The Seller Disclosure Act (SDA); Seller’s Disclosure Statement (SDS); “Environmental hazard” disclosure requirement; MCL 565.957(1); The Natural Resources & Environmental Protection Act (NREPA); MCL 324.20101(p); “Hazardous substance”; MCL 324.20101(x)(i) & (ii); “Contamination”; MCL 324.21302(g); Groundwater; MCL 324.21302(k); Groundwater contaminated with trichloroethylene (TCE); Whether reliance on the SDS was reasonable; Effect of an “as is” clause; “Personal knowledge”

Noting that there was “no binding precedent directly on point,” the court held that known contaminated groundwater is an “environmental hazard” to be disclosed under the SDA, “even when, as here, there is no known associated contamination of the soil or vapor intrusion in the home.” It also found that there was a genuine issue of material fact whether plaintiffs-home buyers reasonably relied on defendants-sellers’ SDS disclosure. The home is located near a former auto plant. TCE has been found in the surrounding groundwater. The current owner of the plant property has installed monitoring wells in the area. Defendants checked “no” in response to the SDS form’s question about environmental problems. Alleging violation of the SDA, fraudulent misrepresentation, and silent fraud, plaintiffs sought rescission of the purchase agreement. The question was whether groundwater contaminated with TCE is “itself an ‘environmental hazard’ under the [SDA], even though (1) the contamination had not migrated to the adjacent soil or residential building, and (2) the building did not draw water from the groundwater?” The court rejected the position “that the surface soil or residential building itself must necessarily be contaminated to trigger disclosure, as opposed to ‘merely’ contamination of the groundwater under the home.” It concluded that as “long as there remains an actual, viable vector through which the contaminant in the groundwater can migrate to the soil and air, there is a risk to the environment.” Given that the SDA does not define “environmental hazard,” the court looked to environmental statutes, including NREPA, for guidance. It found that a reasonable reading of the term under the SDA means “an unacceptable risk to a person’s health, safety, or welfare posed by the presence of a substance, material, or product in the soil, surface water, groundwater, air, or building materials associated with the” property. Applying this definition, it held that the trial court erred in granting defendants summary disposition on the basis that there was no “environmental hazard” to disclose under the SDA. There was no question that (1) “TCE is a carcinogen that, with exposure above a sufficient level, endangers a person’s health, safety, or welfare” and (2) it “was present in levels above those set by the EPA in the groundwater below the” property. And there was “at least a question of fact that, at the time of transfer, there was an actual, viable contaminate vector from the groundwater to the property’s soil and air.” Reversed and remanded.