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Tips for Judicious Management of Real Estate Environmental Issues

Environmental issues are of particular concern to both the realtors and buyers. Approaching these issues practically with environmental due diligence will avoid missing or denial of great opportunities to businesses circumventing extreme handling of minor issues. This article proposes savvy tips to sellers, buyers, developers, bankers, realtors and other stakeholders for successful deal making through appropriate management of environmental issues.

Tip # 1: Be knowledgeable about the regulations and laws

The owner of the property is held liable for any soil or groundwater contamination and migration of contaminants into and out of the property under statutory environmental liability federal law known as the "Comprehensive Environmental Response, Compensation and Liability Act" (CERCLA), or "Superfund". The costs of remediation and cleanup are forfeited from the owner or operator responsible for the release or contamination of the property. So always beware and mindful of the regulations for a safe defense.

Tip # 2: Understand how to defend against the liability

Generally there exist two kinds of defenses under CERCLA, known as the "Innocent Landowner" and the "Bona Fide Prospective Purchaser". However for these defenses to be applicable, the owner or the buyer must have conducted an "All Appropriate Inquiry" (AAI) to ascertain the presence of environmental concerns in the property that could potentially be neglected.

Tip # 3: Consult an experienced environmental consulting firm

An environmental firm that is experienced in handling with environmentally contaminated sites would be of immense help to manoeuvre through the real estate business. Consult the agency about the AAI as it requires a qualified environmental professional to conduct such investigation following the "American Society for Testing and Materials" (ASTM) standard practice requirements for Phase I Environmental Site Assessment (ESA) and certify on environmental issues of the contaminated property.

Tip # 4: Be sure to know what Phase I ESA and ASTM standards are and ponder upon a comprehensive environmental due diligence

Phase I ESA is a process of identifying "Recognized Environmental Conditions" (REC). This process does not stop if the evidence is toward one or more REs in the property. The next step would be to proceed to Phase II ESA with investigation and sampling. However, be cognizant that Phase I ESA does not 1005 guarantee in identifying the RECs.


Keep informed on the potential environmental challenges on your property and a note of competent and experienced environmental consultants for your support when desired.