April 18, 2014

Gas Drilling, Homeowners Don’t Mix

If gas drilling comes to the Southern Tier, homeowners have property-related effects to consider, whether they have already signed a gas lease or are still considering one
By Elisabeth N. Radow, PressConnects.com, Sept. 18, 2012

Elisabeth Radow is the managing attorney of Radow Law and chairs the New York State League of Women Voters’ Committee on Energy, Agriculture and the Environment. She will speak on this topic at the Vestal Public Library at 7 p.m. Sept. 27.

CLICK HERE to read her full article on property issues and gas drilling.

Guest Viewpoint: Gas drilling, homeowners don’t mix

A home represents a family’s most valuable asset. If gas drilling comes to the Southern Tier, homeowners have property-related effects to consider, whether they have already signed a gas lease or are still considering one. The list includes property use and safety, homeowners’ insurance, the home mortgage and the ability to resell one’s home.

For local elected officials, the impact of gas drilling on a property’s assessed value, and by extension the real property tax base revenues, requires consideration since there are municipal bills to pay for existing expenses and new expenses associated with this heavy industrial activity, such as road and bridge repair, emergency response, and expanding health and social services.

Home mortgages and gas drilling don’t easily mix. The mortgaged property needs to stay safe and uncontaminated because lenders sell 90 percent of all home mortgage loans to the secondary mortgage market in exchange for funds to make new home loans. Gas leases allow gas companies to truck in tankers with chemicals, transport flammable gas and toxic waste, operate heavy equipment 24/7 and often allow gas storage underground, for years, all in a person’s backyard. Residential mortgages prohibit the kind of heavy industrial activity and hazardous materials on the residential property that fracking brings. Homeowners who welcome gas drilling on their land should get lender consent first.

Gas leases typically create easements for pipes, roads and underground gas storage that continue after the gas company leaves, with no funds for upkeep. Gas drillers can sell the lease without telling the homeowner, so there’s no way for a family to control who drills on their property. Homeowners can get slammed with risks for dangerous activity they don’t even control. Industrial-sized risks are so expensive, even gas companies don’t get fully insured for them.

Self-insurance from a gas driller can be risky. If the company is not fully insured and low on cash, a homeowner may not get compensated if damage occurs.

Homeowners insurance doesn’t cover risks from fracking. In July, Nationwide Mutual Insurance Company, America’s largest homeowner’s insurance company, confirmed this existing policy. Nationwide also stated it won’t renew homeowner’s policies on properties with drilling. Every mortgage requires homeowners insurance to stay in effect, so maintaining homeowners insurance should be a priority for homeowners with mortgages. Structural damage to the residence and water contamination present two primary concerns to homeowners, since a home on shaky ground or without drinkable water can lose substantial value and may not sell.

People potentially forced into drilling under their property by a New York statute also need to consider their mortgage and homeowners insurance if presented with a Department of Environmental Conservation notice of compulsory integration. In this case, it is the DEC hearing on compulsory integration where these property impacts should be addressed.

For New Yorkers seeking the return of a healthy state economy, the shift of drilling risks and expenses from the gas companies to the homeowners and taxpayers deserves as much attention as do the potential profits.