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. There are several key issues to consider when negotiating risk allocation, liability release, and indemnity--whether a buyer or a seller. Even though indemnity provisions are some of the most common tools for allocating risk, they may also 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 treat these agreements, as well as examines the key provisions to address. The panel will offer best practices for negotiating and structuring the contract and anticipating the potential for litigation post-closing due to challenges to indemnity claims.