Buyers and sellers of real estate must be alert to various environmental issues. Here are some of the more important issues:
Due Diligence and the Site Remediation Reform Act (SRRA): Any due diligence performed under the SRRA must be in the form of a Preliminary Assessment (PA). If any form of due diligence is submitted to NJDEP other than a PA, it will be rejected. Moreover, Licensed Site Remediation Professionals (LSRPs) have obligations to report certain forms of environmental impact. Therefore, buyers and sellers may wish to retain non-LSRP consultants when in the due diligence process. This strategy should be discussed with your attorney and appropriate language written for inclusion in your contract of sale.
Innocent Purchaser Protection Under the NJ Brownfield Act: This protects buyers from third-party liability if they should purchase a property that is subsequently found to contain contamination that, during the course of "proper due diligence," was not discovered and the buyer did not cause. This protection is conferred by New Jersey and the federal government. This protection will not shield a buyer from the cost of remediating such problems, however.
Seller-Financed Cleanups: Should a seller go through the time and expense of remediating their property prior to closing? This question has no simple answer. If you want the highest selling price, you may want to undertake the cleanup on your own. The reason for this is that savvy buyers will estimate the cost of remediation, multiply their remedial estimate by 150 to 300 percent, and then negotiate the sale price down relative to their remedial estimate.
A Sense of Perspective: Some real estate deals have environmental issues that require attention. Inappropriately, some environmental consultants see their involvement as central to the deal. But real estate transactions are normally led by an attorney. If your attorney is competent, they should direct how the deal is to proceed. They may require input from the consultant, but only in-so-far as environmental compliance is concerned. ESA works closely with attorneys to effect an outcome that makes sense and, most important, keeps the deal moving forward. In short, the less ESA needs to do, the better it is for your deal!
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