Environmental Due Diligence in Real Estate Transactions

April 1, 2007
Marc E. Gold and Michael C. Gross
Pennsylvania Bar Quarterly

There are a myriad of environmental issues to evaluate in connection with the proposed purchase of real estate because of the breadth of environmental liability and the significant costs associated with addressing that liability. Thus, practitioners must fully understand the nature of potential environmental liabilities, being sensitive to the factual nuances that matter, and avail themselves of the appropriate tools to gather the necessary facts on which to provide meaningful legal advice to their clients. As an initial matter, this article will detail the federal regulatory standard for due diligence in the context of certain Superfund defenses, aimed at evaluating environmental conditions that may be indicative of releases or threatened releases of hazardous substances at a property. This article will also identify other issues of environmental concern outside the realm of site contamination that need to be considered, including the presence of wetlands, the location of a property in a flood plain, the presence of streams in and around the property and the availability of sewage treatment capacity to serve new development. This article will then address the critical issues associated with permit transfers and conditions that must be met when an entity purchases an ongoing industrial concern that will continue to be operated by the new owner.

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