Navigating Post-Closing Environmental Issues in Real Estate Deals: Liability Allocation; Dispute Resolution

Description

Real estate transactions present the potential for significant environmental liability. The allocation of liabilities is often central to negotiating deal terms. Careful drafting of the contract provisions addressing the allocation of liability is essential.

Counsel must anticipate problems that may arise after closing due to the seller's continuing obligations regarding environmental remediation. Suppose the buyer assumes responsibility and later learns that the due diligence before closing did not accurately represent the state of the property. In that case, the parties face another set of problems.

While in negotiations, the parties must determine at what point in the process to allocate environmental liabilities. Parties can negotiate the issues upfront before the deal is complete or wait until after closing and litigate after problems arise. If the deal is on shaky ground, the parties may postpone the liabilities allocation battle to finalize the transaction. Who pays for what? How will post-closing issues be resolved?

Another issue that the parties and their counsel should consider is that there are typically conditions attached to loans when dealing with a bank. Environmental issues that arise post-closing may affect the ability to meet those conditions. The parties should anticipate the implications of that possibility.

Listen as our authoritative panel examines environmental issues that may arise after the closing of a real estate transaction, including cost allocations, insurance, implementing indemnity provisions, and dispute resolution. The speakers will offer best practices for structuring transactions to minimize the likelihood of post-closing conflicts and to set the rules of play before a liability allocation fight.