Court Of Appeals Finds Potential Environmental Hazards Require Disclosure On Seller’s Disclosure Statement
Opinion Published: June 10, 2025 (M.J. Kelly, P.J., and Swartzle and Ackerman, JJ.)
Docket No. 367226
Wayne County Circuit Court
Holding: Contaminated groundwater is an "environmental hazard" under the seller disclosure act, even if there is no known contamination of the soil or vapor intrusion in the home. The court reversed the trial court's decision, which had granted summary disposition in favor of the Defendant-Appellees, on the basis that there was no "environmental hazard" to disclose.
Facts: Plaintiffs purchased a home from Defendants. The property was located near a former General Motors plant site, where trichloroethylene (TCE), a carcinogen, was found in the groundwater. Plaintiffs alleged that Defendants failed to disclose this environmental hazard as required by Michigan's Seller Disclosure Act. The trial court initially granted summary disposition in favor of Defendants, concluding that Plaintiffs did not present sufficient evidence of contamination and that their reliance on the Seller's Disclosure Statement (SDS) was unreasonable.
The central legal question on appeal was whether groundwater contaminated with TCE constitutes an "environmental hazard" under the Seller Disclosure Act, even if the contamination had not migrated to the soil or home, and the home used municipal water. The court also examined whether the Plaintiffs' reliance on the SDS was reasonable and whether Defendants had personal knowledge of the contamination.
Key Appellate Ruling:
The court determined that the Seller Disclosure Act requires disclosure of potential environmental hazards, not just actual contamination.
The presence of TCE in the groundwater, which poses a risk of vapor intrusion, was deemed an environmental hazard that should have been disclosed. Specifically, the appellate court determined that the presence of TCE in the groundwater beneath the property, despite not having migrated to the soil or home, posed an unacceptable risk due to the potential for vapor intrusion, thus qualifying as an environmental hazard that required disclosure. The trial court found genuine issues of material fact regarding the reasonableness of the Plaintiffs' reliance on the SDS, and Defendants' knowledge of the contamination.
The Michigan Court of Appeals reversed the trial court's decision, ruling that the contaminated groundwater constituted an environmental hazard that should have been disclosed. The court clarified that when there is an actual, viable vector for the contaminant to migrate to the soil or air of the property, it constitutes an "environmental hazard" under the Seller Disclosure Act and must be disclosed on the SDS prior to sale.
Additionally, the appellate court addressed the issue of reasonable reliance, noting that there was a genuine issue of material fact regarding whether Plaintiffs reasonably relied on the SDS disclosure, given that Defendants had represented that there were no known environmental hazards associated with the property. The court also highlighted that Defendants had knowledge of the TCE contamination and monitoring efforts, which they failed to disclose, further supporting the reversal of the trial court's decision.
The case was remanded for further proceedings.
