land contamination and residential properties

© 2012 Environmental Data Resources, Inc.

EDR Client Summit

Scottsdale, AZ

May 16, 2012

Land Contamination and Residential Properties

About 80% of Single Family UK homes get some

form of environmental (land contamination)

screening as part of the home buying process.

Interesting Fact…

Source:

Landmark LTD

• Following Warning Card solicitors began to order

environmental reports for commercial and residential property

transactions

• Homecheck £40, Envirosearch £46, Prime £100

Environmental Desktop reports

Drivers for desktop reports

If no desktop report carried out then buyer exposed to significant

financial liability

Solicitor exposed to negligence claim

Number of cases where alleged negligence of solicitor but settled

out of court

Federal Gov’t

State Gov’tCT

KEY ISSUES• Coal Ash

• Vapor Int.

• Fracking

• Pipeline

• Flood

• Lawsuits

Real Estate Agents

Brokerages

Data Companies• CoreLogic

• DataQuick

• DataVerify

• LPS

LendersBank of America

Zillow

Redfin

Trulia

Google

Residential

Homeowners /

Consumers

EIR.com

PropertFacts

HomeFacts

NHD Companies

MLS

Associations

Home Inspectors

Appraisers• UADataset

• Software

Fannie / Freddie / HUDVEROS (appraisal dataset)

Mortgage Bankers

Association

Escrow/

Title

ERCRelocation

Companies

EPs

Attorneys

RESIDENTIAL

ECOSYSTEM

• ~ 2001 – EDR’s sister company in the UK drawn into

conversation with solicitors regarding mitigating liability as they

were/are the concierge of the transaction

• Circa 2006 EDR introduces two products

Neighborhood Environmental Report™

NHD Environmental Report™ (California and Arizona)

• 2008 creates a “Green Certified” offering

• 2010 explore “Opinion Product”

• 2011 author a guidance document for Rez Phase Is

• 2011 TV show and www.environmentalissuesreport.com

• 2012 conversations with Banks, Attorneys, Appraisers…

EDR and Residential

http://www.environmentalissuesreport.com/

Bank of America will need to move about 42,000 SF properties this year

Over 3 dozen states have disclosure forms….

National Property Environmental Records

9

Sites Across U.S.

• 23 million records of property

contamination since 1990

• Includes:

- Superfund sites

- Brown fields

- Old gas stations

- Landfills

- Meth labs

- Spills

- State hazardous waste sites

- And more . . . .

Boston, MA

…85% of residential properties will have a record within ½

mile (and that downplays the findings from historical

sources that have proven to be equally important)

Probably no surprise to you that….

• Groundwater contamination

• Soil contamination

• Vapor intrusion

Three Core Land Contamination Issues

• Human Health

• Business Risk

• Liability

• Property Value

The Effects

Historical information also important to the process of

determining if there might be a risk at a given property

Toxic Site Data Ain’t Enough….

and Data Ain’t Easy…

Challenging to interpret given data intersection with local geology,

groundwater and cleanup regulations

• Type of Record (permit vs. spill)

• Distance to Property

• Type of Pollutant (Oil, Gas, Solvent)

• Amount of Pollutant (5 gallons, 5000 gallons)

• Amount of Cleanup/Residual Contamination

• Type of Soil (Clay, Sand)

• Depth to Groundwater (10 feet, 100 feet)

• Direction of Groundwater Flow (toward or away)

• Private vs. Municipal well

Factors that determine actual risk

14

• Offering to Brokers to add to listings

• Value added selling tool

• Problems…

• What do you do about those that do not certify

• What does the seal really mean?

Green Certified

• Title I, Section 101 (35) (13) (v) – (Definitions)

SITE INSPECTION AND TITLE SEARCH. – In the case of property for

residential use or other similar use purchased by a nongovernmental or

noncommercial entity, a facility inspection and title search that reveal no

basis for further investigation shall be considered to satisfy the requirements

of this subparagraph.

• Title I, Section 101 (40)(B)(iii) – (Bona Fide Prospective

Purchaser – Inquiries)

RESIDENTIAL USE. – In the case of property in residential or other similar

use at the time of purchase by a nongovernmental or noncommercial entity,

a facility inspection and title search that reveal no basis for further

investigation shall be considered to satisfy the requirements of this

subparagraph.

CERCLA

APPRAISERS USPAP / UAD

FORM 1004

NO

NONE

N/A

UNKNOWN

Freddie Mac Single Family/Single-Family Seller/Servicer Guide

The appraiser must consider any known Contaminated Sites or

Hazardous Substances that affect the property or the neighborhood in

which the property is located. The appraiser must also note the presence

of Contaminated Sites or Hazardous Substances in the appraisal report,

make appropriate adjustments to reflect any impact on market value and

comment on the effect they have on the marketability of the subject

property.

[Examples offered include but are not limited to:]

• Proximity of the property and/or its neighborhood to a Contaminated

Site

• Proximity of the property to ground water contamination, chemical or

petroleum spills or other Hazardous Substances that are expected to

impact the area for more than one year

• Environmental issues can prove to be a

liability for brokers even if they are unaware

the contamination exists!

• Cited lawsuits• Strawn v. Canuso, 140 N.J. 43 Weichert Realtors

• Venezia v. Coldwell Banker Sammis Realty, 270 A.D.2d 480

• Chase v. Coldwell Banker Residential, WL 34685236

• Vastrano v. Killington Valley Real Estate, 996 A.2d 170

• Welch v. Bueler, et.al, 481 N.W.2d 856

• Haberstick v. Gordon A. Gundaker Real Estate, 921 S.W. 2d 104

• Grube v. Daun, 496 N.W. 2d 106

• Bloor v. Fritz, 143 Wash.App. 718

• Alfieri v. Bertorelli, Case No. 07-056919-CH

Liability to Brokers

Published January 14, 2012

NJ Supreme Court:

Relevant Everywhere

21

Well

Contaminated Well Water

Rural/Suburban Homes

Vapor Intrusion

Suburban/Urban Homes

It is not a problem as I’m on municipal water (vapor intrusion)

It’s not a problem in rural areas (landfills, historic operations)

Inside too?

• About 20 major companies

• About 225K relocations per year

• Major impact in adoption of radon and home inspections

Relocation Companies

• 85% of residential properties will have an environmental record

within ½ mile

• Homeowners in every state can be and are affected by

environmental contamination

• Information is not widely known and falls outside the purview of

typical disclosure forms

• Brokerages can be sued for land contamination issues

• Historical data also important for determining risk

• Lenders are faced with historically high levels of REO property

• Issues are contaminated soil, drinking/irrigation water and growing

concern around vapor intrusion

• Data alone is not enough – typically requires a professional opinion

A few concepts

I’d have to feel good that my brother or

sister buying a house were getting

value from the product.

Sibling Test

• Screening

• Disclosure

• Professional Opinions

Three Utilities Depending on Use

PROJ_NAME PROP_ADDR PROP_CITY ZIP STATE TOXICHECK

7861430 15481 SW 50 LANE MIAMI 33185 FL LOW

11878221 5362 MIDDLEBURY RD DAYTON 45432 OH LOW

11879317 1087 HOLLY HILL DR COLUMBUS 43228 OH LOW

340291426 16101 PLUM CREEK TRL LOUISVILLE 40299 KY LOW

390719649 3223 HONEYSUCKLE DR ANN ARBOR 48103 MI LOW

632315255 57 MECHANICS AVE EWING 08638 NJ HIGH

663417640 1006 ROLLING MEADOWS DRIVEAKRON 44333 OH LOW

697227577 3287 E DUGDALE ROAD ASHTON 61006 IL LOW

700081870 146-50 W. QUEEN LANE PHILADELPHIA 19144 PA HIGH

700900285 1342 JONES ST RENO 89503 NV LOW

730211299 16-2087 MOHO ROAD MOUNTAIN VIEW 96771 HI LOW

• Screening

• Disclosure

• Professional Opinions


The

Neighborhood

Environmental

Report™

• Screening

• Disclosure

• Professional Opinions Written by qualified Environmental

Professionals (EPs) with local knowledge and 2-3 day TAT.


• Where is environmental due diligence introduced?

• What is the appropriate level of due diligence for residential

properties?

• Who is qualified to do it?

• What should be the outcome?

• How much can it reasonably cost?

• Can liability be managed?

A bunch of questions

land contamination and residential properties

Business

environmental data resources

environmental reports

residential properties

data aint easychallenging

given data intersection

desktop reportsif

appraisers edr

sf properties