We have two environmental issues in Berkshire County that are always changing, and with constant change there emerges questions about disclosure of POTENTIAL pipelines, PCB paths or dumps. We asked our State Association Legal Counsel, Ashley Stolba to weigh in on these issues. We asked her a series of questions, and she has provided guidance for REALTORS representing both sellers and buyers. Our Introduction/Background:
The first example pertains to a property that is located near (but not adjacent) to the Housatonic River (contaminated with PCBs).
- There are federal and EPA lawsuits regarding the clean-up of these PCBs from a settlement made well over 10 years ago.
- There are contested cleanup plans in court between the EPA / GE.
- The current “plan” sets out to take dredged PCBs from the river (that runs through Pittsfield, Lenox, Lee, Stockbridge, Great Barrington and Sheffield), transport them through adjacent neighborhoods and truck them to an approved facility.
- Some plans call for this PCB “facility” (dump) to be located in Berkshire County, other proposals say out of state.
- Currently there aren’t access roads in many points of the river, so part of the plan is to create roads through neighborhoods for truck / equipment access. There are no identified locations for these roads that we are aware of.
The other disclosure issue surrounds the natural gas pipeline extension.
- While it seems that the company already has its permits to proceed in Otis State Forest through Sandisfield, each permit bears a set of conditions that will determine just how such a installation should occur (and still in appeal stages).
- The FERC Certificate has been issued, but we can only locate a vague map http://www.kindermorgan.com/content/docs/Connprojectmap.pdf
- Yesterday, the Eagle Reports Otis Mapping Begins.
With that background, we asked Ashley the following questions about Chapter 93A disclosure requirements for these two types of issues.
“First, thank you for providing MAR with an opportunity to clarify for Berkshire REALTORS the provisions of Chapter 93A that will apply in the two examples above. Let me start with a general reminder about the regulations. The Attorney General has explained Chapter 93A violations occur when: “Any person or other legal entity subject to this act fails to disclose to a buyer or prospective buyer any fact, the disclosure of which may have influenced the buyer or prospective buyer not to enter into the transaction.” Chapter 93A requires that a real estate agent volunteer this information, even if the real estate salesperson is not asked. Furthermore, this law does not impose a duty to investigate onto brokers – rather, it requires you to disclose information of which you have actual knowledge.”
Q. While all REALTORS (should) know that any PCB contamination ON a property must be fully disclosed to prospective purchasers, what about contamination found NEAR a property? The river, for example.
“The 1997 case of “Urman v. South Boston Savings Bank” ruled that the duty to disclose off-site problems in Massachusetts is limited to: (1) physical conditions; (2) which are known to a business person (seller or broker), but not known and not readily observable by the buyer; and (3) be sufficiently important that they affect the value or use of the property. As such, this would have to be disclosed if there is PCB contamination near the property and it would affect the property’s value.”
Q. What are the recommended disclosure requirements for POTENTIAL future impacts that have been published in the news media? For example, a property is located near a POSSIBLE PCB dumpsite or near the POSSIBLE excavation route for removal or NEAR the POSSIBLE pipeline path? None of which are done-deals.
“To be conservative, I would recommend disclosure with the permission of the seller. I would recommend disclosing what you know, meaning, news that you have read regarding the proposals and allow the buyer do conduct their own research regarding the legitimacy and likelihood of the proposals.”
As always, consult with your office policy and DR (and legal counsel, when necessary) for guidance about making appropriate disclosures about potential impacts if the seller doesn’t provide permission.
Q. The Courts ruled that Kinder Morgan has the right of eminent domain for the construction of the pipe, but it is in the appeals process and environmental advocates indicate they would appeal. Does a Seller’s agent disclose that part of the land has been taken by eminent domain? What if the seller does not tell the seller’s agent?
“If a property owner has already agreed to an easement, that easement would arguably serve as constructive notice and should be disclosed to any buyer, even if not asked. The DeWolfe case helped us answer this: If the agent has actual knowledge about this easement, that fact should be disclosed. The agent also needs to act reasonably, though; if the seller has not told them about the easement, or even worse, told them that no easement exists, but then the agent reads in the paper or notices letters on the kitchen island about an easement on the property, then that would have to be disclosed. Although the agent does not have a duty to investigate, it does have a duty to act reasonably and disclose what he or she actually knows.”
Q. What obligations do seller’s agents have in determining when a proposal or possibility becomes a reality? For example, there is a proposed dump site already identified, but it’s only a proposal. How closely do agents have to monitor this changing dynamic?
“The agents do not have a duty to investigate, but must act reasonably. They must disclose what they know.”
Q. What would be considered proper due diligence for buyer’s agents related to the investigation of pipeline paths or PCB contamination or proposed dumps?
“Use a buyer’s agency agreement instructing the buyer to conduct their own their own research.”