Colorado Real Estate Journal - January 21, 2015
The State Board of Health adopted amendments to its rules for the cleanup of illegal drug labs. These amendments, effective Dec. 15, 2014, make substantial changes to the process used to evaluate and accomplish cleanup. The regulations can be found online at: https://www.colorado.gov/ pacific/cdphe/methlabcleanup. The major changes are as follows: • Consultants conducting sampling and certifying cleanup must now be certified by the Colorado Department of Public Health and Environment. There is a process for interim certification – do not use a consultant whose name or company is not on this list. Those companies and individuals that have completed interim certification also can be found on the state's web page shown above. • A training and formal certification process is being established for consultants and cleanup contractors. Basic curriculum is contained in the regulation and CDPHE is in the process of certifying training courses. • CDPHE now has administrative enforcement powers regarding these regulations. • The process for sampling to determine if contamination is present has been modified. The use of composite samples is allowed but they are now defined and limited. New procedures are in place for sampling of surfaces painted after contamination occurred. • Post-cleaning verification sampling is defined in greater detail and the regulations now contain a great deal of specificity on personal property. • Reports of cleanup must now be sent to CDPHE in addition to the local authorities. • New procedures have been adopted for screening assessments of property not known to be impacted by methamphetamine. These studies typically are done prepurchase as allowed under statute. Certified consultants must be used and specific procedures and reports are required. As the statute and standard residential real estate contract allow cancellation based upon adverse results, we anticipate that litigation on compliance with the screening assessment procedures will occur in some cases of contract cancellation. T h e s e s c r e e n i n g assessments also apply to m u l t i - u n i t re s i d e n t i a l transactions and they suggest rigorous sampling as part of the due diligence process. Buyers and sellers of multi-unit properties will want to carefully consider these requirements when crafting contracts if for no other reason than the cost of due diligence could be quite high. The regulations do not mandate screening assessments, but they may define the scope of work if conducted and not otherwise carefully defined by contract. While these are rigorous requirements, there is a benefit to compliance with the regulatory cleanup process. Once a property owner has an industrial hygienist certify that the cleanup procedures have been met, the property owner is immune from suit by subsequent occupants or neighbors for health problems. According to statute, that property owner also need not disclose the fact that a cleanup occurred when he sells the property – a very bad idea in my view, that almost always generates litigation when the new owner learns about the problem. As best we can tell, meth labs are more common now than they were a couple of years ago. We have seen a resurgence in the discovery of meth labs and litigation. Foreclosure flips remain the most common scenario, although we are still seeing them in apartments, townhomes, self-storage units and commercial spaces. It is critical to understand that “meth lab” doesn't necessarily mean a manufacturing operation. Drug use alone has been proven to cause contamination in excess of the state cleanup standard, and that is today the most common scenario. Proof of contamination is not required. I can't say this enough as it comes up over and over again. Proof of contamination is not required to trigger the obligation to comply with the regulations or the obligation to disclose. Law enforcement is rarely involved in this discovery process. The most common discovery scenario is the neighbor who comes bearing the welcoming fruit basket and expresses pleasure that the new owners are much nicer than the drug users that were previously residents. Such a disclosure causes immediate angst and phone calls to lawyers and consultants. The buyer needs to beware. Even with a certification program for consultants and contractors, get and check references before you hire anybody to do anything regarding methamphetamine contamination. There are no shortcuts. Only one sampling and analysis approach is approved under the regulations – use something else and you aren't in compliance. You can't paint over a meth problem. You must perform a cleanup that involves either scrubbing walls or removing them to eliminate the contamination. Extreme caution must be used when contemplating cleaning. This is not a job for normal maintenance and cleaning crews. Protective equipment must be used. Occupational Safety and Health Administration 40-hour hazardous materials training is typically the minimum. Keep in mind that if other contaminants are present, such as asbestos, different training and certification will be necessary. It should be obvious that disclosures regarding meth labs are required in real estate transactions. Under Colorado statute the seller of residential real estate is required to disclose if he has knowledge that a meth lab was present. This is in addition to the routine real estate disclosure form. Many attorneys feel that failure to disclose drug use that has the potential to contaminate the property also is required as a routine disclosure. This is applicable to commercial property as well. Under the statute the buyer of residential property has an absolute right to have the property tested to determine if a methamphetamine drug lab may have been present. No cause to suspect a lab need be present and the right to test cannot be limited by contract.