When an investor or developer wishes to acquire an interest in real property, a thorough Environmental Due Diligence investigation must be performed. A property’s environmental past can impact the usability of the property. If there are any potential hazardous substances on or near the property site, the new owner also faces significant potential legal liability.
An experienced Scottsdale Arizona real estate development lawyer at Lotzar Law Firm, P.C. can explain the risks of a contaminated property and can assist you in doing your due diligence to mitigate the risk in a property transaction. If you are concerned about a property’s environmental past, our attorneys can also help you to determine the best approach to take to protect your investment. Call today to schedule a consultation and learn more about how we can assist you.
Why You Must be Concerned About a Property’s Environmental Past
When you acquire a property that contains hazardous substances or that has contaminated land or groundwater, you inherit many problems and potential legal risks. For example:
- The property may be unfit or unsafe for its desired use. A developer who intends to construct residential or commercial rental property will be unable to do so on a plot of land that has hazardous waste or contaminated substances.
- You or your organization may become responsible for paying for the cleanup of the property and the mitigating of environmental hazards. The Federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) makes the owner of a property responsible for the cost associated with environmental cleanup. The expense of cleaning up and remediating hazardous chemical waste can be millions of dollars and could bankrupt your enterprise.
- You or your organization could face environmental tort lawsuits. If third parties such as neighbors or workers on the property are exposed to the environmental hazards and become ill or suffer injury, you could be sued as the owner of the property. Judgments against property owners who have polluted land have totaled in the millions of dollars after victims exposed to the contaminants have suffered health problems including cancer and an increased risk of birth defects.
Conducting adequate environmental due diligence can help to protect your organization from lost investment dollars and crippling litigation costs or government fines. When you are concerned about a property’s environmental past and you conduct due diligence, you can uncover potential liabilities before the property is purchased. If problems are discovered, you will have the option of shifting the risk through an indemnity; lowering the purchase price; or walking away from the transaction.
A thorough environmental due diligence investigation also allows you to qualify for a defense from CERCLA liability called the “bona fide prospective purchaser defense.” If you took required investigatory steps before completing the real estate transaction and assuming ownership of the property, you can establish this affirmative defense and will not be held liable for remediation costs.
Lotzar Law Firm, P.C. has extensive experience helping clients to conduct environmental due diligence before the purchase of a property. Call today to schedule a consultation with a Scottsdale real estate development lawyer to learn more about how we can protect you.
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