Pipeline Proximity Disclosure FAQs
- Is transmission pipeline proximity disclosure required by law?
- Why do other disclosure companies say pipelines should not be disclosed?
- Is the pipeline disclosure in the mandatory NHD section of the report?
- Are the government’s national pipeline maps perfect?
- Is it safer to give a general “advisory” about pipelines as other competitors recommend?
- What is the current status of pending legislation regarding pipeline disclosure?
- What does the new C.A.R.® advisory form say about pipeline disclosure?
- Do other California REALTOR® Associations agree with C.A.R.®?
Q1. Is transmission pipeline proximity disclosure required by law?
A. Disclosure Law: Pipeline proximity disclosure is not currently mandated by a specific disclosure law. However, state and federal legislation mandating disclosure are pending.
Other Laws: A real estate agent has a fiduciary duty to disclose all material facts to a buyer (Civil Code 2079). The standard of care is measured by the degree of knowledge through education, experience and examination (Civil Code 2079.2).
Civil Code 1102 and California case law clearly point to the duty of a seller to disclose material facts regarding the property. In 2011 PG&E notified millions of property owners that their parcel is within 2,000 feet of a gas transmission pipeline. Other California gas utility companies inform and educate consumers with pipeline maps on their public websites. Such information is obviously material to a buyer. So, what happens if the seller forgets about the notification and doesn’t tell the agent or the buyer? What will happen when the problem is discovered and the buyer sues both the seller and the agent? Even if the seller never told the agent, how does the agent prove a negative – that he/she didn’t know? How does the agent defend against the accusation that he/she could have provided the information through a FANHD or JCP-LGS report but chose another provider that doesn’t include the information?
Q2. Why do other disclosure companies say pipelines should not be disclosed?
A. Other disclosure companies argue that underground pipelines should not be disclosed because it is not mandatory, or that only general information should be provided in an "advisory." Why? Obtaining and integrating the federal pipeline mapping information into an automated disclosure system and updating it regularly is very expensive. After the pipeline disaster in 2010, FANHD and JCP-LGS made this investment in order to protect its customers.
Q3. Is the pipeline disclosure in the mandatory NHD section of the FANHD or JCP-LGS report?
A. No. The pipeline disclosure information is not included within the statutorily mandated disclosure sections of the NHD report. The pipeline proximity disclosure is contained in a separate optional report -- the EnviroCheck™ -- which is part of our Industry Standard disclosure package. That full-disclosure product is designed for real estate agents and sellers who want complete disclosure protection! Clients who prefer less may ask for the Comprehensive Report package that includes only the NHD and Tax reports.
Q4: Are the government’s national pipeline maps perfect?
A. No map is perfect. Even the governmental agencies who oversee the various mapping systems so state. However, such maps are the “best available data!” Arguably (maybe) more accurate information might be secured by hiring a geologist, surveyor and other professionals to specifically examine the subject property and the surrounding areas. Obviously such a process would be time-consuming and extremely expensive and not a viable alternative in most real estate closings.
The government agencies having jurisdiction regularly update their maps as they obtain more accurate information. The federal national pipeline system is a regulatory mapping system under the jurisdiction of U.S. Department of Transportation (Pipeline & Hazardous Materials Safety Administration) based on detailed information submitted by utility companies and other pipeline owners as a condition of their continued operation.
FANHD‘s pipeline proximity disclosure is based on the National Pipeline Mapping System which is the “best available data” for pipeline proximity.
Q5. Is it safer to give a general “advisory” about pipelines as other competitors recommend?
A. How does a real estate agent with a fiduciary duty to disclose material facts (Civil Code 2079), defend against a lawsuit from the buyer that the agent and/or the seller had such material information available as part of the FANHD and JCP-LGS reports but chose not to provide it?
And liability for failure to disclose may have a long life! If an accident occurs years after the home purchase, the buyer may have a legal argument around any statute of limitations defense if the buyer argues that he/she only discovered the negligent failure to disclose after an accident occurs.
Q6. What is the current status of pending legislation regarding pipeline disclosure?
A. California: The disastrous 2010 San Bruno pipeline explosion and fire resulted in 5 new pipeline safety laws signed by Governor Brown in 2011. To date, at least 3 additional pipeline safety bills have been introduced in the California Legislature in 2012.
Federal: Last year Congresswoman Jackie Speier introduced a bill into the U.S. House of Representatives that would require all utility companies to notify property owners and residents of transmission pipelines located within 2,000 feet of their property. On January 3, 2012, President Obama signed into law the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011 which increases federal enforcement authority, grants the federal government expanded authority over pipeline safety, provides for new safety regulations and authorizes completion of several pipeline safety studies.
The “pressure” for pipeline disclosure by sellers and their agents is definitely building!
Q7. What does the new C.A.R.® advisory form say about pipeline disclosure?
A. In its most recent revision of the Statewide Buyers and Sellers Advisory (Form SBSA revised 11/2011), paragraph 29 addresses Underground Pipelines and Utilities as follows (emphasis added):
UNDERGROUND PIPELINES AND UTILITIES: Throughout California underground pipelines transport natural gas, liquid fuel and other potentially hazardous materials. These pipelines may or may not provide utility services to the property. Information about the location of some of the pipelines may be available from a company that also provides disclosures of natural and other hazards or from other sources of public maps or records. If Buyer wants further information about these underground pipelines and utilities, Buyer is advised to consult with appropriate experts during Buyer’s investigation contingency period. Brokers do not have expertise in this area. (emphasis added)
Q8. Do other California REALTOR® Associations agree with C.A.R.?
A. Yes. The San Diego Association of REALTORS® (SDAR) recently updated its Local Area Disclosures (LAD) for San Diego County. This buyer’s booklet now includes a fuel transmission pipeline disclosure, according to Robert E. Muir of SDAR’s Risk Management Committee.
SDAR believes disclosure of underground fuel transmission lines helps the parties
in a real estate transaction make an informed decision and is in the best interest of
the public and REALTORS®.*
The San Diego Association further notes:
Only some of the NHD providers disclose pipeline information so ask if your NHD
provider includes fuel transmission pipeline information. When pipeline proximity
is disclosed, the information is contained in the environmental section of the NHD
report.* (emphasis added)
* SDAR Local Area Disclosures (LAD) for San Diego County ("Gas Pipelines", page 5); and SDAR REALTOR® magazine article, "Fuel Transmission Pipeline Disclosure: What You Need to Know" (January 2012 Edition, page 7).
WE ARE THAT COMPANY!
Since 1977 our mission has never wavered. We are dedicated to providing the real estate community with accurate information and comprehensive disclosures necessary to close transactions successfully, with the peace of mind that the provider is a major reputable company with the strength of an industry leader.
NOTE: Other disclosure providers have been very clear that they DO NOT include the pipeline proximity disclosure, according to their marketing information!
To order the pipeline proximity disclosure as part of your hazard disclosure package, request the Industry Standard product from FANHD or JCP-LGS. Call or click to 800-527-0027 (www.fanhd.com), or 800-748-5233 (www.disclosures.com)