Real Estate Salesperson Exam (National Portion): Property Disclosures and Environmental Issues Concepts
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Overview
This chapter covers what must be disclosed about a property and the environmental hazards that can affect value, health, and liability.
A material fact is one that would affect a reasonable buyer's decision or price. Known physical defects, such as a leaking roof or a cracked foundation, must be disclosed, while the seller's personal reasons for moving are confidential. Puffing is exaggerated opinion; misrepresentation and fraud are false statements of fact. For housing built before 1978, sellers and landlords must disclose known lead-based paint hazards and give the EPA pamphlet, and buyers get a 10-day chance to test unless it is waived or changed by agreement.
Radon is an odorless radioactive gas from the soil found only by testing. Asbestos is most dangerous when disturbed. Underground storage tanks can leak into soil and groundwater. Under CERCLA, or Superfund, present and past owners can be liable for cleanup, so buyers of commercial land often order a Phase I environmental site assessment to support the innocent landowner defense. Flood insurance is generally required for federally backed loans in special flood hazard areas.
Key concepts
Material fact
A fact that would affect a reasonable buyer's decision to buy or the price or terms.
Memory tipWould it change the decision?
Lead-based paint disclosure
For housing built before 1978, sellers and landlords disclose known lead hazards and give the EPA pamphlet; buyers get a 10-day testing opportunity.
Memory tipPre-1978, 10 days
Source: EPA/HUD lead disclosure rule (40 CFR 745 Subpart F; 24 CFR 35 Subpart A) · as of 2026
Radon
A colorless, odorless radioactive gas from uranium in soil and rock, found only by testing.
Memory tipTest, then mitigate
Asbestos
A fiber once used in insulation and flooring that is most dangerous when damaged or disturbed.
Memory tipEncapsulation is an option
CERCLA (Superfund)
A federal law making present and past owners and others liable for hazardous waste cleanup.
Memory tipStrict, joint and several liability
Source: CERCLA (42 U.S.C. 9601 et seq.) · as of 2026
Phase I ESA
A records and site review for signs of contamination, used as due diligence before buying.
Memory tipSupports the innocent landowner defense
Often tested
- Puffing is opinion; misrepresentation is a false statement of fact.
- Underground storage tanks can leak into groundwater.
- Flood insurance is generally required for federally backed loans in special flood hazard areas.
3 sample questions
Verified practice questions from this unit.
Question 1. For homes built before what year must sellers and landlords disclose known lead-based paint hazards?
- ① 1965
- ② 1950
- ③ 1978
- ④ 1990
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Answer: ③ 1978
Key point: Pre-1978 housing → lead-based paint disclosure
Federal law requires sellers and landlords of housing built before 1978 to disclose known lead-based paint and hazards, give the EPA pamphlet, and keep a lead warning statement in the contract. Buyers get a 10-day chance to test, unless they waive it.
Wrong choices
- 1950: The federal rule covers homes built before 1978, not 1950.
- 1990: 1990 is too late; lead paint for homes was banned in 1978.
- 1965: The cutoff year is 1978.
Question 2. A material fact is best described as a fact that:
- ① Would affect a reasonable buyer's decision to buy or the price paid
- ② Has been fixed and no longer matters
- ③ Appears only in the public records
- ④ Only the seller thinks is important
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Answer: ① Would affect a reasonable buyer's decision to buy or the price paid
Key point: Material fact = would change a reasonable buyer's decision
A material fact is information that would affect a reasonable person's decision to buy, or the price or terms. Licensees must disclose known material facts about a property's condition.
Wrong choices
- Only the seller thinks is important: Material facts are judged by what a reasonable person would think.
- Appears only in the public records: Material facts may or may not be in public records.
- Has been fixed and no longer matters: A repaired problem may still need disclosure under state law.
Question 3. Radon is best described as:
- ① A fiber once used in insulation and floor tiles
- ② A colorless, odorless radioactive gas that can enter homes from the soil
- ③ A toxic metal found in old paint
- ④ A fungus that grows in damp areas
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Answer: ② A colorless, odorless radioactive gas that can enter homes from the soil
Key point: Radon = odorless radioactive gas from soil
Radon is a radioactive gas from the natural breakdown of uranium in soil and rock. It has no color or smell and can only be found by testing. Long exposure is linked to lung cancer. It can be reduced with a mitigation system.
Wrong choices
- A fiber once used in insulation and floor tiles: That describes asbestos.
- A toxic metal found in old paint: That describes lead.
- A fungus that grows in damp areas: That describes mold.
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