or testing surfaces for elevated levels of nicotine. [Health & S C §25417.2(b)(1)]
The seller discloses when they know their single-family residential property has:
- residue from tobacco or nicotine products; or
- a history of occupants who smoked. [Calif. Civil Code §1102.6k(b)]
Smoking includes both electronic cigarettes and vaping devices. [CC §1102.6k(b)(2)]
The seller discloses this material fact about the property to the buyer in writing, using the TDS. [CC §1102.6k(a); See RPI Form 304 §17]
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