Commercial real estate lenders are putting more emphasis on environmental due diligence now than ever before, according to two surveys conducted by EDR in August 2007 and January 2008. Banks conduct environmental due diligence primarily to protect their bottom lines from collateral loss and protect their institutions from the direct liability associated with environmental issues.
Environmental Site Assessments
Innocent Landowners Defense Under CERCLA Regulations
In order for a property owner to claim the “innocent landowners defense” under the CERCLA regulations they must first complete “due diligence” when investigating the environmental history of a piece of property. Persons who complete this due diligence must be properly certified and have adequate experience to do this type of investigation. These studies must also comply to the ASTM E 1527-00 standard for environmental site assessments as well as the new EPA rule of “All Appropriate Inquiry” standards made into law on January, 2002. Cutting corners when choosing your environmental professional could leave you unable to use the innocent landowners defense under CERCLA and financially responsible for any environmental contamination discovered on your property.
New Regulations for Commercial Property Owners
Beginning November 1, 2006, every commercial real estate transaction will be subject to new federal regulations that real property purchasers conduct a comprehensive non-intrusive environmental site-assessment. Although it has long been prudent practice to obtain a Phase I report, the new federal rules now make it mandatory to qualify for one of the CERCLA defenses.