Have you been in the market to buy property, but learned that the property was contaminated? There are steps that you can take to avoid opening yourself up to liability.
Everyone's heard of the phrase, "Be careful what you wish for," but Sunoco, Inc. might be ready to coin a new phase, "Be careful what you warrant."
The health threats posed by physical contact with contaminated soil or groundwater are well known. But increasingly, state and federal regulators are recognizing that harmful vapors from such contamination can be drawn into nearby buildings and pose a threat to the occupants. Known as soil vapor intrusion, this threat can come from undiscovered contamination beneath a building, or even from the remnants of previously remediated soil or groundwater.
In a sale or loan transaction the most important pre-closing covenant is that the borrower or seller will maintain the property in compliance with all environmental laws and will re-affirm accuracy of the representations and warranties as of the closing date.
Typically the preamble for the representations and warranties will state that they are made to induce the buyer to purchase or the lender to make the loan contemplated.
Material Adverse Effect: In a sale of any ongoing business, one way to address the difficulty of being absolute in the representations and warranties when in fact the parties are not concerned about the de minimis presence of hazardous materials or damages, is to define Material Adverse Effect.