Question

Real Estate Questions

a. What is the report done for environmental due diligence, and what are the four components of the report?

b. What does REC stand for? Identify one.

c. What is the difference between a brownfield and a greenfield site?

d. If there is environmental contamination identified at a site, who is liable for clean-up?

e. Buyers, lenders, and sellers all have environmental concerns when transacting real estate. Name one for each.

f. What items do title insurance insure? Name three.

g. For what time period does title insurance insure your property, and for how long does the policy last?

h. How much does the lenders title policy insure? How about the owner’s policy?

i. What is an encumbrance? Name two

j. What document would you or a title company use to identify easements, encroachments, etc?

Answer 1

a. ENVIORNMENTAL DUE DILIGENCE

Enviornmental due diligence is a formal process that assesses real estate for potentail risk of enviornmental contamination, such as soil or ground water contaminations. Standards for conducting environmental due diligence are set forth by the Environmental Protection Agency (EPA). Environmental professionals determine the extent and type of assessment warranted, which varies based on the property.

The four components of the report are

1.Company Analysis

2. Media Report

3. Stakeholders Analysis

4. Reporting Framework

b. What does REC stand for? Identify one.

Ans:-REC stands for Recognized Enviornmental condition.

ASTM E1527-13 defines a REC as “the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: (1) due to any release to the environment; (2) under conditions indicative of a release to the environment; or (3) under conditions that pose a material threat of a future release to the environment.”

c. What is the difference between a brownfield and a greenfield site?

A greenfield is an area of agricultural or forest land, or some other undeveloped site earmarked for commercial development, industrial projects or other construction projects. Conversely, a brownfield is an abandoned commercial development where hazardous substances or contaminants are typically present.

d. If there is environmental contamination identified at a site, who is liable for clean-up?

The law labels the responsible parties as "appropriate persons". These are divided into two classes of people. The first group, Class A persons, are those who caused or knowingly permitted the polluting substances to be in, on or under the land.If no Class A person can be found then responsibility will pass to any Class B persons. This group is made up of the current owners or occupiers of the contaminated site

e. Buyers, lenders, and sellers all have environmental concerns when transacting real estate. Name one for each

  

When a person is buying or selling a piece of real estate, they need to be aware of the common environmental issues that could affect the transaction. Environmental safety issues can occur with land as well as buildings and when this happens the value of real estate will decrease significantly. If contaminated property is sold to an unknowing buyer, the seller could be liable for any costs associated with clean-up even if they are not responsible for the contamination. It is important to protect your home from hazards.

Asbestos.

This was a material commonly used in construction because it provided excellent insulation and was fireproof. It was recently discovered that asbestos was related to lung disease as well as different types of lung cancer. It can become a serious problem during remodeling projects. Anything that causes a dispersal of asbestos filaments puts people at risk for health issues involving their lungs.

Radon.

One of the common home hazards is an odorless, tasteless as well as colorless gas. Radon is found around the world and is produced by the natural decay process of uranium. Radon gas can be found at different levels in the air and soil worldwide. When it is present in dirt, or well water there is a good chance it is in nearby homes. Radon can be found in most homes at various levels. If a structure has levels that are not considered safe, a radon gas mitigation system will need to be installed.

Mold.

This is a fungus that can grow on organic substances like paper, wood, leather and more when there is enough moisture present. The level of mold in a home can be the result of its construction as well as moisture in the environment where it is located. It can cause asthma attacks as well as different allergic reactions and more. Mold growing within a dwelling can result in liability issues if not disclosed during purchase negotiations.

Groundwater.

This is water beneath the surface that flows in underground streams. It is often the main source of drinking water in some areas. In many situations, it can also move hazardous waste located in the ground or buried there. It is a circumstance with the potential for polluting properties for several miles. This is a consideration when a property uses groundwater as its water source. Any problems with groundwater need to be identified and addressed. Regular testing results of the water should be provided to any party interested in purchasing the property.

Underground Storage Tanks (USTs)

. What land is used for can change in many ways over time. Industrial areas have been torn down and replaced with housing. Zoning and changes in ordinances can result in businesses being forced to leave. In many cases, this has resulted in the presence of underground storage tanks being left in place. Office buildings or residential neighborhoods have been built near them. USTs could contain anything from motor oil to toxic waste and more. They will eventually corrode and begin leaking over time. Locations for many USTs are not known. When they do start to leak, a person selling property could be held liable for any problems caused by a UST.

Lead-Based Paint.

Lead was used for many years to make the pigments of paints for a variety of colors. It was a material also commonly used for solder and water pipes. Lead-based paint was often used on the inside as well as outside surfaces of homes and other buildings. Prior to 1978, most houses and other buildings had lead-based paint. We now know that lead is highly toxic. It will accumulate in a person’s body over time. This can cause many different types of health issues including anemia, paralysis, weakness and more. It’s possible for small children to ingest paint flakes from the surface of a house. This has caused children to develop mental retardation and more. Having a structure with lead-based paint may require its removal as part of the building being sold.

It is important for both buyers and sellers of real estate to be aware of any possible environment hazards with the land or structure involved in a transaction. This could impact the cost of the real estate but ultimately do away with liability issues that could be addressed using the legal system.

f. What items do title insurance insure? Name three

The actual mortgage lender needs title insurance to protect themselves against a home's defects or potential disputes between buyer and seller that could result in the lender suffering financial loss before the home sales transaction is completed.

There are two types of title insurance – owner's title insurance (an Owner's Policy), which protects the buyer, and lender's title insurance (a Loan Policy), which protects the lender.

g. For what time period does title insurance insure your property, and for how long does the policy last?

All policies of title insurance are issued for a one-time premium and are valid as long as the insured owner or his heirs hold title to the property, in the case of the owner's policy; and as long as the mortgage is a lien of record in the case of the lender's policy.

h. How much does the lenders title policy insure? How about the owner’s policy?

The average cost of title insurance is $1,000 per policy, but that amount varies widely from state to state and depends on the price of your home. A one-time payment is made when or before you close on your house

The cost of title insurance is basically dependent on the value of the property. You can easily calculate the cost of title insurance by multiplying the rate per thousand to the purchase price of the house. ... For example, home with a value of up to $100,000 will get 0.0575% per $1,000 (subject to a minimum of $100).

i. What is an encumbrance? Name two

An encumbrance is a claim against a property by a party that is not the owner. ... The most common types of encumbrance apply to real estate; these include mortgages, easements, and property tax liens.

j. What document would you or a title company use to identify easements, encroachments, etc?

The title report is specifically designed to disclose a property's most important information: everything from the rightful owner and vesting interests in the property to the details of liens, encroachments, or easements.