Lake water quality

The buyer is thinking about buying a cabin on a small lake. He has heard about Eurasian Milfoil and wants to know more about the lake water quality before purchasing lakefront property. What should the agent tell him? 

One of Wisconsin’s greatest assets is her lakes and rivers. However, there are invasive species of plants and animals threating the health of Wisconsin waters. Although REALTORS^® are not expected to become botanists and limnologists, REALTORS^® should be prepared to refer interested consumers to authoritative resources to investigate water quality issues. One such publication from the Wisconsin Department of Natural Resources (DNR) is “Choosing the Right Waterfront Property” at http://dnr.wi.gov/topic/shorelandzoning/documents/choosingwaterfrontproperty.pdf.  

The DNR maintains a list of Wisconsin lakes that have reported invasive species, both plant and animal. The list for Eurasian Milfoil is available at dnr.wi.gov/topic/invasives/fact/eurasianwatermilfoil.html.

Radon

The buyer’s offer includes a radon testing contingency. The buyer heard that active radon mitigation systems are required when the radon levels are high. If the radon level exceeds 4.0 pCi/l and the seller agrees to cure, what type of system must be used?  

Whether the seller will install a passive or active system depends upon several variables including the construction of the home. The parties would be wise to consult with a radon mitigation installer to determine what type of system is appropriate for the property. A list of Wisconsin Radon Mitigation contractors may be found at www.dhs.wisconsin.gov/radon/radon-mitigation.htm.

According to the EPA, an active mitigation system has four basic elements: (1) an electric vent fan (located outside of conditioned space, i.e., in the attic, garage or outside the building envelope); (2) a system failure warning device (may also be in the basement); (3) a vent pipe running between sub-slab gravel up to above the roof or eave and (4) sealed and caulked cracks and joints. A passive system (installed at the time of construction) has: (1) a vent pipe extending from the sub-slab gravel up to above the roof or eave and (2) a physical barrier (polyethylene membrane) between the soil and house foundation.

The EPA has published a new Consumer’s Guide to Radon Reduction, available at www.epa.gov/radon/pubs/consguid.html#reductiontech. Also see the Home Buyer’s and Seller’s Guide to Radon at www.epa.gov/radon/pubs/hmbyguid.html#6

Carbon monoxide detectors

Is there a requirement for single family homes to have carbon monoxide detectors permanently installed? The buyer has an accepted offer on an older home where the seller installed plug-in CO detectors on all levels. At the walk through the buyer noticed the seller had removed the CO detectors. Must the seller replace them? 

Beginning February 1, 2011, Wis. Stat. § 101.647 requires virtually all homes to have carbon monoxide detectors. The law expands coverage beyond the April 1, 2010, requirements for all multi-family units to have carbon monoxide detectors. The law includes CO detector requirements for most single-family homes and duplexes, and parallels requirements for smoke alarms for installation.

For new residential construction beginning October 1, 2008, these alarms must be interconnected, continuously powered by electrical service and have a battery backup. For existing residential buildings as of October 1, 2008, CO alarms were to be installed by April 1, 2010 in buildings with any type of fuel burning appliances — such as batteries, electrical outlet plug-ins or wiring to the building’s electrical service — are allowed. CO alarms are not required if there are no attached garages, and there are no fuel-burning appliances or all fuel burning appliances are “sealed combustion” and are under warranty or annually inspected for CO emissions. Owners of older construction homes can comply with the law by installing plug in CO detectors. If the property has plug in CO detectors the offer may be drafted to state whether they will remain with the property after the sale.

The WRA has updated the RECR to include disclosure about CO detectors. For additional information, see the DHS Carbon Monoxide fact sheet at dhs.wi.gov/eh/ChemFS/fs/CO.htm and the CO alarms brochure at dsps.wi.gov/sb/docs/Sb-CommBldgsCoMultiBroch.pdf. 

Gas station property

The broker is considering listing a property that used to be an old service station. How does the broker address the fuel tanks and avoid liability for the buyer and the seller?  

At the time of the listing the broker may ask the seller to complete a written statement regarding property condition, such as the WRA Seller Disclosure Report – Commercial. The seller would be asked to disclose any known defects or contamination and the status of any remaining or removed fuel tanks. The parties may check with the Department of Commerce to determine if there are any tanks in the DCOMM tank database.The seller may wish to confer with his attorney regarding strategies for reducing or eliminating seller liability.

Likewise the buyer may be referred to legal counsel, the EPA, the DNR and the Department of Commerce. The buyer’s attorney may recommend that the buyer’s offer include appropriate testing or inspection contingencies. The attorney might recommend, for example, that the buyer include contingencies for both Phase I and Phase II Environmental Assessments. Both attorneys may give advice about the how the parties might allocate the risk of environmental contamination. In addition, before drafting an offer, the buyer may consult with the lender to determine what documentation or evidence will be needed in order for the buyer to qualify for financing for the purchase of this property.

While discussing a possible vacant land listing, the seller said they were told there was a landfill located nearby. However, she did not know exactly where it was because it has since been filled in. Is it incumbent upon the agent to disclose this as an adverse material condition on the Real Estate Condition Report should it be true? 

The seller client completes the RECR — not the licensee. The seller should discuss any questions about the seller’s obligation to disclose with his or her attorney – not the agent. The seller’s disclosure is based on the definition of defect contained in the RECR.

If after consultation with her attorney the seller decides not to disclose the landfill, whether the possibility that a landfill may have existed in the area constitutes a fact the agent needs to disclose as an adverse material fact is a judgment that only the agent can make after considering all of the facts and circumstances in the situation. Agents make their disclosures in a letter or some other form, not in the RECR.

If the agent, as a competent licensee knows that a possible landfill (1) has a significant adverse effect on the value of the property; (2) significantly reduces the structural integrity of the property; (3) presents a significant health risk to the occupants of the property or (4) is information that indicates that a party to the transaction is not able to or does not intend to meet their obligations under the contract, then the possible landfill constitutes an adverse fact. If a party to the transaction was to so indicate or if a competent licensee would generally recognize that the possible landfill is of such importance that it would affect a reasonable party’s decision to enter into a contract or would affect the party’s decision about the terms of the contract, the fact is both adverse and material. If the possible landfill is both adverse and material then Wis. Admin. Code § RL 24.07(2) requires the agent to timely disclose the possible landfill in writing to all parties to the transaction, even if the client would direct the agent not to disclose.

See the list of landfills licensed by the DNR at dnr.wi.gov/topic/landfills. A sample material adverse fact disclosure letter is available in on page 26 of the October 2009 Legal Update, “Diligent Disclosure,” or on zipForm^®. See the October 2009 Legal Update, “Diligent Disclosure,” for further discussion of licensee disclosure obligations. 

Tracy Rucka is Director of Professional Standards and Practices for the WRA.