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3 FAIR DISCLOSURE AND AIRPORT IMPACT STATEMENTS IN REAL ESTATE TRANSFERS By Larry W. Thomas, Attorney at Law, Washington, DC I. INTRODUCTION Section II of the digest examines states with air- port disclosure laws and discusses when and in what The purpose of this digest is to discuss whether and manner a seller must disclose that residential prop- under what circumstances a seller of residential real erty being offered for sale is within the boundaries of property or local authorities must give notice to a pro- an airport noise exposure map, an airport influence spective home buyer that the property is affected by its area, or is situated in a military Air Installation proximity to an airport. Compatible Use Zone (AICUZ). As is more fully discussed in Appendix A, in the ab- Section III of the digest discusses whether a sence of a residential real property disclosure act, the state's enactment of an airport disclosure act is an doctrine of caveat emptor ("Let the buyer beware") usu- exercise of the state's police power or amounts to a ally applies. Under the caveat emptor doctrine, it is a regulatory taking of property that requires the pay- buyer's responsibility to perform the due diligence re- ment of just compensation to property owners af- garding a property he or she intends to purchase. In fected by a disclosure act's requirements. those states without disclosure acts a seller's obligation Section IV discusses whether an airport disclosure or duty to disclose defects or conditions affecting prop- statement would have an effect on a buyer's claim for erty is likely to be limited by the caveat emptor doc- noise damages after the buyer purchased property trine. Also, under the doctrine a seller generally is not knowing that it was subject to airport noise. obligated to reveal all that he or she knows about the Section V addresses the effect of noise studies and property. Except in the circumstances noted in Appen- contour maps on claims for airport noise damages. dix A, the rule prevents a buyer from suing a seller to Section VI is a typical fair airport disclosure act rescind a contract or for damages. developed for the digest that includes comments on The recent trend in the states is the enactment of proposed provisions and issues relevant to the enact- residential real property disclosure laws. For purposes ment and use of an airport disclosure statute. of this digest, the disclosure laws are of two types: 1) Appendix A is a general discussion of real estate fair general residential real property disclosure laws, and 2) disclosure laws. Appendix B is a matrix of state resi- residential real property laws applicable to the disclo- dential real property statutory disclosure provisions. sure of the proximity of airports and airport noise af- Appendix C is a matrix of state airport disclosure provi- fecting property offered for sale. sions. Appendix D is the Airport Disclosure Statement Approximately two-thirds of the states have enacted relating to the Tucson International Airport. Appendix general residential real property disclosure laws. The E is the Real Estate Transfer Document Statement for purpose of such laws is to provide prospective home the San Francisco International Airport. Appendix F is buyers with sufficient information to enable them to a version of the Typical Airport Disclosure Act devel- make informed decisions about the purchase of residen- oped for the digest that is contained in Section VI but tial property. See Appendices A and B for a more com- without the notes and comments. prehensive analysis of the provisions of the acts. Sig- nificantly, no circumstances were found in which a II. DISCLOSURE OF AIRPORTS UNDER EXISTING disclosure statute lacking an airport disclosure provi- REAL PROPERTY DISCLOSURE LAWS sion has been used to require notification to a prospec- tive buyer of airport proximity or noise. Some states specifically require the disclosure of an A. Introduction airport or the effect of aviation operations to a prospec- Some form of residential and real property disclosure tive purchaser of residential property. The digest dis- laws specifically pertaining to airports have been en- cusses the features of such laws requiring the disclo- acted in at least 13 states, including A l a s k a , Ari- sure of airport noise, flight paths, and other effects of zona, California, Hawaii, Indiana, M a r y l a n d , airports to prospective purchasers of property in the Michigan, Minnesota, New Jersey, Nevada, North Caro- vicinity of an airport. Appendix C contains a matrix of lina, Tennessee, and Virginia. The disclosure laws take these laws. Under most residential real property disclo- one or more of four approaches. Arizona, California, sure laws, the requirement to disclose is generally im- Hawaii, New Jersey, and North Carolina require that a posed on the seller or his or her agent. seller disclose that a property is within an airport influ- ence area, an airport noise contour map, or an airport safety zone. Indiana, Michigan, and Minnesota require