Environmental Indemnity in Real Estate Transactions: Allocating Risks of Potential Cleanup Costs

Negotiating Key Provisions, Drafting and Reviewing the Agreement to Ensure Complete Coverage

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, August 15, 2017
Recorded event now available


This CLE webinar will provide guidance to counsel for buyers, sellers and lenders in real estate transactions on structuring environmental indemnity agreements to ensure coverage for environmental liabilities. The panel will examine key provisions and lessons from recent court treatment of such agreements.

Description

The risk allocation of environmental liabilities in real estate transactions is often essential to the terms of the business deal. Numerous decisions are involved when negotiating and structuring an environmental indemnity agreement. Even though indemnity provisions are some of the most common tools for allocation of risk, they also may present many unforeseen pitfalls.

The First Circuit Court of Appeals’ decision in VFC Partners 26 v. Cadlerocks Centennial Drive is an example of a line of decisions demonstrating that the specific language in environmental indemnity agreements is critical in real estate transactions.

Under these rulings, the specific language of the environmental indemnity provision—and not general concepts of indemnity—controls and determines whether particular costs or damages will be subject to indemnity.

Counsel to buyers, sellers and lenders in real estate and other commercial transactions must carefully consider negotiation strategy options and how to memorialize indemnity provisions to ensure coverage for potential environmental liabilities and cleanup costs (or in some cases to exclude coverage).

Listen as our authoritative panel discusses environmental indemnity agreements in transactions, including how the courts are treating these agreements, and will examine the key provisions that must be addressed. The panel will offer best practices for negotiating and structuring the agreement and how to address the potential for litigation post-closing as a result of challenges to indemnity claims.

Outline

  1. Environmental indemnity agreements and court treatment
  2. Key provisions
  3. Negotiating and structuring the agreement

Benefits

The panel will review these and other key issues:

  • When is an environmental indemnity agreement necessary and when is it not useful?
  • What are the key provisions of the environmental indemnity agreement?
  • How do environmental indemnity provisions complement other provisions in real estate purchase and sale agreements?
  • What are the critical lessons from recent court decisions for structuring environmental indemnity agreements?
  • What are the best practices for allocating environmental risks in real property transactions?

Faculty

R. Morgan Gilhuly, Partner
Barg Coffin Lewis & Trapp, San Francisco

Mr. Gilhuly specializes in environmental litigation and counseling. He has represented defendants in major environmental litigation regarding a release of chemicals at an oil refinery, an EPA cost recovery action regarding a mercury mine, PCE contamination, and at various Superfund sites. Mr. Gilhuly also has extensive experience in Polanco Act litigation and with brownfields redevelopment.

Cindy J. Karlson, Founder
Law Offices of Cindy J. Karlson, Groton, Conn.

Ms. Karlson focuses on environmental and land use law, including compliance counseling, transactional work, administrative matters and litigation. Her work involves pre-transaction counseling and structuring of deals, developing risk management strategies, negotiating contractual language on environmental risk and allocation of liability for known and unknown conditions, and environmental due diligence.


Recordings

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Environmental Law Advisory Board

John J. Allen

Partner

Allen Matkins

Albert M. Cohen

Partner

Loeb & Loeb

Aaron Courtney

Partner

Stoel Rives

Andrew N. Davis

Partner

Shipman & Goodwin

David R. Gillay

Partner

Barnes & Thornburg

Brian D. Israel

Partner

Arnold & Porter Kaye Scholer

Thomas J. P. McHenry

Partner

Gibson Dunn & Crutcher

James B. Slaughter

Principal

Beveridge & Diamond

Jeffrey A. Smith

Senior Counsel

Sidley Austin

E. Gail Suchman

Special Counsel

Stroock & Stroock & Lavan

Gregory D. Trimarche

Senior Counsel

Ring Bender

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