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Title: Avoiding Environmental Liabilities During Property Transactions
Author: Don C. Porter
Source: American Gas Association 1991
Year Published: 1991
Abstract: Buyers of contaiminated real estate are liable for cleanup cost regardless of whether they contributed to the coniaimination or knew that the contamination was present prior to the purchase, this is the ruling of the Federal Courts on the basis of the Superfund Law of 1980. Not to be left out, New Jersey, Connecticut and Illinois have enacted property transfer laws that address environmental issues. Numerous other states have proposed similar statutes. These laws are usually geared toward transfers of industrial or commercial property. In the natural gas industry, property transactions occur on almost a daily basis. Most of the property should be exempt from statutory requirements. However, maintenance shops, equipment yards and even office buildings can be affected by the regulations. A company must protect itself from a surprise, that is a liability that at a minimum slows a project or creates an on-going expense for years. This is accomplished by an environemtnal site assessment performed prior to closing. The leaders and driving forces in developing environmental assessments have been federal lending regulators such as the Federal National Mortgage Association (Fannie Mae), which has published a guidance document entitled Environmental Hazards Management Procedures (1988). This has influenced many banks to require assessments on all industrial or commercial property transactions. A bank in Houston advertised recently for an environmental coordinator to review the reports submitted for such loans. Even when banks are not involved, the assessment has become a regular part of the transaction.

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