Groundwater Hazard Statement Change

by | Jul 8, 2022 | Residential Real Estate

For homeowners buying and selling real estate, the entire process can be overwhelming. There are price negotiations, home inspections, and title matters to address. Before closing, an attorney must draft a deed for the seller to sign. Now, the State of Iowa enacted a new law that changes some of the required legal documents.

In a typical real estate transaction, there are three legal documents that must be prepared: the deed that conveys title, the Declaration of Value that recites the sales price of the real estate, and the Groundwater Hazard Statement that discloses the existence of potential groundwater contamination issues.

Effective July 1, 2022, a new law eliminates the requirement for a Groundwater Hazard Statement if there are no known groundwater contamination issues. This is a major change from always filing the Statement, even if it showed no groundwater issues.

The Groundwater Hazard Statement discloses the existence of septic tanks, wells, hazardous waste, and other potential contaminants. If there is a septic system, the law requires that it be inspected by a licensed professional at the time of transfer.

But many transactions don’t involve groundwater contamination issues at all. To eliminate unnecessary paperwork, if there no known groundwater hazards, then a Groundwater Hazard Statement must not be filed. Instead, the first page of the deed must contain a recitation that the transaction is exempt. The language on the deed must follow the new statute.

This is a requirement, not an option. After July 1, 2022, if a Groundwater Hazard Statement is submitted with a deed and the statement shows no groundwater hazards, the local County Recorder shall reject the filing. This means that the transaction will not go through and the deed will have to be amended and resubmitted.

If there are groundwater hazards, then nothing changes with the requirement for the Groundwater Hazard Statement disclosure. Certain transactions – like those between family members or transfers without consideration – are exempt from the Groundwater Hazard Statement altogether.

It is vital that anybody selling real estate know whether or not there are potential groundwater contamination issues and that those hazards be clearly disclosed. If you have questions about the legal requirements for drafting deed and its supporting documents, contact an attorney who specializes in real estate law.