By Samuel Butcher, LSP and VP, Loureiro Engineering Associates, Rockland
Q. Can a property where environmental contamination exists be bought/sold?
A. Yes. There are no laws that prevent the purchase or sale of properties where environmental contamination has been identified. However, Massachusetts laws state that if you own property where environmental contamination has been identified you may be responsible for cleaning up the contamination even if you did not cause it, with few exceptions. If you buy the property and enter the chain of title, you are buying the liability associated with the contamination as well.
Q. Is the seller responsible for clean up prior to the sale?
A. No. Unlike Title 5, which often requires work to be done prior to, or as a condition of, closing, state laws provide no requirement contamination to be cleaned up prior to the sale of the property. In many cases, a seller may initiate soil and/or groundwater assessment and cleanup activities and the buyer may take these activities over after the sale.
Q. Will banks lend me money if contamination has been identified?
A. Maybe. Different banks have different risk tolerance. In most cases, the bank’s primary concern when lending on any property is the ability of the borrower to repay the loan. In cases involving environmental contamination, the bank must be comfortable that the borrower completely understands the extent of the contamination and the costs to address it and that the borrower will be able to complete any necessary remaining assessment or cleanup.
The Massachusetts Department of Environmental Protection has the right to step in and address environmental contamination in cases where the owner of a property fails to do so. In such cases, the state will place a lien on the property to recover those monies it spent addressing the contamination. The state’s lien, often called a Super Lien, supersedes other liens, including bank liens. The lender’s primary concern is that the borrower will not be able to pay back the loan due to unexpected environmental costs or that the state will step in to address the contamination and place a lien on the property.