Past property contamination can result in a lender having added costs, added liabilities, foreclosure possibles, or a major loss in property value.
Make Sure To Do the Proper Research Up Front
There are risks for lenders who can be surprised by a property’s unknown past use as a gas station, dry cleaner or other high-environmental risk operation. Maybe in the past the property had spill or leaking tank. This history is easily identifiable by a search of property records and show the importance of conducting an appropriate level of environmental due diligence before a property is purchased.
Beware of Dry Cleaners and Properties Around Them
Sites used for dry cleaning operations warrant special attention. Investigations of the property can sometimes find perchloroethylene and other petroleum-based solvents on the property. Sometimes the dry cleaners were 2 and 3 owners before the current operations but that doesn’t help the lender’s case any. Other potential liabilities can be healthcare obligations that result from poor indoor air quality. Also beware of properties near current and past dry cleaning operations because they can also be contaminated. So make sure to investigate them before purchasing or selling.
HSBC Was Fined and Paid $850,000+ for Industrial Contamination
The violation involved hundreds of drums, tanks and containers that were abandoned at the Westwood Chemical Co. in New York. The attorney general’s lawsuit alleged that after HSBC seized the company’s operating funds in 2004, Westwood was forced to close its doors and leave behind many containers of chemicals and products that posed a substantial risk of fire and explosion. The suit also alleged that HSBC was aware of the abandoned chemicals and associated risks, but did not notify the state Department of Environmental Conservation or any state, or local, emergency responders as required by law.
Fleet Financial Group Held Liable for $5M+ for Failing to Disclose Knowledge of Drinking Water Contamination to Property Purchasers
An old plant on a nearby property contaminated the property. In the suit, the owners claimed the bank became aware of the contamination from an environmental report less than two months before the property auction but failed to disclose it to the buyers and instead dropped the price.
Beware of Sites Used in the Past as Chemical Processing Facilities
Make sure to conduct studies and sampling of the grounds, waste ponds, etc. There have been past cases where radioactive substances have been found in the grounds and in ponds of base Chemical Processing facilities.
Illegal Drug Labs With Devalue Real Estate Assets
While under receivership or some other transfer, drug labs have been discovered in residences and companies. In some cases the projected cost to remediate was estimated to be approximately one-fourth of the total value of the asset.
Environmental Risk Management can help you facilitate your due diligence on a property so that you can be informed before making any major decisions about how to proceed.
Please contact us (859-689-9222) today for a more detailed description of our environmental services. We look forward to helping you and your company.