Type: Law Bulletins
Date: 04/24/2014

Indiana Legislature Unexpectedly Axes Property Transfer Law

The Indiana General Assembly recently voted to repeal the Indiana Responsible Transfer Law (“RPTL”) as part of House Enrolled Act No. 1005. After July 1, 2014, however, the RPTL will no longer remain in force. The repeal applies to relevant definitions listed throughout IC 13-11, such as the definition of “property” in IC § 13-11-2-174 and other RPTL provisions that are codified at IC §§ 13-25-3 et seq.

Currently, the RPTL applies to property transfers with certain defined characteristics. For example, if a parcel of property is contaminated or contains underground storage tanks, it could fall under the RPTL’s purview. Under the RPTL, transferors of such property must disclose a range of information, including any environmental defects, existing restrictive covenants, regulatory information and relevant site information from prior owners and operators. This information is reported on a standard disclosure form (the “Disclosure”). The Disclosure must be completed at least 30 days before the property transfer occurs. Significantly, if the Disclosure reveals one or more environmental defects, the party or parties to whom the Disclosure is provided are relieved of any obligation to accept transfer of the property or finance the transfer of the property.

The circumstances surrounding the repeal of the RPTL have received little publicity. Nevertheless, this development will undoubtedly impact a significant number of prospective real estate transfers. The extent of the impact remains unclear, however, and will likely vary on a case-by-case basis. Although there will be no statutory duty to disclose environmental defects after July 1, the common law “duty to warn” may still apply. To make matters murkier, at least one court has held that the RPTL applies to historical uses. See Browning v. Flexsteel Indus., 959 F. Supp. 2d 1134, 1157-60 (denying defendant’s motion for summary judgment on RPTL claims). Thus, in the RPTL’s absence, questions concerning the duty to warn are sure to arise, which will likely spawn disputes. Additionally, there is an increased likelihood that critical information, previously subject to disclosure under the RPTL, will be fraudulently withheld.

While the repeal of the RPTL may come as a relief to some and a hazard to others, purchasers and financers of certain real estate transactions could face unforeseen environmental liability stemming from undisclosed contamination or other environmental defects. This is especially true where a less sophisticated party does not have the means to discover a defect or mistakenly believes investigation is unwarranted.

For more information regarding existing obligations under the RPTL or the impact of its repeal, please contact Scott Alexander, Julian Harrell or any member of Taft’s Environmental group.

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