The URL can be used to link to this page

Home My WebLink AboutCOM 0419.002 1998-2000 OoJM<r•0 N1 ~~J-i Stephen K. Yamashiro Richard Wurdeman bIa)~or Corporation Counsel '~J a ~,E Of ~N~~ ~IILtYt~~J II~ ~tSf112Ttt OFFICE OF THE CORPORATION COUNSEL 101 Aupuni Strree, Suice 325 • I'lilo, Hawaii 96720-4262 • (808) 961-8251 • Fax B08) 961-8622 October 12, 1999 ~ ~ O,~ o C- c-~ r-~ - - w - 3 TO: Councilmember Dominic Yagong ~ o Hawaii County Council N FROM: Frederick Giannini, Deputy Corporation Counsel RE: Resolution 135-99, Geothermal Relocation Program This is in response to your memo of September 23, 1999 in which you raised questions about the above-noted resolution, which authorizes the Planning Director, pursuant to Hawaii County Code Chapter 2, Article 36 and Planning Department Rule 10, to negotiate the sale of three properties which the County purchased, and which are close to Puna Geothermal Venture's (PGV) electric generating plant. The primary legal issue which you raise is whether or not there is liability on the County's part for selling these properties knowing that the original occupants claimed to have health problems related to the plant. Our response is that as long as the County discloses the location of the plant and the information regarding complaints made by the previous occupants and allows potential buyers to examine the property, the County should avoid liability. In the normal practice of selling real estate, the long established rule has been "caveat emptor," or "Let the buyer beware." A vendor of real property is generally not liable for injuries to the buyer of the property or a third person caused by a defective condition that exists on the property at the time the purchaser moves in. 77 AmJur. 2d, Vendor and Purchaser, §326. An exception would be where the seller knows of facts about the property which would materially affect the value of the property which are not readily observable or known to the buyer. 77 AmJur. 2d, Vendor and Purchaser, §327. Comm. No• ~ ~ ~ F51e No. Qd C Ref. Tos p~e3°M~ GoYMG1L Ref. Date_ ~ 1 3 1449 Memorandum to Dominic Yagong October 11, 1999 Page 2 In the case of the properties in question, the location of PGV is not a defect in the home itself or the parcel of real property on which it is located. There is, however, a recent trend in cases involving real property sales that place a duty on the seller to disclose conditions on property off-site that may influence the decision to buy the property. 41 ALR 5'h 157. In Strawn v. Canuso, 657 N.J. 420 (1995), the court held that where a seller knew that a landfill was located near a residential development, and that the landfill possibly contained hazardous waste, the seller of the properties had a duty to disclose facts about any offsite conditions which were not readily observable and which would affect the desireability or value of the property. In the case of Alexander v. McKnight, 9 Cal Rptr., (Cal. App. 1992), it was ruled that sellers had the duty to disclose to potential buyers the existence of neighbors who made unreasonable noise and otherwise caused problems in the neighborhood. In the present situation, people have attributed problems such as burning eyes, sore throats, and breathing difficulties to the fact that they live close to PGV's plant. The plant does generate a certain level of noise, and that may be a consideration in some peoples' decision to buy. Therefore, when the County sells the properties, it should make a full disclosure of the location of the geothermal plant, acknowledge that the plant generates noise, and state that the buyer has the responsibility to examine the property in order to make himself or herself aware of the noise situation. The prospective buyer should be given the opportunity to find out what the noise level is like at various times of the day, including the night and early morning, in order to determine whether or not it is personally acceptable to the buyer. In addition, infonnation regarding these claimed health hazards should be made available to prospective purchasers. The County would not have any liability, either to void the sale or for damages, if these appropriate disclosures are made. Were any later action by PGV to cause injury to the person who bought the property, then PGV may have some liability, but not the County. You have also raised questions about the potential financial return on the sale of the property and whether or not the financial return outweighs the possible liability exposure. It is difficult to state what the financial return would be, since that is not a legal question and would be better answered by an appraiser or someone with experience and expertise in real estate sales. As to whether or not the financial risk outweighs the exposure to liability, we can only state that if the County makes honest and proper disclosures about the property and PGV's plant, then the County will have minimal risk of exposure to liability. Memorandum to Dominic Yagong October 11, 1999 Page 3 Please contact this office if there are any questions. FG:ch comma : a/YagongGeothermalReloc.ltr