Environmental
Underground storage tanks (USTs) are a concern in real estate transactions primarily because:
AThey reduce property value by taking up basement space
BLeaking USTs can contaminate soil and groundwater with hazardous substances✓ Correct
CThey require annual replacement under federal law
DThey increase property taxes
Explanation
Leaking USTs—common at gas stations, dry cleaners, and older properties with home heating oil tanks—can release hazardous petroleum products into soil and groundwater, creating costly cleanup liability.
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Key Terms to Know
Gross Rent Multiplier (GRM)
A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
EncumbranceAny claim, lien, charge, or liability attached to real property that affects its value or limits its use.
ZoningLocal government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.
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