"In today's real estate market, the old doctrine of "caveat emptor," or "let the buyer beware," has been replaced by the "seller's disclosure." A majority of the states, and most real estate companies, require the seller to disclose known material facts about a property for sale, especially conditions that may not be readily apparent to a buyer. A material fact is anything that could influence the buyer's decision to purchase the home or affect the sales price. The only sellers excluded from disclosure laws are banks and mortgage companies with foreclosure properties. If it is latent, hidden and not readily observable, you should give careful thought to disclosing it. Failure to disclose could evolve and many times does into a lawsuit, misrepresentation, alleged fraud and perhaps a breach of contract by the potential buyer.
Structural issues such as cracked foundations, leaky roofs, faulty wiring, corroded pipes and termites are one thing; however, consumers are becoming increasingly concerned about potential health risks as a result of environmental hazards and toxic materials. Federal law, for example, requires sellers of homes built prior to 1978 to disclose lead-based paint hazards within the structure. The most common toxic substances found in homes are lead-based paint, asbestos, formaldehyde insulation and glues and carbon monoxide or radon gases. Unless buyers have the home specifically tested for these substances, the homeowner may not know the problem even exists.
Toxic chemical contamination of groundwater is a national problem and no stranger to Lexington. Groundwater contamination is the most serious problem at the majority of sites in the government's billion-dollar Superfund program. The Environmental Protection Agency operates the Superfund and sets the standards for levels of contamination at local levels, where remediation is conducted. Ground water contamination is having significant impacts on property values and on local governments everywhere.
Local governments are charged with protecting the public health, the environment, and the taxpayer who pays for government services and stimulates the local economy. It is local government that is also charged with the remedial action of cleaning up groundwater. This translates to appropriate funding and oversight by the government and citizens of Lexington.
Most development takes place on farmland where old cisterns, abandoned wells, dumping and septic tanks have been in place for years, adding to impairment of water quality. Heavy metals, phosphorus and oil run off from parking lots, pollution from roofs and pesticides and lawn fertilizers ultimately wash down a stream through a neighborhood or park. Runoff also overloads streams, causing flooding, stream bank erosion and property damage, as well as insufficient groundwater recharge. Collectively, this translates into disclosure issues that can and do affect your property values. Detention ponds once thought of as neighborhood amenities channel huge volumes of rainwater off of parking lots and lawns and into our waterways, making water pollution, erosion and flooding problems even worse. Seepage from septic systems or sewage from straight line pipes can also end up in streams.
Homes positioned adjacent to streams that may flood not only have to retain flood insurance, but will also have to be concerned about the pollutants that spill onto their yards, especially if the stream is marked impaired. Neighborhoods with inadequate sanitary sewer and storm water provisions have already been identified and stigmatized.
Some prime examples of disclosure items can be found in The Seller Disclosure of Property Condition, utilized by the Lexington Bluegrass Association of Realtors. Section 4 asks questions in relation to land/drainage: i.e. property flooding, soil stability problems and retention/detention basins adjacent to the subject property. Section 7 asks "Are you aware of any problems with the septic system?" Section 10, under Miscellaneous states as follows:" (j) Are you aware of any violations of local, state, or federal laws, codes, or ordinances relating to this property? (l) Are there any environmental hazards known to seller?"
In light of looming violations of the federal Clean Water Act identified by the EPA's 2004 inspection in Lexington, many of the aforementioned items could very well be checked "yes" on a disclosure form.
How this will affect one's property value will depend on the extent of the problem. Emotionally and financially, this all has a trickle-down effect on the community as a whole; it's all about quality of life. Why do people buy in certain neighborhoods? Why do companies relocate to certain areas? Purchasing a home is undoubtedly the single biggest investment for most people in their lifetime.
But remember, the burden does and always will remain on the property owner to fully disclose, disclose, disclose."