A financial institution’s risk of becoming directly or indirectly responsible for a borrower’s environmental liability has dramatically increased and therefore, a working knowledge of provisions of environmental law and development of procedures to avoid environmental liability has therefore become increasingly important. Lenders must aware of the potential exposure to liability associated with hazardous substances that may place their financial institutions at far greater risk than a mere impairment of the value of collateral serving as security for a loan.
The initial article addresses the issue of environmental liability and minimizing such exposure. Lenders are becoming increasingly aware of the many substance exposures connected with real estate serving as security for a loan. The article outlines the federal CERCLA and RCRA legislation and accompanying EPA regulations. In addition to the FDIC’s Environmental Risk Program Guidelines, other issues include appropriate loan documentation considerations, Nebraska Leaking Underground Storage Tank statutes and a number of useful exhibits. The section also contains an article regarding lead-based paint and other paint hazards.
The materials within this article are not intended to serve as a comprehensive discussion on all aspects of environmental liability. Being such a specialized area of law and science, it is recommended that environmental counsel and other professional consultants be contacted for additional advice on any transaction for which assistance is desired.