Disclosure & Liability
Environmental Hazards on the Real Estate Exam
Environmental hazards appear on both national and state exam portions. Here's each hazard the exam tests — what it is, where it's found, and what disclosure rules apply.
Environmental Hazards Tested on the Exam
Lead-Based Paint
Present in most homes built before 1978. Federal law requires sellers and landlords to disclose known lead paint hazards and provide the EPA pamphlet 'Protect Your Family from Lead in Your Home' before the sale or lease of pre-1978 housing. Buyers get a 10-day window for a lead paint inspection.
Asbestos
A fibrous mineral used in insulation, flooring, and roofing before the 1980s. Intact asbestos is not immediately dangerous if undisturbed, but disturbing it releases fibers linked to mesothelioma. Abatement requires licensed contractors.
Radon
A naturally occurring radioactive gas formed by uranium decay in soil. The #1 cause of lung cancer among non-smokers. EPA action level: 4 pCi/L. Radon testing is simple and mitigation (sub-slab depressurization) is effective.
Mold
Caused by moisture. Can cause serious health problems. Agents must disclose known mold conditions. Remediation requires identifying and eliminating the moisture source.
Underground Storage Tanks (USTs)
Old fuel oil or gasoline tanks from heating systems or gas stations. Leaking USTs cause soil and groundwater contamination. Remediation can cost tens of thousands of dollars.
Urea-Formaldehyde Foam Insulation (UFFI)
Used in the 1970s for wall insulation. Off-gases formaldehyde, a known irritant and potential carcinogen. Banned for residential use by the CPSC in 1982. Still a disclosure item in some states.
Carbon Monoxide
Odorless, colorless gas from combustion appliances (furnaces, water heaters, fireplaces). Most states require CO detectors in residential properties.
Environmental Hazards FAQ for the Exam
What is CERCLA and why does it appear on the exam?
CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act), also known as Superfund, imposes strict liability for hazardous waste cleanup on current and former property owners. Even innocent buyers can be held liable. Real estate professionals should advise commercial buyers to conduct environmental due diligence.
What is a Phase I Environmental Assessment?
A Phase I ESA reviews historical use records, aerial photos, and government databases to identify potential environmental contamination. No soil sampling is done in Phase I. If risks are identified, a Phase II (soil and groundwater sampling) follows. Required for most commercial transactions.