Avoiding pollution when buying land
Think before you act, then think again:
One of the most difficult challenges a land owner can face is environmental problems with real property. A significant part of that can be pollution and hazardous waste. As we’ll soon see, better to investigate environmental conditions during inspection and prior to the earnest money going hard. That’s the part before you are the “owner” - when you still have time to bail out.
In the of case pollutants, due diligence can be especially difficult since our 5 human senses cannot detect many of them. In other words, they can be invisible to us without scientific and data base investigation.
Notice and Disclosure: Only qualified attorneys and properly licensed professionals should advise on environmental issues regarding real property. I am neither, so this article and the links provided express my experiences and opinions only.
Pollution:
We tend to think of pollution as man made - released chemicals that should not be there, and that is certainly one type. On the other hand there are also natural pollutants.
On May 18, 1980 I was salmon fishing on the Cowlitz River in western Washington. Mount St. Helens erupted about 9 nautical miles away from where my buddy and I were fishing. It was about 8:30 AM and in less than an hour daylight turned to night. It was black as midnight. The ash released by the eruption was a natural element, but was a pollutant nonetheless.
Remember, pollutants can be man-made or naturally occurring and when pollution occurs there can be adverse effects on living organisms and/or the natural environment. Once pollutants are released, they can be particularly hard to control and clean up.
Point source pollution:
The place where pollutants come from is known as the point source, which is simply the point of origin. In land acquisition I consider myself lucky if there is a known point source since it is identifiable.
Consider this: If it is known conclusively that there is an underground oil tank, then it is known that investigation of the soil conditions around that tank is necessary during the property inspection period, and while the earnest money is still refundable.
It doesn’t mean there is not anything else to be concerned about, but at least you know an important piece of the inspection puzzle since you know a potential single source. Before getting too relaxed about single point source pollution, consider that if the point source is off-site you have a situation presenting additional considerations.
Non point source pollution:
Non point source pollution comes not from a single point, but from multiple points. Logarithmic complications can be presented because this type of pollution has to be traced back to multiple sources and the complexities associated with source targeting are multiplied.
Mega Pollution - Superfund Sites:
The American Smelter and Refining Company (ASARCO) site in Tacoma, Washington was used for decades as a smelter to remove metals from ore (the process of smelting). It became a Superfund Site under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 - (CERCLA) and was cleaned up under provisions created by the Environmental Protection Agency (EPA) as a long-term clean up response.
Two things:
The smelter, as a point source, discharged pollutants in the air, soil, and nearby Puget Sound. This resulted in a localized impact.
It also discharged pollutants though a tall smoke stack into the ambient air, which was carried by the wind for decades, thus depositing hazardous pollutants in the surrounding soils for miles around.
But now…
The former ASARCO site, cleaned up per the EPA guidelines, is now a full blown condominium, retail, entertainment and recreational project sitting dead-center on the site. Big money corporate developers are in a position to undertake the cost and risk associated with developing on remediated Superfund Sites, but we small guys aren’t.
More importantly for the small guy, any land developer in the south Puget Sound area should be aware of the historical soil contamination for land he/she is considering for acquisition and future development in the region.
For acquisition, purchasers of real property, including land developers, must be aware of potential point and non point pollution sources that could be miles away and seemingly unrelated to the property under consideration. They should also be aware that investigation of a potential project includes an investigation of the surrounding area - meaning off-site.
Public resources:
Federal, state and local resources exist to look up environmental laws and identify resources and I suggest researching them. Here’s one for the EPA:
United States Environmental Protection Agency (EPA) United States Environmental Protection Agency | US EPA .
At the same time, my opinion is that only qualified legal professionals and properly licensed consultants can be relied on to interpret and advise.
Over reliance on eye sight during property inspections:
“Looks good to me”!
Zeiss, a world leader in optics and vision says in an article on their website: “Humans perceive up to 80% of all impressions by means of our sight”. Seems true true to me and thank goodness most of us have sight to rely on. But if it is true that of our 5 senses, we rely heavily on sight, then we need to recognize that our sight can fail us when it comes to hazardous waste and pollutants. As previously stated, none of our 5 senses can be fully relied on when it comes to potential pollutants in real estate.
Common sense & investigational science:
As a private land developer I stay away from any property that is environmentally compromised or is suspected of being so.
Environmental assessment of property is a key step of due diligence for any property under consideration. The wise prospective land buyer will use his/her 5 senses along with common sense to assess the subject property.
In my opinion, the job isn’t done until that same buyer employs any necessary licensed professional services to provide investigational work for pollutants and any other environmental factors that may apply to the land and its intended use. The same applies to the interpretation and compliance with environmental laws which is what a qualified environmental attorney is for.
Some additional information on environmental topics can be found here:
Environmental Assessment of Vacant Land: Environmental Assessment of Vacant Land — Land Development Realities .
Environmental Problems in Real Estate: Environmental Problems in Real Estate — Land Development Realities .
Property inspections:
In real estate contracts it can be possible to waive a property inspection and this negligent tactic seems completely inadvisable to me. What thinking buyer would waive the opportunity to investigate land under contract, especially since he/she has the time to investigate before the earnest money goes hard in a properly drafted and mutually executed contract. It does happen, though.
I sold to a builder one time that was famous for waving inspections on the lots I sold him. He always used the angle that since he was waiving the offered 30 day inspection period for raw land, that somehow I should be conceding on price since I was going to get the money that much sooner. It didn’t work and I provided him with Seller’s Disclosure Statements anyway. Don’t know if he ever read them.
Sellers Disclosure Statements:
Every state I have sold properties in requires Sellers’s Disclosure Statements on real property transactions. This is where the seller answers questions about the real property, providing their current and actual knowledge to the buyer in written form. The disclosure statement in my home state provides answer boxes and the choices are:
Yes - No - Don’t Know. There is usually another section to provide written explanations.
If I am the seller I always provide them, but in my home state it is possible to fully waive a disclosure statement and that can work two ways: First, if the seller meets certain qualifications they are waived from the requirement to provide one. One example would be a estate executor in a Will, where he/she is entrusted to sell the property, but has no actual knowledge about it. The other example is the buyer, for whatever idiotic reason, waives the right to receive one and states so in writing.
One other thing: I never rely solely on what a seller tells me in a disclosure statement. I do my own investigating, at my cost, with my consultants.
Wrap up:
Environmental problems with real property are a serious menace to the unsuspecting novice. Once you are in the chain of title to the property you have liability exposure for clean up and also current and future disclosures for the property. My approach is to thoroughly investigate the property and surrounding area for environmental problems including, but not limited to, pollutants.
Environmental laws are particularly complex and hard hitting, so professional advisement is necessary in my opinion. This type of consulting and testing can be very costly, but the cost of closing on polluted or other types of environmentally compromised land can be much worse. My approach is to use the required professionals and despite the cost be grateful to walk away from the deal if environmental problems surface. Be particularly cautious here and Good Luck!
(Blog photos courtesy of Unsplash - Beautiful Free Images & Pictures | Unsplash - (Ivan Bandura, Gary Chan, Jordan Whitfield) - Thank you!
