NEW YORK — New York--When you bought your last house, you might have had it checked for termites and dry rot.
When you buy your next one, you should check it for a wide range of environmental hazards as well.
Almost any piece of property might, in the past, have had toxic substances buried there. Almost any vacant lot might be hit, in the night, by guys in dark shirts who are making an illegal dump. Almost any homeowner might turn on the tap and find the water stinking of chemicals from a nearby spill.
If you don't check for problems and wind up with a tainted property, you may not be able to sell it or borrow against it until you clean the hazard up.
Bankers who make commercial loans are vividly aware of the new environmental risks. Many won't finance business properties until they've conducted an "environmental audit" to see if the real estate is clean.
Small businesses that use or produce toxic substances -- among them, gas stations, scrap yards, dry cleaners, paint stores and printers -- are finding it tough to get any credit at all.
Bankers are terrified of the liability. If such businesses fail and the lender forecloses, the lender might inherit the cleanup.
But so far, banks have gone easier on single-family homes. It takes a risky situation to generate a full inspection for toxic threats, says Lynne Barr, a Boston attorney who handles these issues for lenders.
But if you don't check, and discover problems later, you're up the creek.
If, at this point, you are not scared stiff about buying a piece of real estate, this column isn't doing its job. The last to hear about these environmental risks are small investors and homeowners who might easily blunder into a property that could cost them all they have. Any property is a risk to own if:
* You depend on a well for water and live near a landfill, a chemical plant, a gas station or any enterprise that produces toxic wastes. Your water supply is permanently endangered. Your location has already lowered your property's value. As more potential buyers learn about these hazards, your home will be even harder to sell.
* You buy a farm, or invest in a second mortgage on a farm and foreclose when the owner doesn't pay. Fuel tanks are doubtless buried on the land for gassing up the farm machinery. If they leak, your property may not be salable until you dig out the polluted dirt.
* You own a vintage apartment house. The ceilings might have been sprayed with asbestos. The walls might be shedding lead-based paint. Lead-based solder might have been used on the water pipes. The cost of correcting these hazards may be more than the building is worth.
Under state and federal laws, buyers generally aren't responsible for sanitizing property as long as (1) they didn't cause the pollution (or their tenants didn't) and (2) before buying, they made "all appropriate inquiry" to see if the land was clean.
Big deal. You still may go broke. Once land is polluted, you may not be able to sell it or borrow against it. This is just as true of inherited land as of land you buy. You'll have to sue the polluter to recover your money.
Banks maintain lists of qualified environmental auditors. They charge around $1,500 to $3,000 to check for such problems as asbestos, radon, lead and hazardous wastes. The audit is worth it!
For some helpful information, get "A Home Buyer's Guide to Environmental Hazards" from R. Woods, Consumer Information Center-W, P.O. Box 100, Pueblo, Colo. 81002. It costs 50 cents.