ASTM New Standards for Obligations to Contaminated Properties

Real Estate Influence
April 5, 2013 — 818 views  
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Contaminated land or property is valued extremely low. Both owners and purchasers of contaminated property are at a significant risk. It is a challenging issue for regulators as well as buyers and sellers of such property where transactions are involved or re-development needs to be done.

The new ASTM standard proposes to address some of the issues involved with contaminated properties. The latest ASTM is based on E-2790-11. A fairly large number of the purchasers of contaminated properties do not know that their superfund liability does not end once they get the defense of innocent purchaser. They have to fulfill six obligations under CERCLA. With these six obligations they can maintain their LLP (Landowner Liability Protection).

Managing the Risks in a Contaminated Land

Managing risks can be confusing especially because compliance with CERCLA offers no clear guidelines. The obligations are rather of a general nature. The ASTM however addresses the issue in concrete terms especially since new standard E-2790-11 offers concrete guidelines that property owners can follow. The guidelines offer the purchasers protection against liability in context of CERCLA. They are equally applicable to prospective purchasers, innocent landowners, and contiguous property holders.

The simplest way in which one can avoid the risk is by not purchasing contaminated property. Other ways include Brownfields agreement, escrows, insurance, and indemnities. Under Brownfields agreement, the state upholds liability protection while the buyer develops the property and makes it safe. Other than the liability protection offered by the regulation, the individual property purchasers will find the new standards easy to follow and take action upon.

New Standards

The new ASTM guideline under E-2790-11 is a comprehensive approach that assists tenants, operators, and the property owners. Other than CPO and BFPP exemptions, the new guideline amends the existing defense. The new standards make an attempt to balance competing requirements of cleaning distressed properties and motivating prospective buyers to purchase environmentally distressed properties. CERCLA’s strict liability clause was daunting to the prospective buyers. However, the current amendments are designed to facilitate re-development efforts.

Earlier many of the requirements were confusing and difficult to comply with. The liability protection obligations, especially their clause like “reasonable steps” to ensure environmental protection, did not make sense to property owners. However, the current four-steps are clear that can be identified and CERCLA obligations can be complied with. The guide focuses on suggested procedures instead of mandating any action. Since many issues are not settled and continue to evolve, the guide recommends using the services of an environment counsel.     

More Clarity than the Earlier Guidelines

Often contaminated or distressed property attracts buyers who find irresistible proposition in it. However, it can be confusing and challenging for them because the buyers, renters, or operators are under huge responsibility to manage the property strictly in compliance with regulations like CERCLA. For most property-holders compliance with the regulations was challenging because the mandates or guidelines were not clear. As a result, contaminated property, despite its low value, did not attract many buyers. The new standards for obligations to contaminated property are an improvement over the issues that were difficult and challenging. Additionally, there are ways to eliminate risks with contaminated properties.

Real Estate Influence