Study Pinpoints Broker Costs for Environmental Compliance

Lefrak Organization Inc. v. Chubb Custom Insurance Co., 1996 WL 603964 S.D.N.Y.

February 1, 1997

WASHINGTON, D.C.--Real estate salespeople spend an average of one hour and five minutes of each residential sales transaction explaining environmental compliance issues to buyers and sellers and doing paperwork, according to a new study from the NATIONAL ASSOCIATION OF REALTORS®.

The average cost of environmental testing, inspection, and remediation is $325 per residential transaction--including both seller and buyer expenses--according to the 1996 Environmental Compliance Cost Survey from the NAR Research Division.

Commercial specialists reported spending an average of two hours and three minutes on educating and doing paperwork, with testing and inspection costs averaging $7,266.

The results are based on survey responses from 680 NAR members--412 residential specialists and 268 commercial specialists.

Insurers Liable for Defense in Lead Paint Injury Claims

NEW YORK--General liability insurance carriers can’t use an environmental-pollution exclusion clause found in standard policies as a reason for refusing to defend property owners against tenant claims of lead-based paint injuries, a federal judge in Manhattan has ruled.

The decision was seen as a victory for residential landlords faced with lead-based paint injury claims.

The decision stemmed from a lawsuit brought by a landlord against Chubb Custom Insurance Co. when Chubb refused to pay the landlord's costs in defending a $3 million lawsuit brought by a Brooklyn tenant. The tenant claimed that her young daughter had been injured by exposure to lead-based paint in their apartment.

Chubb argued that the paint was covered by an exclusionary clause for pollution. The clause is contained in the insurer's standard policy.

The U.S. District Court for the Southern District of New York ruled that because the alleged poisoning occurred inside an apartment, it couldn't be regarded as a pollutant, such pollutants being typically created as ''by-products of the operation of equipment or machinery.''

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