Property Disclosures and Environmental Issues: Texas Exam Guide

This area is not a list of scary substances. It tests whether you can identify a condition, connect it to the correct federal rule, and decide what a seller or license holder must do next. A good answer rarely asks the agent to diagnose contamination. It usually asks the agent to disclose a known fact, preserve a required federal process, or refer the client to a qualified specialist.

The outline used here is Pearson VUE document #094401, revision 01/2026. Its national salesperson outline became effective March 1, 2025 and remained the published outline on August 30, 2026.

What does the official exam outline cover?

Pearson divides this area into two subtopics. It does not divide it into a separate Texas disclosure topic, lead topic, and CERCLA topic.

That 5 to 4 split should shape your study time. Subtopic A is slightly heavier, but the exam also expects you to apply disclosure rules to facts rather than only recite hazard definitions.

Subtopic A: property conditions and environmental issues

Start by sorting the condition into one of four groups.

The environmental hazards lesson owns the full condition-and-law map. The CERCLA lesson goes deeper on contaminated-site liability and landowner protections. The lead disclosure lesson handles the transaction checklist for target housing.

Lead, asbestos, radon, and mold

Lead is the hazard with a federal transaction-specific disclosure rule. For most target housing constructed before 1978, 40 CFR Part 745, Subpart F requires the seller or lessor to disclose known lead information, provide available records and an approved pamphlet, and include the required warning and acknowledgments before the buyer or tenant is obligated. A purchaser also receives a 10-day opportunity for a lead inspection or risk assessment unless the parties agree in writing to another period or the purchaser waives it in writing. The rule does not require the owner to test or remove lead.

EPA published a revised Protect Your Family From Lead in Your Home pamphlet in January 2026. It reflects dust-lead levels effective January 12, 2026 and the abatement definition effective January 13, 2025. EPA also provides a supplement for English pamphlets older than January 2026. Use EPA's current materials for an actual transaction.

Asbestos has no equivalent general federal home-sale disclosure form. Federal rules govern many demolition, renovation, school, and workplace situations, while state law and general material-fact duties may govern a sale. The exam clue is usually friable, meaning the material can crumble and release fibers.

Radon is an invisible radioactive soil gas. EPA recommends fixing a home at 4 pCi/L or more and considering action between 2 and 4 pCi/L. That is federal guidance, not a nationwide sale-testing requirement.

Mold follows moisture. Texas licenses many paid mold assessment and remediation activities through Occupations Code Chapter 1958, but the chapter also contains exemptions. Do not convert a state licensing threshold into a federal disclosure rule.

Groundwater, underground tanks, waste sites, and brownfields

A leaking underground tank can contaminate soil and groundwater, but the legal pathway depends on what the tank contains. Petroleum is generally excluded from CERCLA's definition of hazardous substance. EPA explains that federally regulated petroleum tank releases usually fall under RCRA Subtitle I and 40 CFR Part 280, with states serving as the main implementing agencies. CERCLA can still matter when non-petroleum hazardous substances are released.

A brownfield is real property whose expansion, redevelopment, or reuse may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant. Brownfield does not mean the property is unusable or that it appears on the National Priorities List. It describes a redevelopment problem that may be investigated, cleaned, and returned to use.

Flood zones and flood insurance

Floodplain, flood zone, and flood insurance are related but not interchangeable. A floodplain describes land at risk. A FEMA flood zone is a map classification. A structure in a Special Flood Hazard Area may trigger mandatory flood-insurance requirements when the loan is made, increased, extended, or renewed by a federally regulated or insured lender or through certain federal programs.

Texas separately requires applicable sellers to answer flood questions on the Property Code Section 5.008 notice. That is a Texas overlay, not the source of the national flood-insurance rule.

Federal environmental laws, assessments, and wetlands

These topics remain part of official subtopic A. Study them as a second pass after the physical conditions because each one turns on a named federal law, agency, or review.

Clean Air Act, Clean Water Act, wetlands, and EPA

The Clean Air Act authorizes EPA to regulate emissions from stationary and mobile sources and to establish national air-quality standards. The Clean Water Act regulates pollutant discharges into covered waters and uses permit programs such as NPDES.

Wetlands questions usually point to Clean Water Act Section 404. When a wetland qualifies as waters of the United States, discharging dredged or fill material generally requires authorization from the U.S. Army Corps of Engineers unless an exemption applies. The word wetland alone does not prove federal jurisdiction, and private ownership does not create an automatic exemption.

EPA administers or shares responsibility for many of these programs. Match the agency to the law instead of choosing EPA merely because a stem mentions pollution.

CERCLA, SARA, site assessments, and impact statements

CERCLA is the 1980 federal Superfund law. Section 107 identifies four classes of potentially responsible parties, including current owners and operators. EPA describes the liability as strict and retroactive, with joint and several liability possible when the harm is indivisible.

SARA amended CERCLA in 1986. SARA Title III also created the Emergency Planning and Community Right-to-Know Act, which supports emergency planning and public access to information about hazardous chemicals.

A Phase I Environmental Site Assessment is a nonintrusive review of records, historical uses, interviews, government sources, and site conditions. As of August 30, 2026, EPA recognizes ASTM E1527-21 for most commercial real property and ASTM E2247-23 for qualifying forestland or rural property as compliant All Appropriate Inquiries standards. The inquiry generally must be completed within one year before acquisition. Interviews, government-record reviews, the on-site visual inspection, and environmental cleanup lien searches must be conducted or updated within 180 days. A compliant Phase I can help establish one part of a CERCLA landowner protection, but it is not automatic immunity. A Phase II commonly uses sampling and laboratory analysis to investigate a concern identified in Phase I.

An Environmental Impact Statement is different from both. Under NEPA, a federal agency prepares an EIS for a proposed major federal action expected to significantly affect the human environment. A private buyer does not order an EIS as the next step after every Phase I.

Subtopic B: disclosure obligations and liability

Disclosure questions become manageable when you ask four questions in order:

1. What fact or condition exists?
2. Who knew it?
3. Was it known before the other party became obligated?
4. Does a statute require a form, or does a broader duty prohibit concealment?

The material facts and stigmatized property lesson owns this subtopic. It separates national exam doctrine from the Texas rules that candidates also need.

Known material defects

A material fact is one that would matter to a reasonable party's decision. A latent defect is hidden or not readily observable. A patent defect is open and apparent. National exam doctrine places the greatest disclosure pressure on a known latent material defect because the other party cannot reasonably discover it during an ordinary viewing.

For a Texas license holder, the rule is direct. Occupations Code Sections 1101.652(b)(3) and (4) authorize discipline for misrepresenting or failing to disclose a known significant defect to a potential buyer, including a latent structural defect that would matter to a reasonable and prudent buyer.

The Texas seller's notice is not the entire duty

Property Code Section 5.008 requires an applicable seller of residential real property containing no more than one dwelling unit to provide the prescribed notice. The notice reports the seller's knowledge, is not a warranty, and does not replace inspections. The statute includes exempt transfers and gives the buyer a seven-day termination right when the notice is delivered after the contract becomes effective.

Do not turn the form into a universal rule. Some transfers are exempt, and other disclosure duties can still exist. A license holder's independent duty concerning a known significant defect does not disappear because the seller is exempt from the statutory notice.

Stigma and physical condition are different

Texas Property Code Section 5.008(c) removes any duty to disclose a natural death, suicide, an accident unrelated to the property's condition, or a previous occupant's specified HIV or AIDS status. It does not say every death or every psychological stigma is exempt.

Texas Code of Criminal Procedure Article 62.056(e) separately says specified owners, sellers, lessors, and their real estate representatives have no duty to disclose registrants under the sex-offender chapter to a prospective buyer or tenant. Referring the consumer to the current public registry avoids an inaccurate personal assurance.

A physical condition remains a different question. Chemical residue from illegal drug production, a failing foundation, active water intrusion, or contamination is not converted into harmless stigma merely because the property also has a bad reputation.

The quickest way to answer a scenario

Use this sequence:

1. Identify the condition. Lead, asbestos, tank, wetland, flood, contamination, or ordinary defect?
2. Attach the right authority. Lead rule, Clean Water Act, RCRA tank program, CERCLA, NEPA, or Texas disclosure law?
3. Separate knowledge from investigation. Disclosure usually concerns known information. Testing and cleanup belong to specialists.
4. Check the timing. Lead disclosures and All Appropriate Inquiries are valuable only when completed before the legally relevant point.
5. Reject guarantees. An agent should not promise that a property is safe, contamination-free, outside every flood risk, or immune from liability.

Original practice questions

Question 1. A buyer is considering a former service station. The only known release is gasoline from a regulated underground storage tank. Which statement is most accurate?

• A) Gasoline is automatically a CERCLA hazardous substance
• B) The release is generally addressed through the RCRA underground-tank program and state implementation because CERCLA generally excludes petroleum
• C) Environmental law does not apply to petroleum
• D) A title policy transfers the cleanup duty to the insurer

Answer: B. RCRA Subtitle I and 40 CFR Part 280 govern many regulated petroleum tanks and releases. CERCLA Section 101(14) generally excludes petroleum, although other hazardous substances at the same site can still create CERCLA issues.

Question 2. A Phase I identifies a recognized environmental condition. What is the usual distinction between Phase I and Phase II?

• A) Phase I samples soil, while Phase II reviews records
• B) Phase I is a nonintrusive inquiry, while Phase II commonly uses sampling and laboratory analysis
• C) Phase I is federal and Phase II is always state law
• D) Either assessment automatically eliminates owner liability

Answer: B. Phase I focuses on records, history, interviews, government sources, and site observation. Phase II investigates selected concerns with physical sampling or testing. Neither creates automatic immunity.

Question 3. A listing agent knows about a hidden structural defect. The seller is exempt from the Texas statutory seller's notice. May the agent remain silent?

• A) Yes, because the form exemption erases every disclosure duty
• B) Yes, unless the buyer asks directly
• C) No, the license holder's independent duty concerning a known significant defect remains
• D) No, but only after closing

Answer: C. Property Code Section 5.008 form exemptions do not erase Occupations Code Sections 1101.652(b)(3) and (4), which address a license holder's misrepresentation or nondisclosure of a known significant defect.

Question 4. A federal agency proposes a major project expected to significantly affect the environment. Which document is associated with that federal decision process?

• A) Phase II Environmental Site Assessment
• B) Environmental Impact Statement
• C) Seller's Disclosure Notice
• D) Lead Warning Statement

Answer: B. NEPA uses an Environmental Impact Statement for a proposed major federal action expected to have significant environmental effects. It is not a private property-condition test.

Frequently asked questions

How many Property Disclosures and Environmental Issues questions are on the Texas exam?

There are 9 scored questions on the national salesperson examination. Pearson allocates 5 to property conditions and environmental issues and 4 to disclosure obligations and liability.

Is lead the only environmental issue with a federal law?

No. CERCLA, SARA, the Clean Air Act, Clean Water Act, NEPA, RCRA, and federal underground-tank rules also appear in this area. Lead is distinctive because it has a transaction-specific federal disclosure process for most pre-1978 target housing.

Does a Phase I Environmental Site Assessment protect every buyer from CERCLA?

No. A qualifying Phase I can help satisfy All Appropriate Inquiries, but a claimant must meet the rest of the applicable landowner-protection criteria and continuing obligations. Under the current EPA rule, All Appropriate Inquiries generally must be completed within one year before acquisition, with specified components updated within 180 days.

What is the difference between a Phase I and Phase II Environmental Site Assessment?

A Phase I is a nonintrusive due-diligence review of records, prior uses, interviews, government sources, and visible site conditions. A Phase II investigates a specific concern through sampling and laboratory analysis. A Phase I may help satisfy All Appropriate Inquiries. Neither assessment guarantees that a site is clean or eliminates liability by itself.

Must an agent test a suspected environmental hazard?

No. The exam-level role is to disclose known material information, avoid false assurances, and recommend the appropriate environmental, inspection, legal, or insurance professional. Federal lead rules create specific compliance duties for agents, but they still do not make the agent a lead inspector.

Does an exemption from the Texas seller's notice also exempt the license holder?

No. It exempts a transfer from the Section 5.008 notice requirement. A Texas license holder still faces independent discipline for misrepresenting or failing to disclose a known significant defect under Sections 1101.652(b)(3) and (4).

Sources and verification

This guide was reverified on August 30, 2026 against the official Pearson outline, the eCFR version available that day, EPA program pages, and current Texas statutes. The review confirmed EPA's January 2026 lead pamphlet, the current ASTM E1527-21 and E2247-23 All Appropriate Inquiries standards, and the one-year and 180-day timing rules. Primary-source excerpts used for the review are recorded in the repository source archive.

• Pearson VUE Texas Real Estate Content Outlines #094401
• eCFR, 40 CFR Part 745 Subpart F, lead disclosure
• EPA, January 2026 Protect Your Family From Lead in Your Home pamphlet
• EPA, Superfund liability
• EPA, All Appropriate Inquiries
• EPA, Clean Air Act summary
• EPA, Clean Water Act summary
• EPA, NEPA review process
• Texas Property Code Section 5.008
• Texas Occupations Code Chapter 1101
• Texas Occupations Code Chapter 1958, mold assessment and remediation
• Texas Code of Criminal Procedure Chapter 62

This article provides exam-prep education, not legal, environmental, medical, engineering, or insurance advice. Confirm the current law and use qualified professionals for an actual transaction. Pass Texas is not affiliated with TREC or Pearson VUE.