Court: Contaminated Groundwater To Be Disclosed Under Seller Disclosure Act

(Source: MIRS.news, Published 06/13/2025) The Michigan Court of Appeals held that contaminated groundwater is an “environmental hazard” that must be disclosed under Michigan’s seller disclosure act (SDA).

And that is required “even when there is no known associated contamination of the soil or vapor intrusion in the home,” according to a nine-page published opinion by Appeals Judge Brock Swartzle.

The appeals panel had to interpret what the Legislature meant by “environmental hazard” in the SDA as it wasn’t specifically defined. Rather, the act provided examples, such as asbestos, radon gas or lead-based paint.

After reading other statutes, including the Natural Resources and Environmental Protection Act, the appeals panel concluded the Legislature meant that an “environmental hazard” under the SDA is “an unacceptable risk to a person’s health, safety or welfare posed by the presence of a substance, material, or product in the soil, surface water, groundwater, air or building materials” associated with the property.

The plaintiffs, Leandre Gholston and Theresa Gholston, alleged they did not learn that there was trichloroethylene (TCE) present in the groundwater under their home until they moved in August 2021 and were told the property required continued contamination monitoring.

TCE is a carcinogen and it can migrate to adjacent soil, allowing the substance to enter homes through openings in the floor and walls.

As a result, the Gholston couple sued the sellers, Scott Sherrill and Danny Sherrill, alleging violations of the SDA, fraudulent misrepresentation and silent fraud.

The Sherrill pair, who signed a Seller’s Disclosure Statement in June 2021 confirming there were no environmental problems, later acknowledged that TCE was present in the groundwater.

However, they claimed the contamination was not actionable because the home – located near a former General Motors Corp. manufacturing plant site – used municipal water.

During plant operation, GM released solvents into the soil and groundwater, and years later it was learned that TCE was found in the surrounding groundwater, but a mitigation company allegedly told the Sherill men that TCE vapors were not detected in their home, although there were high levels of TCE in the soil under the home.

The defendants successfully had the lawsuit dismissed at the trial court. The appeals panel’s ruling returns the case to the trial court for further proceedings.