Reducing Environmental Risk

No Violations / Compliance With Laws

A typical provision states: “Except as set forth in schedule x.x and except for violations which would not have a Material Adverse Effect, seller is not and has not been in violation of any Environmental Requirements. 

1. Buyer or lender may want to add a provisions reaching behind the claimed absence of violation: “Except as set forth in schedule x.x, there are no bases or grounds for any action with respect to seller relating to, or arising under any Environmental Requirements [which, individually or in the aggregate would have a Material Adverse Effect].

2. The major risk for a buyer relying on this representation is that remediation could be required because of soil or groundwater contamination even when the property owner is not considered to be in violation of the law. The property owner may not be in violation until he or she fails to comply with a remediation order. Allied Princess Bay Co. No. 2 v. Atochem North American, Inc., 855 F.Supp. 595 (E.D.N.Y. 1993); Channel Master Satellite Sys., Inc. v. JFD Electronics Corp., 702 F.Supp. 1229 (E.D.N.C. 1988).



FindLaw Network