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Reduction in Land Value From Fracking

A lot of Pennsylvanians probably felt lucky to be living near fracking sites when fracking first came to their towns. After all, fracking meant a boom in jobs, which meant more money for all kinds of local businesses. Some property owners were able to get money in exchange for drilling on their land as well.

But now that the risks of fracking have become clear, Pennsylvanians may be sorry they have fracking sites for neighbors. That’s because even if they aren’t directly affected by the contamination concerns posed by fracking, Pennsylvania homeowners are indirectly affected by reductions in the value of their property.

One of the chief ways fracking can hurt your property values is by creating a real or presumed risk to the drinking water in the area. When drinking water is contaminated, fixing it is not easy or cheap. Even if there’s no evidence of a risk, this will likely drive away potential buyers for the property. If there is a documented risk, the value can plummet to a fraction of what current owners paid.

In addition, property values are damaged in fracking zones because of their proximity to a site with heavy work. A fracking site causes the same quality of life issues for its neighbors that any job site would: noise, pollution, frequent comings and goings at odd hours. But because fracking is a time-sensitive job, the noise, light and traffic happens at night as well as during the day. Fracking involves a risk of gas explosions and chemical spills, so it can exert much more downward pressure on prices than a conventional construction site. And while a construction job creates a new building, a fracking site leaves behind a wastewater well and a site that is less than beautiful. That’s without any toxic spills.

These are not abstract risks; families living on or near property with active drilling wells have seen their property values plummet. According to a Duke University study, groundwater contamination concerns alone decrease property values by more than 20 percent. This can put the homeowners “underwater,” meaning they are locked into paying back a loan for more than the property is worth. Real estate agents, who are legally required to disclose known problems with a property, may politely refuse to list such homes for sale.

To make matters worse, mortgage companies are increasingly refusing to lend the money required to buy property on or near a fracking site. Buyers and sellers may agree to a price, but with major banks refusing to grant loans, they may be unable to actually close a deal. The same applies to current owners who want to refinance or open a home equity line of credit; banks are increasingly refusing to fund these loans when they’re close to a fracking site. Because “mineral rights” to land are often separate from “surface rights” to live on the land, permission to drill may be out of the property owners’ control; it may even have been granted before the owners moved in.

Nobody buys a house expecting to have a 24-hour drilling operation destroy their investment. If your property values have been hurt by fracking and you’d like to talk with an experienced attorney about your legal options, call Rosenbaum & Associates today for a free consultation. You can find us through our website or call (215) 569-0200.