Periconi, LLC

No Hazardous Substances

This most common of representations and warranties is most often abused. Buyer or tender may initially want a flat representation that there are not now and never have been any Hazardous Materials on the premises or any operations that generate, use, treat, store, or dispose of Hazardous Materials. Difficulties that immediately arise include the length of time this representation will reach back, the de minimis without a qualifier based on the best knowledge. 

1. The basic representation typically is: "No Hazardous Material is or has been located on, in, under or about the premises."

2. The first evolution of this clause is: "No Hazardous Material has been or is currently located on, in, under or about the premises in a manner which violates any Environmental Requirements, or which requires cleanup or corrective action of any kind under any Environmental Requirement."

3. A second evolution which may also be additive is: "No releasing, emitting, discharging, leaching, dumping, or disposal of any Hazardous Material from the premises onto or into other property of from any other property onto or into the premises has occurred of is occurring [in violation of any Environmental Requirement], [or in a manner which requires investigation or remediation under any Environmental Requirement].

4. Another way to the same issue is to obtain a representation on the history of use of the premises: "Except as set forth on schedule x.x, seller has not generated, used, transported, treated, stored, released or disposed of, of suffered or permitted anyone else to generate, use, transport, treat, store, release or dispose of any Hazardous Material [in violation of any Environmental Requirement] on the property.

5. Yet another: "There has not been any generation, use, transportation, treatment, storage, release or disposal of any Hazardous Material in connection with the conduct of the business of seller or the use of the property by seller or, to the knowledge of seller, or any nearby or adjacent properties of facilities, [which has created any liability under any Environment Requirement] [or which would require reporting to or notification of any Governmental Authority by seller]."

6. If Hazardous Material has been defined to include only those contaminants which require remediation, the de minimis problem is addressed. Bear in mind, however, that even where remediation is not required, groundwater migrating offsite could have caused personal injury or property damage to third parties, creating a liability for both seller and buyer.

7. A seller may only be able to warrant as to his or her own use, and with respect to former owners or tenants make no representation as to the uses which such owners or tenants made of the property.

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