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

Description

The risk allocation of environmental liabilities in real estate transactions is often essential to the terms of the deal. Whether a buyer or a seller, a number of key issues have to be considered when negotiating risk allocation, liability release, and indemnity issues. Even though indemnity provisions are some of the most common tools for the 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 that series of 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 know how to memorialize indemnity provisions to ensure coverage for potential environmental liabilities and cleanup costs (in some cases to exclude coverage).

Listen as our authoritative panel discusses environmental release and indemnity agreements in transactions, including how the courts are treating these agreements and will examine the key provisions to address. The panel will offer best practices for negotiating and structuring the contract and how to anticipate the potential for litigation post-closing due to challenges to indemnity claims.