Radon Testing for Real Estate Investors

Radon levels might not be high on the list of concerns of a real estate investor trying to decide whether to invest in a particular property. Title issues, renovation budgets, the accuracy of the after-repair value, and real estate market trends should all supersede it. However, when the dust settles, and the decision has been made, you need to ensure radon-level compliance regardless of whether you plan to sell your property or hold it as a rental. For this reason alone, any savvy real estate investor should know local radon regulations and how to address them.

What is radon?

Radon is a naturally occurring radioactive gas that forms when uranium, radium, or thorium is broken down in rocks, soil, and groundwater. Although it is diluted in open air, the gas can be easily concentrated within a home if it makes its way through gaps, cracks, and other openings. Radon is invisible, odorless, and otherwise undetectable. The only way to determine its levels is to test for it.

Why is radon testing important?

To protect the health of those who live in the property.

Exposure to radon gas poses severe health risks. Elevated levels of radon can cause lung cancer. Radon is the second leading cause of lung cancer, behind cigarette smoking. According to the EPA’s 2003 Assessment of Risks from Radon in Homes, radon is estimated to cause 21,000 lung cancer deaths per year in the US. Additionally, according to a Radon Zones Map created by the EPA, the Northeast and areas across the Upper East Coast consistently test higher for radon levels. As east coasters, we should be especially aware of radon gas and its effects.

To comply with local radon regulations.

Radon testing poses not only health risks but also legal ramifications, specifically for sellers and landlords. In many states, radon testing is a crucial part of the home inspection process and is required before a sale can be completed. Failure to conduct a test or disclose radon levels can lead to legal action for misrepresentation and fraud.

What are the implications of radon testing requirements for real estate flippers?

Those real estate investors who are looking to buy, rehab, and sell the property are impacted by radon in at least three distinct ways:

1. Legal and Regulatory Compliance

• Local Regulations: Many regions have specific regulations and guidelines for acceptable radon levels in residential and commercial properties. Non-compliance can result in fines, legal actions, and difficulties in property transactions.
• Disclosure Requirements: In at least 37 states (Maryland and Washington, DC, among them), sellers must disclose known radon levels and any mitigation efforts to potential buyers. Failing to do so can lead to legal consequences and affect the sale process.

For example, as of October 1, 2016, Montgomery County law requires that “a single-family home located in the County must be tested for radon before completing a sale of the home.” This means that all real estate transactions in Maryland require the seller to conduct a radon test within twelve months before the sale and disclose the results to a buyer. This includes homes, apartments, and condos on the ground level. If high radon levels are found, buyers may negotiate remediation costs or consign these costs as the seller’s responsibility.

2. Marketability and Property Value

• Value Impact: Buyers are increasingly aware of radon risks and may demand radon testing as part of the purchase agreement. In addition, a savvy real estate agent can employ radon testing and remediation as a negotiating strategy. Properties with high radon levels can be less attractive and harder to sell. In contrast, properties with certified low radon levels or successful mitigation systems can be more appealing and potentially command higher prices.

3. Financial Considerations

• Mitigation Costs: Addressing radon issues before listing your newly rehabbed property can prevent last-minute negotiation hurdles, additional expenses, and unexpected delays.

What are the implications of radon testing requirements for landlords?

If you intend to keep your newly renovated property as a rental, you will have to comply with your local radon testing and mitigation requirements for rental properties. For example, Montgomery County requires landlords to provide the tenant with a copy of the radon test results below the EPA’s recommended action levels at lease signing and lease renewals. The test should be performed less than three years before the lease date. Existing tenants may conduct their own tests and break a lease if the test indicates higher acceptable radon levels and the landlord refuses the mitigation.

Ensuring low radon levels can enhance tenant satisfaction and retention. Healthy living conditions contribute to a positive tenant experience, reducing turnover rates and associated costs. In addition, a reputation for providing safe and healthy living environments can attract quality tenants and enhance the overall reputation of the investment property.

How is radon testing conducted, and what are its costs?

There are two main types of radon tests: short-term and long-term. Long-term tests provide a more accurate average of radon levels over time since they measure radon levels in a property for more than 90 days. However, because of the testing length, they are not practical in ensuring regulation compliance. Because of this, short-term tests are commonly used and relied on to determine the radon levels in properties being sold or rented.

Whether selling your property or renting out, I recommend using a qualified radon testing professional to conduct the testing for you. You can easily find them by googling “radon testing near me“. The cost of professional testing typically ranges from $100 to $250. The process is simple. A team member will stop by your house and place a black box in the lowest living area. If your property has a basement, it will be placed there. It will be placed somewhere on the ground floor if it doesn’t. The box is called a Continuous Radon Monitor. It’s often smaller than a shoe box and provides hourly readings and a detailed report at the end of the test period. The report will be emailed to you by your testing company after you pay for their services.

The EPA recommends action if radon levels are four picocuries per liter (4pCi/L) or higher. Although there is no completely “safe” level of radon exposure, the EPA suggests that reducing levels below 2pCi/L is beneficial and lowers the risk of adverse health effects. However, as a seller or the landlord, you are not required to offer mitigation for the radon levels below 4pCi/L.

How to mitigate radon levels

We know that radon testing is relatively cheap and easy. However, mitigating radon levels can be more challenging. Lowering radon levels in your investment property requires technical knowledge and special skills. You should use a contractor who is trained to fix the problem and can help you pick the correct treatment method for your home. The primary method proven to reduce radon levels in the home is a vent pipe system and fan. This system pulls radon from beneath the house and vents it to the outside. The convenient thing about this system is that it doesn’t require significant changes to your home and includes a monitor that indicates whether the system is operating correctly. Other mitigation techniques, such as sealing foundation cracks and openings, make this system more effective and cost-efficient. Despite this, putting a price tag on mitigation processes is still challenging as they largely depend on how your home was built and the extent of the radon problems.

What can influence radon levels in properties?

Fresh air, drafts, and air conditioning all can artificially lower your radon levels. This is why it’s recommended to maintain closed-house conditions for at least 12 hours before starting the test and during the entire testing period. This means keeping all windows and exterior doors closed, except for normal entry and exit.

Last but not least, once it is determined that the property—whether it’s your rental property or your primary residence—does not exceed acceptable radon levels, do your best to air it periodically and encourage your tenant to do the same. Periodically airing your home by opening windows is essential for several key reasons, primarily related to improving indoor air quality, regulating humidity, reducing odors, enhancing overall health and comfort, and yes, reducing radon to its absolute minimum.

Conclusion

For real estate investors, understanding and addressing radon level requirements is essential for protecting the health of occupants, ensuring regulatory compliance, maintaining property value, and enhancing marketability. Proactively managing radon risks demonstrates due diligence, fosters trust with tenants and buyers, and contributes to the long-term success of real estate investments.