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November 29, 2001

What To Do If You Buy Contaminated Property

By Stuart Lieberman

Realty Times

It does not happen often, but it does happen regularly enough that it warrants discussion. No matter how careful someone might be, they still can purchase property that is contaminated. Often some kind of cleanup is needed -- which means some level of out-of-pocket spending will happen.

For a large commercial property purchaser, the news may be manageable. If the property cost one million dollars, an extra $50,000 is not going to kill him or her. But in the case of a new home purchaser, depending upon the kind and size of the problem, it can be pretty tough. And emotions often run high.

As with any property owner, homeowners have limitless potential for uncovering different kinds of pollution. But some discoveries are more common than others. I believe the most popular bad news is that an underground oil tank is or has leaked and needs to be removed and cleaned. The second most common issue is, I believe, the discovery that a home's drinking water well is contaminated. Other common discovered issues relate to lead paint, radon, asbestos, and noise issues (those railroad tracks are not abandoned -- he lied!).

What should a new homeowner do if he or she discovers that the new castle is tainted? The exact response depends on the specifics and if the exposure is significant, you need to consult a lawyer as soon as possible. But what follows are general observations.

First, many sale contracts have seller representation clauses, such as "to the best of my knowledge, there are no environmental problems." To be blunt, not every seller (and yes, real estate sales professional) is completely honest when they sign these forms. You need to find out whether the seller was not honest when he or she made that representation. If the seller was not honest, you may have redress in the courts, which means a lawsuit against the seller.

Even if no form was signed, you still need to consider whether the seller had a duty to disclose the bad news. In most jurisdictions, the doctrine of caveat emptor (let the buyer beware) has been modified. Depending on where you live, and depending on what your seller and real estate professional actually knew, there may have been an affirmative duty to disclose. If there was a duty of disclosure that was not met, you may have a right to pursue either a fraud claim or a claim for misrepresentation.

Many jurisdictions have consumer fraud statutes which expressly apply to real estate transactions. If one exists in your jurisdiction, it should be evaluated. These laws often provide for treble damages (three times the cost of the repair) and attorneys fees.

Other than suing for fraud and misrepresentation, you may also be able to file suit alleging common law claims such as trespass and nuisance. If the hazardous whatever came from someone else, that might be a trespass. It is the same as if they threw a ball onto your yard and it still remains there. If whatever is there is affecting the quality of your life, it may be a nuisance. And if was placed there because someone was inattentive or failed to act in a prescribed manner, that might give rise to a claim for negligence.

Suppose you purchased a dirty home and the seller is gone, or not legally responsible or available. Fortunately, there are other places to look as well.

First, you need to evaluate every property and liability insurance policy that you have. Some people have policies that apply to oil tanks. Also, perhaps the seller's insurance might help, even if the seller is not available.

Also, some States have special funds available for paying for cleanups. Some provide grants --which means free money that need not be repaid. Others provide very low interest loans.

Finally, before your purchase, did you retain the services of a professional inspector to evaluate the property and look for potential pollution and structural problems? If so, the next question is whether that professional was negligent in failing to identify the problem before the purchase. In this regard, note that many contracts with these professionals attempt to limit the liability of the professional. You should always question any agreement attempting to insulate a professional from exposure in the event that you are harmed by their malpractice.

Learning that your new home has a pollution problem is never, never welcomed news. But after the shock is over, you need to come up with a plan. If the issue is minor, you may be able to handle it yourself. If it is significant, be sure to retain competent professional help.

For more articles by Stuart Leiberman, please press here