MONTVILLE, N.J. – Thomas Perrone’s three girls were in grade school when the family received a letter from township officials notifying them that their upscale development had been built on pesticide-contaminated soil from a former apple orchard.

As his oldest daughter prepares for college, the questions of who knew about the contamination, when they knew it and what they were obliged to do about it have dragged on through a maze of lawsuits, leaving the Perrones and other residents of the development 30 miles west of Manhattan sitting on property that has plummeted in value and could pose health hazards.

On a broader scale, the case raises questions about what restrictions should be placed on builders seeking to develop former farmland where pesticides were used.

U.S. District Judge Dickinson Debevoise heard oral arguments in July on motions to dismiss the remaining lawsuits, which seek to determine who’s responsible for cleanup costs. If the suits go forward, the case could go to trial this year.

Perrone, a vice president at the JP Morgan financial services company in New York, said he believed he was buying his dream house in a nice neighborhood.

“Now,” he said, “my wife hates the house because of the issues with it, and we’d like to move out, but we can’t sell it.”

Long-term exposure to the contaminants found in the soil, arsenic and dieldrin, can lead to skin, liver and pancreatic cancer, according to the New Jersey Department of Environmental Protection’s Web site. No illnesses have been reported among residents, but the uncertainty has altered daily routines.

Bobbi Intile, who lives at the far end of the cul-de-sac with her husband and three children, said she scrapped plans to plant a vegetable garden and frequently took her kids to her sister’s or to a local park to play to avoid prolonged contact with the soil.

Perrone said he has delayed putting in a pool or patio for the last six years as he waits to learn whether his yard will have to be ripped up.

Meanwhile, Montville Township and developer Woodmont Builders claim they had no legal obligation to notify prospective buyers about a potential problem whose severity only became evident after the houses were sold, mostly for around $800,000 each a few years ago.

Intile isn’t buying it.

“I believe nothing would have happened if they hadn’t been caught with their hand in the cookie jar,” she said. “The bottom line is, I don’t know that in five years I’m not going to come down with breast cancer or my kids aren’t going to become ill.”

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The S-shaped road at the center of the dispute, Bonnieview Lane, sits on a 130-acre parcel used as an orchard by Bonnie View Farms from the early 1940s. The then-abandoned property was bought in 1970 by eight people, who sold 100 acres to Montville Township for about $2 million in the late 1990s to be used as open space.

Woodmont, the developer, bought the remaining 30 acres and began building Bonnieview Lane in 2000.

According to the homeowners’ lawsuit, reports drafted for Montville between 1998 and 2001 identified areas of possible pesticide contamination on the open space site, with one report warning that “liability issues may exist.”

A subsequent study released in September 2002 said the Bonnieview Lane site also could be contaminated; tests done the following spring confirmed levels of arsenic and dieldrin that exceeded state guidelines.

By then, most of the 25 lots had been sold to buyers who were learning for the first time about the ground they walked on every day.

Attorney Jeffrey Wagenbach, representing the homeowners, said the early reports should have raised a red flag for Woodmont to do more testing before selling the properties.

“There were indications in certain reports that clearly should have led them to do more, and they didn’t do it,” he said. “It was pretty blatant.”

Woodmont’s attorney, Lee Henig-Elona, leveled a similar charge at the township.

“Montville could have discovered the pesticide contamination if they had followed their own consultants’ advice,” she said. “Instead, they sat on their hands.”

Who, if anyone, was legally obligated to notify the homeowners is at the heart of the case, and the answer isn’t readily apparent in existing state and federal environmental law.

New Jersey and other states have laws that require property owners to notify potential buyers if a property is near a former toxic waste site, for example, but those laws generally don’t apply to farmland where pesticides were used.

While New Jersey’s environmental guidelines recommend soil testing when a former agricultural property is developed for residential use, they don’t require it.

That type of omission has given developers unfettered ability to build on former farmland without having to test for possible contamination, according to Jeff Tittel, director of the Sierra Club environmental group’s New Jersey chapter.