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THE WORD "ENVIRONMENT' IS A LOOSE TERM which has different meanings in different contexts. The “natural environment” refers to natural habitats, the plants and animals which live there and the forces of nature which shape them. “Environmental impacts” are the negative effects which human plans and projects have on both the man-made and natural environment.
“Environmental hazards,” on the other hand, are toxic materials, radiation and even electromagnetic fields which are known or suspected to be harmful to humans. Environmental hazards can originate on the property, the lot next door or from remote sources miles away. Hazardous materials can be in the soil, the air, the water or can be part of the building itself.
Environmental hazards affect human health and real estate values. For these reasons, California law requires that sellers and their agents disclose all “material facts” about the condition of a property which is for sale.
Environmental hazards can be hidden and difficult to detect. Buyers should always order a thorough inspection of any property they intend to buy. If the inspection reveals that hazardous materials may be present, they should also order specific tests to find out the extent of the problem and the cost to fix it.
Types of Environmental Hazards
Environmental hazards are different than “natural” hazards, which include naturally-occurring events such as floods, fires, earthquakes and storms. Environmental hazards usually mean man-made elements which are toxic or harmful, even though some occur naturally (radon, for example). There are too many hazardous materials to list here, and science is discovering more all the time. However, the real estate industry has lumped environmental hazards into the following general categories.
- Lead
- Underground Storage Tanks (USTs)
- Private Wells
- Private Septic Systems
- Asbestos
- Formaldehyde
- Radon
- Carbon Monoxide
- Volatile Organic Compounds (VOCs)
- Electromagnetic Fields (EMFs)
- Polychlorinated Biphenyls (PCBs)
- On-Site Hazardous Waste Spills
- Off-Site Contamination
Environmental Laws
Many people credit the publication of Rachel Carson’s book “Silent Spring” in 1962 as the turning point of environmental consciousness in this country. Her book, which questioned the use of chemical pesticides, awakened worldwide concern for environmental protection.
Responding to public concern for the environment, Congress enacted a series of powerful laws which addressed every aspect of the word “environment.” Congress created the following acts and agencies, which are some of over 40 pieces of environmental legislation enacted since the 1960s.
- 1964 – Wilderness Act
- 1965 – Solid Waste Disposal Act
- 1968 – Wild and Scenic Rivers Act
- 1970 – Environmental Protection Agency (EPA)
- 1970 – Occupational Safety and Health Administration (OSHA) 1970 – Clean Air Act
- 1970 – Resource Recovery Act (amended the Solid Waste Disposal Act of 1965)
- 1970 – National Environmental Protection Act (NEPA)
- 1972 – Clean Water Act
- 1973 – Endangered Species Act
- 1976 – Resource Conservation Recovery Act (amended the Resource Recovery Act of 1970)
- 1976 – Toxic Substances Control Act
In 1979 at Love Canal near Niagara Falls, New York, the EPA declared a residential neighborhood uninhabitable because it was built on a chemical dump site. Public outrage led to the passage of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), known as the “Superfund.” In 1986 the act was augmented by the Superfund Amendments and Reauthorization Act (SARA).
These federal laws, which began by protecting rivers and air, have become much more sophisticated and far-reaching. Many state laws are now even stricter than federal laws. The new environmental laws set aside funds for the identification and clean-up of environmental hazards and make polluters and property owners responsible for the clean-up costs. Buyers who unknowingly purchase contaminated property may be just as liable for cleaning up as the party who caused the contamination.
Cleaning up environmental hazards can cost thousands and even millions of dollars. In some cases, the clean-up costs exceed the market value of the property. Half a million contaminated urban sites, called “brownfields,” have been abandoned or remain idle across the United States. A federal “brownfields initiative” now encourages private investors to clean up and redevelop these sites.
Environmental Inspections
To protect themselves from potential liability, some lenders now require a detailed environmental inspection in addition to the standard termite report, real estate appraisal and title report. Private individuals can also order these inspections.
Environmental inspections are relatively new and they have their own terminology. The following are the most common types of inspections, from least to most thorough. The inspections can begin at any level. For example, for sites with known contamination, you would probably begin with a Phase II inspection.
- Incidental Environmental Screen – This is the least thorough type of environmental inspection, conducted “incidental” to other types of property inspections, such as real estate appraisals and home inspections. Experienced appraisers and home inspectors can recognize most apparent environmental hazards. However, they don’t take samples and usually don’t interview the property owner and tenants in depth. Some lenders now require a standard checklist for this type of inspection.
- Transaction Environmental Screen – This type of inspection doesn’t involve any sampling, but it requires a thorough interview with the current owner and major occupants using a detailed checklist. It also includes a visual inspection of the property and a limited records check (local building permits, state and federal records, etc.).
- Phase I Environmental Site Assessment – The inspector, usually an experienced professional, conducts a visual inspection of the site and the surrounding properties and interviews the owner, major occupants and even the neighbors. He or she also reviews historic records to determine if hazardous materials have ever been stored, manufactured or dumped on the site. The inspector does not take samples.
- Phase II Environmental Site Assessment – This level of inspection requires an experienced professional who takes samples of suspected hazardous materials and determines the extent of the contamination. The sampling process may require excavations and test borings.
- Phase III Environmental Site Assessment – In this phase, environmental engineers prepare a management plan and cost estimates to clean up the environmental hazard.
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Chet Boddy, Real Estate Appraisal, Sales and Consulting
43300 LR Airport Road, #59, Little River, CA 95456
707-937-4011, office
707-937-4818, fax
chet@chetboddy.com
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Copyright © 2002 Chet Boddy, All Rights Reserved
Chet Boddy is a Certified General Real Estate Appraiser, Realtor“ and real estate consultant who has lived on the Mendocino Coast since 1976. Look for this and other real estate columns on Chet’s web site at www.chetboddy.com
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