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This section presents various tools to address regulatory liability related to the purchase, environmental condition, and financial status of revitalization properties.

The advent of revitalization associated with contaminated properties has given rise to an increase in the use of legal agreements to protect the parties involved in the endeavor. Agreements are used to apply parameters to issues of the revitalization project that pose a risk to one or more of the parties involved in the transaction. The following sections provide information regarding some commonly used agreements.

EPA may issue comfort letters to prospective purchasers of contaminated properties when the purchasers request information about future liability at a site. Comfort letters clarify the likelihood EPA will be involved at a site or identify whether a party is protected by a statutory or discretionary enforcement policy. While the letters do not release purchasers from future liability, they do describe what EPA currently knows about potential contamination at the site. States may also issue comfort letters for sites under their oversight.

A majority of concerns can be addressed by providing information known about a particular property to EPA, with an explanation of the relevance of that information to the agency. Consequently, EPA has adopted a policy on the issuance of comfort letters. The policy establishes criteria for issuing such letters and contains the following four sample letter types:

Federally mandated lead-based paint disclosures and flood zone disclosures are required during property transactions. Many states also have mandated disclosures that vary from state to state and many municipalities have locally mandated disclosure requirements. Check with your state department of real estate for disclosures required in your state and city planning department for information on local ordinances and disclosures that affect your sale.

These regulations typically require sellers to disclose information regarding the condition of the property to the prospective purchasers. For example, California sellers must give buyers a mandatory disclosure form listing defects in the property. In addition, California sellers must disclose potential hazards from floods, earthquakes, fires, environmental hazards and other problems in a Natural Hazard Disclosure Statement. In most states, it is illegal to fraudulently conceal major environmental impairments or physical defects of a property. When a buyer and seller enter into a contract, the seller has certain obligations to disclose any known defects, needed repairs, and violations of law that may be associated with the property. Sales contracts typically provide the buyer with the opportunity to thoroughly inspect the property, and hire professional inspectors and engineers to inspect the property to determine its condition.

Generally, owners are responsible for disclosing only information within their personal knowledge. However, full disclosure of any property defects will provide the owner protection from legal problems from a buyer who seeks to rescind the sale or sues for damages suffered because important information about the property was carelessly or intentionally withheld.

ASTM provides a guide of a series of options or instructions consistent with good commercial and customary practice in the United States for environmental liability disclosures accompanying audited and unaudited financial state.

It is important for the project team to complete a thorough review of disclosure regulations that may be applicable during the planning phase by contacting state and city real estate departments. This information can be useful in determining purchasing and revitalization decisions and in focusing environmental assessment activities at areas of suspected concern.

An environmental covenant is a restriction on the specific condition and use of a property, such as a requirement that the property will be used only for residential purposes. These covenants, sometimes called deed restrictions and/or deed notices can be found when completing the due diligence process on a potential property being considered for revitalization or reuse. Past restrictions should be identified. There are potential liabilities associated with future owners not conforming to the use constraints of a Risk Based Corrective Action (RBCA) cleanup. The language in an agreement of sale to the effect that the seller is not responsible for any exposures due to failure to conform to the environmental covenants may protect the owner or developer from third-party lawsuits, even though the party remains liable under CERCLA.

After a site assessment determines that cleanup action is required at a property, states can inform a property owner of the level of cleanup that is necessary before a no further action letter can be issued for all or part of a site. The letter is granted only after a cleanup has been completed or a site assessment has determined that no cleanup is necessary. The letter does not release the new owner from liability, but does guarantee that the state will not take any new enforcement actions at the site, barring discovery of information unknown at the time the letter was issued. The state no further action letter satisfies the Federal EPA requirements.

EPA issued guidance outlining situations under which the agency may enter into an agreement not to file a lawsuit against a purchaser of property that was contaminated prior to the purchase. In addition, some states have passed laws that allow for the issuance of a covenant not to sue (CNTS). A CNTS offers protection from future suits by the state for contamination found on the property. In some states, the CNTS may not cover conditions and contamination that were unknown at the time the covenant was granted. In some cases, a CNTS may be contingent on an approved land use for the property. For example, the state may require that the property be maintained in industrial use or that the new use will not exacerbate contamination that already exists. Moreover, some states may issue the CNTS at the time the environmental agency issues no further action certificates or cleanup letters.

Some states issue a certificate of completion after cleanup if the site meets the state cleanup standards that were agreed upon. In some cases, the standards will be individually negotiated for each site, based on a risk assessment or in accordance with a states policies or standards. In other cases, the standards will be voluntary cleanup standards that apply to all sites statewide. The certificate of completion provides assurance to prospective purchasers that the cleanup has occurred and that the state environmental agency participated and was satisfied with the results. In many states, possessing a certificate of completion limits further liability for both potentially responsible parties (PRPs) (laws vary by state on a PRP’s eligibility for such a certificate) and parties that do not bear responsibility.

There is a growing interest in the acquisition of federal Superfund sites that are not classified as brownfield sites under the EPA definition and therefore are ineligible for EPA brownfields funding.  The 2002 Brownfields Amendments to the Superfund law provide conditional CERCLA liability protection to landowners who qualify as bona fide prospective purchasers, contiguous property owners or innocent landowners. The Interim Guidance Regarding Criteria Landowners Must Meet In Order to Qualify for Bona Fide Prospective Purchaser, Contiguous Property Owner, or Innocent Landowner Limitations on CERCLA Liability (Common Elements Guidance) document provides clarification of the “Common Elements” that are the statutory threshold criteria and ongoing obligations landowners must meet to qualify as a bona fide prospective purchaser, contiguous property owner, or innocent landowner.