REALWorld Law

Real estate finance

Environmental liability

Can a lender holding or enforcing security over real estate in his country be liable under environmental laws, even if it did not cause any pollution of the real estate?



A mortgagee is generally not liable for environmental damage provided that it does not itself cause or knowingly permit damage to the environment (or influence the acts of the landowner/mortgagor to do so). However, environmental issues need to be assessed if a mortgagee takes over the management of a property or even buys the property itself in connection with the enforcement of a right of mortgage.