"Sustainability" and "development" do not often go to the dance together, but that may be changing. Today's real estate investors are embracing their interconnection, and encouraging environmental social governance (ESG) within the industry. With the rise in environmental consciousness that has accompanied global climate change, sustainability reporting has become an increasingly important tool for real estate investors who wish to engage in socially responsible investing.
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.
A major problem with definitions of environmental terms in commercial and real estate transaction documents is that they become overly inclusive, confusing, and unworkable. A definition of "hazardous materials" which includes virtually every substance known to man in any amount at any concentration, will be impossible to satisfy in any representation regarding the absence of hazardous materials on the property. Conversely, a representation regarding "Environmental Laws" or "Environmental Requirements" may be less than anticipated if the definition uses the "list" approach and certain key environmental laws or requirements are not included. Much clarity can be obtained in the operative provisions by using defined terms with consistent and detailed definitions. The definitions often contain the key issues in the transactions and deserve considerable attention.