Environmental Provisions And Cost Allocations In Terms Of Sale

Deciding to purchase or sell a commercial property in New York City and elsewhere is not simply about the purchase price; it’s about understanding the range of (and restrictions on) development scenarios that might already be foreclosed (but might actually also be encouraged) by the property’s history.

Restrictions arise above all from environmental contamination that must be remediated before the purchaser can safely make best use of the property; other possibilities might be encouraged by existing deed restrictions and environmental easements, all from prior but limited remediations.

What A Contract Needs To Include

It is thus essential to draft environmental provisions of the contract, and plan for allocation of costs as between seller and purchaser for remediation of contamination to the property. The tools by which the parties reflect what are business terms in the contract include:

• Representations (statements of fact) and warranties (promises that the representations are true)
• Covenants by each of the parties to undertake certain responsibilities both between contract execution and closing, an after closing
• Specific releases and indemnities
• The drafting of “as is” clauses and other seemingly “boilerplate” provisions
• Other environmentally related contractual protections for buyer and seller

To protect yourself as you move forward in the transaction, especially as purchaser, you must comply with the requirements for the bona fide prospective purchaser exemption from liability under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) (also known as the Superfund Act) and relevant state regulations, not only during the transaction but also fully understand, before you commit to the purchase, what “due care” requirements will be and their likely cost once you own the property, something purchasers rarely take into account.

You also need to fully grasp land use restrictions that might have been imposed on the property through environmental easements or deed restrictions following a prior limited remediation, or if a site management plan is in place that will impose restrictions on future land uses. In some cases, as well, special permits and federal, state and municipal regulations may apply. If the business terms of the deal so requires, the seller also needs legal advice (and a well-drafted contract) to ensure that the purchaser is assuming environmental risks and will not seek any legal action to demand that seller undertake remedial actions for pollution later discovered on the property.

Qualifications Of Our Environmental Lawyers

The environmental law attorneys of Periconi, LLC, have a deep understanding of the scope and extent of environmental legal restrictions that will apply by their direct experience working at the environmental regulatory agency in New York, namely, the New York State Department of Environmental Conservation, as well as at the New York State Department of Law. Attorney James J. Periconi is a former environmental civil attorney and criminal prosecutor with the New York state attorney general’s Environmental Protection Bureau, a former assistant New York County prosecutor and a former chief of hazardous waste enforcement for the New York State Department of Environmental Conservation.

Equally importantly, in private practice for decades since the conclusion of their government service, the attorneys at Periconi, LLC, have drafted, critiqued, rewritten and implemented environmental easements, deed restrictions and site management plans, both for outgoing and incoming property owners, and are intimately familiar with how land use restrictions embodied in those documents can intentionally or unintentionally impact property values and the costs of development of property, and in some cases prevent the use their clients intend to make of the property.

Reach Out To Our Law Firm

With this depth of experience, Periconi, LLC, is well-prepared to protect clients by analyzing prospective transactions where these factors may well pose problems for their clients, help clients determine whether these hurdles can be overcome, and by negotiating environmental provisions that determine which party will bear the costs and requirements to remediate known contamination, and how to deal with contamination issues discovered after the transaction has closed. Schedule a consultation by calling 646-733-4487 or sending an email inquiry.