Real Estate Salesperson Exam (National Portion) Property Disclosures and Environmental Issues Summary

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.

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.

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.

Buyers of pre-1978 housing have a 10-day opportunity to inspect for lead-based paint hazards. The parties may agree in writing to a different period, or the buyer may waive it.

Wrong choices

• 3 days: The standard period is 10 days.
• 30 days: The standard period is 10 days.
• No inspection period is provided: Buyers are given an opportunity to test.

Asbestos was used in insulation, siding, and flooring. It is mainly dangerous when it becomes friable (crumbly) or is disturbed, letting fibers into the air. Removal can release more fibers, so encapsulation is sometimes preferred.

Wrong choices

• Left undisturbed and in good condition: Undisturbed asbestos in good condition is generally less risky.
• Painted over: Painting (encapsulation) can help keep fibers in place.
• Covered by flooring: Covering it can reduce release of fibers.

When a property is in a special flood hazard area on FEMA maps and the loan is from a federally regulated or insured lender, flood insurance is generally required.

Wrong choices

• A radon test: Radon testing is not required because of a flood zone.
• A Phase II environmental assessment: That is not required for a home in a flood zone.
• A lead-based paint abatement: Lead abatement is unrelated to flood zones.

CERCLA, known as Superfund, makes present and past owners and others liable for cleanup of hazardous waste sites. Liability can be strict (no fault needed), joint and several, and retroactive. SARA later amended it and added the innocent landowner defense.

Wrong choices

• The Clean Air Act: The Clean Air Act regulates air pollution.
• RESPA: RESPA regulates settlement procedures.
• The Fair Housing Act: The Fair Housing Act concerns discrimination.

Known physical defects such as foundation cracks, roof leaks, and septic failure must be disclosed. The seller's personal reason for moving is not a physical defect and is usually confidential information the seller's agent should not reveal.

Wrong choices

• A cracked foundation: A cracked foundation is a physical defect that must be disclosed.
• A roof that leaks: A leaking roof must be disclosed.
• A failing septic system: A failing septic system must be disclosed.

Puffing is exaggerated opinion that a reasonable person would not take as fact. It is different from misrepresentation, a false statement of fact, and fraud, an intentional false statement made to deceive. Licensees should still be careful with puffing.

Wrong choices

• Fraud: Fraud is a false statement of a material fact made to deceive.
• Negligent misrepresentation: Misrepresentation involves a false statement of fact, not opinion.
• Steering: Steering is a fair housing violation.

A Phase I environmental site assessment reviews records and the site for signs of contamination. Doing proper due diligence before buying helps a buyer claim the innocent landowner defense. If problems are found, a Phase II with sampling may follow.

Wrong choices

• Comparative market analysis: A CMA estimates price, not contamination.
• Certificate of occupancy: A certificate of occupancy concerns building use.
• Termite inspection: A termite inspection checks for wood-destroying insects.