REALWorld Law

Sale and purchase

Environmental liability

Is the buyer of a real estate asset in this country responsible for soil pollution or contamination of the building even if it did not cause the pollution or contamination?

United States

United States

The responsibility of property owners for prior contamination is governed both by federal law and by the State law of the property in question. The federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) imposes strict liability on owners and operators of contaminated property, even if they did not cause the contamination. However, ‘innocent’ purchasers who perform prescribed levels of due diligence prior to acquiring the contaminated property (known as ‘All Appropriate Inquiry’) and who take reasonable steps to cooperate with environmental governmental agencies and avoid exacerbating the contamination after the purchase, can avoid CERCLA strict liability.

Liability under state law can vary, with some states imposing strict liability similar to CERCLA and other states imposing liability only against parties who caused or contributed to the contamination.

The primary federal environmental authority, the US Environmental Protection Agency (EPA), has entered into agreements with several states under which EPA allows state agencies to manage the remediation of most contaminated sites in their jurisdictions, with EPA intervening only in certain extraordinary cases (eg sites that present a relatively higher risk to public health or the environment).