COMMERCIAL
Environmental Awareness
Making commercial property buyers aware that THEY need to conduct appropriate environmental
due diligence can reduce your probability of being party to a complicated legal battle
Brenda Bray
In recent decades, a worldwide increase
in concern over environmental protection
has given rise to a broad field of environmental
law that encompasses issues such
as air quality, water quality, waste management,
and the handling of toxic substances.
As a result, companies large and small may
face environmental challenges arising from
their business practices that can, in turn,
impact property transactions.
ORRA members recently gained insight
into environmental issues surrounding toxic
substance controls and waste management
in commercial real estate from Rebecca
York, director and faculty member with the
Dr. P. Phillips Real Estate Institute at UCF.
York provided an overview of:
• Relevant federal and state laws
• Who bears liability for contaminated sites
• What investors can do through the transaction
In 1980, the federal government passed
the Comprehensive Environmental Response,
Compensation, and Liability Act
(CERCLA,) known also as Superfund. The
passage of CERCLA served to identify:
• Hazardous materials sites
• Responsible parties
• Authorized short term removal
• Authorized long term remedial action
For responsible parties, “safe harbor”
defenses from liability are narrow and fall
within strict guidelines for:
• Innocent landowner defense
• Landowner liability protections
• Contiguous property owners
Therefore, it is important that buyers
conduct an environmental due diligence
to prevent a sound investment potential
from becoming a costly, high-risk game.
The purchase of property with hazardous
materials contamination may result in the
buyer assuming liability for cleanup that
can be far greater than the property value or
expected return on investment.
York participated in a brief Q&A session
with Orlando REALTOR® magazine to sum up
important points from her presentation.
OR: IF AN ENVIRONMENTAL ISSUE(S)
IS DISCOVERED AS A RESULT OF
CONDUCTING DUE DILIGENCE, MUST
IT BE REPORTED?
RY: In most cases, statutory, regulatory,
and common law requirements impose
reporting obligations only on the owner, operator,
or person in charge or control of the
facility or property being assessed. However,
in some circumstances, however, reporting
obligations may be legally or voluntarily
imposed upon a broader group, including
the Phase II (Environmental) Assessor. Buyers
should discuss these obligations with
their environmental assessment company
to ensure that the buyer understands what
and when information may be disclosed.
OR: WHAT ARE ENVIRONMENTAL
RED FLAGS FOR WHICH AGENTS AND
BUYERS SHOULD WATCH?
RY:
• Underground storage tanks
• Asbestos
• Lead-based products
• Radon and vapor intrusion
Add these red flags which will likely be
included in new ASTM Standards:
• Arsenic
• Former agriculture uses
• Former golf courses
• Former industrial uses
• Dry cleaners
16 Orlando REALTOR® November/December 2018