Phase What? Understanding Environmental Reports In Real Estate Transactions

Introduction

Most of us have heard of cases where a purchaser of real estate discovers contamination after the deal has closed, or where a purchaser later learns that a known potential condition turns out to be far worse than previously thought. There are a variety of tools a lawyer can use to minimize and mitigate the risk of entering into the purchase, sale or lease of real estate with potential environmental liabilities. The lawyer's toolbox includes: indemnities, holdbacks, buyback provisions, insurance, among others. However, choosing which tool to use and how to use it is often based on information contained in a report prepared by an environmental consultant.

The focus of this article – understanding environmental reports and the reliance that can be placed on them – is intended to help potential vendors and purchasers understand the information that may be available to them, limitations of that information, and how to factor the limited information into