When purchasing property, how does one avoid liability for existing environmental damage?
Under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) parties may be held strictly liable for cleaning up hazardous substances at properties that they either currently own or operate. Parties may also be held liable if they owned or operated the properties at the time of harm.
Before a purchase of real property, an “all appropriate inquiries” investigation should be conducted to obtain protection from CERCLA liability. All appropriate inquiries investigations are to be conducted by a qualified Environmental Professional according to prescribed guidelines, which include site inspections, reviews of historical information and interviews with past and present owners and occupants.
If one conducts an investigation and follows other guidelines after purchase, then CERCLA liability does
not attach by virtue of several defenses:
- Innocent landowner’s defense: an innocent landowner is someone who can demonstrate that (1) the harm occurred before he or she acquired the property and (2) he or she “did not know and had no reason to know” about the harm.
- Bona fide prospective purchaser’s defense: a bona fide prospective purchaser is someone who acquires property with the knowledge that the property may be contaminated. However, the purchaser is protected from CERCLA liability if he or she complies with the statutory requirements, which include all appropriate inquiries.