Whither Davis Real Estate?

Would you buy a home if you knew the previous owner or their neighbors had to tape their doors and windows shut every winter to prevent wood smoke intrusion from their neighbor’s chimney? Would you move your children or asthmatic parents into a neighborhood if you knew the ambient air quality each winter was deemd to be “Unhealthy for Sensitive Groups” on one out of every 6 days due to high concentrations of particulate matter? These are exactly the questions prospective Davis home buyers will be asking themselves if the local real estate community properly discloses the extent of the wood smoke problem in Davis as required by law.

Things could be worse, however. Sacramento home prices dropped up to 50% in a number of neighborhoods. Thus, on a comparative basis, residential real estate prices in Davis have fared pretty well during this recession. This is due to a variety of factors positively influencing Davis real estate not the least of which is the desirability of the Davis school system and proximity to the University. Another factor also often promoted to prospective buyers is that Davis is somehow more “Green” than surrounding communities.

Such obvious self-promotion will be seriously tempered in the future, however, due to California real estate laws requiring disclosure of existing environmental hazardous conditions in residential real estate – in this case, wood smoke in Davis.

The research and investigation of the potential need for disclosure of excessive or irritating levels of wood smoke in real estate sales began upon reading a letter from The American Lung Association (ALA) to the Davis City Council. This letter, among many others from health professionals and atmospheric scientists, strongly supported the proposed Davis wood burning ordinance which was most recently rejected by the City Council on October 5th with the sole dissent of Joe Krovoza. The letter from the ALA reported that every year they hear from people throughout Northern California who were forced to move from their homes because of their neighbor’s excessive wood smoke that negatively impacted their health.

An obvious question arose as to whether or not those affected home sellers would be inclined or even be required to disclose to prospective buyers the nature of the wood smoke problem they themselves experienced in the home – thus adding economic insult to their physical and emotional injuries. That is, such honest disclosure of the existing wood smoke problem forcing them to sell their home would probably negatively affect the salability or the value of their home from which they were forced to move. The legal requirements of current California law pertaining to such disclosure requirements are further discussed in this article.

Although I have consulted with various real estate brokers and attorneys in the preparation of this article, I am not a lawyer. However, I have been involved in a number of residential and agricultural real estate transactions over the years so I have a good understanding of legally required disclosures in such matters. Over the course of my 30-year professional career I have also provided environmental consulting to lawyers advising many different businesses in a variety of industries ranging from agricultural and industrial air emissions to water quality contamination issues. Thus, I have a broad knowledge of the legal issues involved and the potential ramifications if proper environmental disclosures are not made in California real estate transactions.

The following discussion is not meant to be an exhaustive legal review of current environmental hazard disclosure requirements for residential real estate transactions, though. In particular, recent and relevant court cases have not been researched which might provide additional insight into the current body of law pertaining to this matter. That said, environmental hazard and other disclosure requirements for residential real estate transactions is not an evolving body of law and very little has changed with respect to the legal requirements for such disclosures in many years. Nevertheless, readers are urged to consult their own attorneys as to the applicability of this subject matter to their own circumstances and readers should specifically NOT rely on any information presented herein as constituting legal advice pertaining to their particular situation.

General Background on Disclosure of Residential Real Estate Environmental Hazards

In general, a California seller of residential real property consisting of 1 to 4 dwelling units must give the buyer a Real Estate Transfer Disclosure Statement (TDS) prior to the completion of the sale.

In addition to a number of transaction and property-related disclosures clearly specified by law (such as agent fees, financing costs, termite and infestation inspections, etc), California law also requires that any known environmental hazards must also be disclosed in the TDS.

If specific hazards are not known to the seller and identified in the TDS, the seller or the seller’s agent(s) may give the buyer a pamphlet entitled, “Environmental Hazards: A Guide for Homeowners, Buyers, Landlords, and Tenants”. This pamphlet discusses potential common home hazardous material such as such as the presence of asbestos, radon gas, lead-based paint, formaldehyde, fuel or chemical storage tanks, and contaminated soil or water. If the buyer receives the pamphlet, neither the seller nor any agent in the transaction is required to furnish more information concerning any potential hazards, unless the seller or the agent(s) has/have actual knowledge of the existence of an environmental hazard on or affecting the property including, but not limited to, the above identified environmental hazards.

Additionally, California courts have long held that all “material facts” pertinent to the sale of residential property must be disclosed to the buyer if known by the seller or seller’s agent(s) prior to the sale. A “material fact” is commonly defined as anything that would affect the buyer’s decision to purchase a home or the price and terms the buyer offers. Thus, as a matter of law any material facts regarding likely exposures to hazardous or toxic substances to home purchasers must be disclosed to the purchaser before completing a sale of a home.

An example of an environmentally-related material fact would be that a home for sale is adjacent to an industrial complex that is permitted to release certain quantities of priority pollutants or dusts or chemicals with irritating smells or noxious or hazardous properties. If the presence of these pollutants has been detected on the property by the home seller, or would be expected to be present by virtue of environmental modeling, monitoring, or tests performed on adjacent or nearby properties by independent and/or competent authorities, this must be disclosed to a prospective home buyer.

Another example of an environmentally-related material fact would be that a house for sale might be in close proximity to a known toxic groundwater plume that has been identified in the area but for which specific monitoring wells have not been drilled on the specific property for sale. The presence of such a contaminated groundwater plume would be considered a material fact and disclosure would be required.

It was for this reason that environmental hazard disclosures were given to many home purchasers near the Frontier Fertilizer Superfund site in East Davis notifying them of the proximity of the known contaminated groundwater plume even though test and/or monitoring wells were not drilled on the specific properties for sale. Even with these specific disclosures prior to sales in the affected area, a number of lawsuits were filed subsequent to the home sales in question alleging that the disclosures were not specifically identified as a potential risk and were otherwise buried in the reams of closing documents.

Specific Information Pertaining to Potential Required Disclosure of Wood Smoke as Environmental Hazards in Davis Residential Real Estate Transactions

Although many Air Quality Management Districts in California require the removal of non EPA Phase II-Certified Wood Stoves from a home prior to its sale (but certainly not in Davis – that would be too “Green”), there are no specific real estate statutes specifically requiring the disclosure of the presence of unhealthy or irritating levels of wood smoke in the air surrounding a home as a potential environmental hazard.

Whether or not an environmental hazard disclosure is required for some Davis homes or recommended as a precautionary measure for all residential sales in Davis would depend on the facts and circumstances of the particular situation as indicated in the following questions.

1)    Is wood smoke considered to be toxic pollutant or a noxious or strong irritant to a significant percentage of people when exposed to it?
2)    Is wood smoke potentially present in sufficient quantities in the air surrounding the identified home for sale such that it could present either a health and safety risk to the new buyer or could be an impediment to the enjoyment of the home by the new buyer?
3)    Would a buyer of a home in Davis otherwise have an expectation of comparatively clean air around their home without undue or extensive investigations on their own?

If the answer is “Yes” to all of the above questions, it would be an undeniable legal requirement to disclose this information to all prospective buyers of the home in question.

1) Is wood smoke considered to be toxic pollutant or a noxious or strong irritant to a significant percentage of people when exposed to it?

Numerous informational pamphlets are available from the US Environmental Protection Agency, the California Air Resources Board, and the American Lung Association and a scientific article entitled Wood Smoke Health Effects from the Journal of Inhalation Toxicology 19:67-106, 2007 is available that conclusively demonstrate wood smoke in sufficient quantities is highly toxic; particularly to sensitive individuals including young children, seniors, and others with preexisting respiratory or cardiac problems. This is also supported by numerous letters written to the Davis City Council by physicians, academics, and health organizations attesting to the toxicology of wood smoke, its effects on humans, and the potential effect it may have on homeowners adjacent to a wood burning source. Indeed, the California Air Resources Board themselves have stated, “If you can smell smoke, you have a problem”.

2. Is wood smoke present in sufficient quantities in the air surrounding a home such that it could either present a health and safety risk to the home’s new occupants or be an impediment to the enjoyment of the home by a new buyer?

The Yolo Solano Air Quality Management District submitted to the City of Davis entitled “YSAQMD Davis Wood Smoke Study_2009-2010” (the “YSAQMD Report” – see Vanguard article, “Hold Your Breath in East Davis During the Winter!” – 6/3/201). This report indicated that air quality tests performed by the California Air Resources Board (CARB) at Slide Hill Park in East Davis from November, 2009 through February, 2010 showed the average PM2.5 concentrations in the measured air were on the order of 100% greater than average PM2.5 concentrations measured at two other locations in Davis. Further, the report indicated that average PM2.5 concentrations taken at Slide Hill Park in East Davis were about 50% greater than average PM2.5 concentrations measured during the same period by CARB in Woodland and Vacaville.

The YSAQMD Report further stated that there were 19 days in which average 24-hour PM2.5 concentrations at Slide Hill Park exceeded Federal air quality standards and were thus deemed to be “Unhealthy for Sensitive Groups”. “Sensitive Groups” as defined by the United States Environmental Protection Agency include seniors, children, and others with respiratory or cardiac impairments. The YSAQMD Report also stated that there were only 1 to 2 days in which Federal 24-hour PM2.5 standards were otherwise exceeded at the other sites in Davis, Woodland, and Vacaville which were simultaneously monitored by CARB.

Additionally, information presented in a report submitted to the City of Davis by Dr. Thomas Cahill entitled “Aerosol monitoring in Davis, Winter, 2009-2010” (the “Cahill Report” – see Vanguard article “Cough…Cough! There were Sure a Lot of Wood Smoke Complaints from Davis Residents Last Winter” – 6/4/2010) showed that there were 12 days in which average 24-hour PM2.5 concentrations exceeded the current Federal 24-hour PM2.5 standard at a site in Sacramento identified as “Del Paso”. According to the Cahill Report, the Del Paso site in Sacramento “…is the one that is most likely to have violations of the federal PM2.5 mass standard and thus throw the whole Sacramento, Yolo-Solano, and low elevation regions of Placer and El Dorado Counties into violations of the Clean Air Act.” Thus, there were approximately 50% greater days in which Federal 24-hour PM2.5 standards were exceeded at Slide Hill Park in East Davis compared to what is otherwise identified by Dr. Cahill as the area with the worst air in the region.

The Cahill Report also reported numerous complaints of wood smoke by citizens in central and west Davis and concluded there were a number of credible instances in Davis where citizens were adversely affected by what was characterized as “nearest neighbor impacts” of wood smoke.

Additionally, numerous letters to and testimony before the City Council speaks to the widespread nature of the problem in Davis. One letter written by a person in Village Homes in West Davis told of having to tape some of his doors and windows shut each evening during winter to prevent intrusion of wood smoke into his home which triggered asthmatic reactions in his wife.

Another letter to the Davis City Council from a Central Davis resident reported that “Smoke invades the home, making the interior air both unpleasant and unhealthy. When that condition occurs, the victims of the smoke have only two choices – endure the condition or leave the home”. This resident also resorted to taping his sliding glass doors shut to try to prevent his neighbors smoke from entering his house. If he tried to spend time in his backyard during these episodic events, he reported becoming nauseous.

Another person with COPD (chronic obstructive pulmonary disease) in East Davis testified before the City Council that neighborhood wood smoke was sufficiently high that it precluded their walking down the street or even using their backyard during many winter nights because they otherwise suffered adverse effects from the presence of the wood smoke. This person further testified that they were unable to open their windows at night to enjoy the breathing comfort provided by cold air because wood smoke wafted into their bedroom through the open window.

Based on these qualitative statements by Davis residents, the number of complaints reported in the Cahill report, and the independent, quantitative findings of high PM2.5 concentrations by the YSAQMD, it is apparent that the problem of wood smoke is widespread and pervasive in Davis such that it represents a public health threat and/or is an impediment to the enjoyment of many persons’ homes in many different Davis neighborhoods.

3. Would a buyer of any home in question in Davis otherwise have an expectation of comparatively clean air around their home without undue or extensive investigations on their own?

One person specifically wrote to and testified before the Davis City Council that, “Because the air is supposedly better in Davis, I recently moved from Sacramento to Davis and in doing so gladly paid a comparatively higher housing price”. Once the woman moved to East Davis, however, she testified that local wood smoke pollution initiated severe asthma attacks resulting in numerous trips to the hospital emergency room in respiratory distress during subsequent wood burning seasons.

One could speculate that other people moving to Davis from outside the immediate area would also have an expectation that the air in Davis will be of comparatively higher quality. This is because the city, business, and real estate communities in Davis all advertise Davis as “green” or otherwise allude to an environmentally-friendly community through various statements in the City’s, the Chamber of Commerce’s, and numerous real estate broker websites and promotional materials.

For instance, the City’s own municipal website indicates that Davis is “…known as environmentally aware” and “…is noted for its … environmental programs…” Further, a Focus newsletter published by the City of Davis states, “For more than 40 years, Davis citizens have supported programs and projects that have earned it an ecofriendly reputation” and that “Davis has gone green”. The website of the Davis Chamber of Commerce also states that, “The city is also known for its commitment to environmental awareness”.

It is obvious that such statements are designed to create the impression that there are no generally known environmental hazards in Davis and that Davis is environmentally-friendly in order to increase the appeal of the City of Davis to its own citizens and businesses and prospective newcomers to the City. Further, a person viewing only such statements and not being privy to other information about specific environmental conditions in Davis would, in general, clearly have an expectation that the air quality is Davis is at least comparable to if not better than that in other communities.

Additionally, 90% or more of the population from Bakersfield to Sacramento and including the entire San Francisco Bay Area are subject to mandatory restrictions on all wood burning ranging from 10-50 days per year and that there are absolutely no restrictions on wood burning during any time in the city of Davis. Thus, people moving from those areas in which there mandatory restrictions on wood burning during episodic events of poor air quality probably would assume that Davis would have similar protective measures because of the environmentally responsible image projected by the City of Davis and the Davis business and real estate communities.

Conclusions as to the Legal Requirement or Advisability to Disclose Wood Smoke as an Environmental Hazard to Prospective Home Buyers in Davis

In summary, the need to provide an Environmental Hazard Disclosure for wood smoke in a Real Estate Transfer Disclosure Statement in either East Davis or other parts of Davis depends on the determination of several points of fact as described above:

Based on publicly available information, though, certainly the sale of residential real estate in East Davis which is in close proximity to Slide Hill Park in East Davis requires that prospective buyers be properly and explicitly notified that the presence of excessive levels of wood smoke in the air during the winter months is a distinct possibility. Additionally, they should be advised that such exposures could be detrimental to the health of children, seniors, and those with preexisting respiratory or cardiac conditions.

Further, such an Environmental Hazard Disclosure for wood smoke in other parts of Davis from which reported complaints were made in the Cahill Report would also seemingly be required. Such disclosures should also clearly indicate that there are not ANY wood burning restrictions in Davis and that there have been complaints of wood smoke from these neighborhoods in Davis. For maximum disclosure and protection from future liability, seller and seller’s agent should also provide the prospective buyer with copies of the YSAQMD Report and the Cahill Report particularly if the prospective buyer has any members of their household that is in a group susceptible to excessive wood smoke exposure. Such “Sensitive Groups” include children, seniors or others with respiratory or cardiac impairments such as asthma, COPD, or those with congestive heart failure.

Certainly, if any particular seller of residential real estate in Davis has specifically experienced discomfort due to wood smoke exposure or was offended by the smell of wood smoke within the recent past few winters, such seller is explicitly required by law to disclose this information to prospective buyers as a material fact. Any failure to disclose such information could mean that the buyer would have standing to bring a lawsuit for damages or reverse the sale of the home if such facts became known in the future and the buyer was negatively impacted by future wood smoke exposures. If a wood smoke problem did exist in that particular neighborhood, it would therefore be highly advisable to make such disclosures unless a mitigating ordinance is put in place that would be expected to substantially eliminate this risk factor.

What if this disclosure is simply ignored or downplayed by prospective sellers and their real estate agents in the future? Well, the experience of sellers and sellers’ brokers representing homes sold near the existing Frontier Fertilizer Superfund site indicate that such avoidance or oversights would likely result in lawsuits demanding reparations or sale reversals particularly if members of the buyer’s family are in the identified “Sensitive Groups”. And there would obviously be no shortage of lawyers willing to assist new buyers in obtaining this legal recourse.

Obviously such disclosures potentially represent a serious obstacle to timely future home sales in Davis at prices beneficial to sellers. And the situation is doubly unfair to sellers who have otherwise not only endured years of harmful or irritating exposures to their neighbors’ toxic wood smoke plumes but will also face the specter of diminished home resale value because of their neighbors’ largesse.

It will be tempting to some to solely blame the wood burners in Davis whenthese home sale impediments become apparent in the future. Clearly they are responsible for the decreased air quality in Davis and the misery to which some are subjected and the irritation many experience. And I am sure there are those who will blame this author for bringing this matter front and center to the public’s attention. But the blame is equally shared by the irresponsible failure of the majority of the City Council to implement any protective measures to mitigate the problem in the face of overwhelming evidence that a harmful condition exists – and such failure has continued for 3 straight years! Further, this information was provided to each of the individual Councilmembers before the October 5th meeting. As such, they declined to implement any wood burning restrictions knowing full well their continued inactions would place these substantial hurdles before home sellers in Davis in the future.

In a future Vanguard article, mitigating solutions proposed to and rejected by the City Council majority will be discussed that could have alleviated this disclosure problem.