Environmental liability can attach to current owners and operators regardless of fault, which makes contractual allocation essential in any property or business transaction.
Baseline first. A Phase I, and where warranted a Phase II establishing existing conditions. Without a baseline, later contamination cannot be allocated because no one can say when it arose.
Representations. Compliance with environmental laws, absence of releases, permits held, no pending proceedings, and disclosure of all reports. Knowledge qualifiers and materiality thresholds are heavily negotiated here.
Indemnity. Separate from the general indemnity, with its own survival period — frequently longer or unlimited — and its own cap. Define whether it covers conditions existing before closing regardless of discovery date, and whether it covers claims by third parties, regulatory demands and voluntary remediation.
Conduct provisions. Who controls the remediation, the cleanup standard, whether a risk-based closure using restrictions is acceptable, and consent requirements for voluntary disclosure to regulators.
Insurance. Pollution legal liability policies covering pre-existing conditions and new conditions, with terms of up to ten years.
State programmes. Baseline environmental assessments in some states establish a defence for a purchaser who documents existing conditions and submits within a statutory window, which is a filing deadline that cannot be missed.