Buyer Beware

There are a few of sure ways to spot a property that may have environmental contamination issues:

 

  • Be cautious of any property that is being offered for a price that is significantly below the fair market value of comparable parcels of real estate.  This suggests that the current owner might know that there are expensive environmental problems associated with the property, and is trying to use discount pricing as a way to unload it  onto an overly-eager buyer.  The U.S. EPA "All Appropriate Inquiries" (AAI) regulation even requires the evaluation of the asking price versus the fair market value of a property as a potential indicator that the property may be environmentally distressed.

 

  • Be very wary of "as is-where is" limitations included in a real estate sales agreement.  If contamination is later  discovered on the property, such a limitation could both substantially increase your statutory cleanup liability, and make it very difficult for you to recover damages from the seller.  "As is-where is" is generally a huge red flag that suggests that the seller knows that there may be something seriously wrong with the property.

  • Consider walking away from any property where the seller refuses to allow you a reasonable and customary amount of time to conduct environmental due diligence.  You should always be given at least 30 days to conduct  an initial environmental assessment.  If a seller demands that the transaction be completed in 7, 10, 15, or 20 days ("take it or leave it"), we would strongly recommend walking away from the deal.  This is not a sufficient amount of time to complete a thorough level of environmental due diligence, and based upon our experience, I can almost guarantee that the seller is trying to unload a distressed property onto an unsuspecting, inexperienced, or naive buyer.

 © 2021  OMNICON Environmental Management, LLC

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