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Environmental liability is a growing concern in the commercial real estate industry. Being an educated investor involves understanding potential issues and taking precautionary steps whenever possible. Although this topic is far more comprehensive than we could ever cover in a single article, below are a few environmental liability precautions for Boston commercial real estate investments.

1 – Complete Environmental Assessments

Environmental site assessments give you the opportunity to identify potential hazards before you purchase a property. There are different types of assessments that can be performed by trained professionals. It can provide valuable information to help in your decision making. Additionally, should a problem arise after you purchase a property, an assessment prior to purchase demonstrates lack of prior knowledge, which could be a benefit legally.

2 – Avoid Purchasing Property from Related Parties

Be sure to speak with an attorney about the legal implications of purchasing a property from related business entities. Specifically, inquire about environmental liability and available defenses. It is important to understand this particular aspect of purchases from related parties.

3 – Consider the Impact of Property Use

Environmental liability often relates to the specific use of a property, both past and current.  Thus, it is helpful for potential CRE buyers to review the history of a property and its tenants.  The use of a property by current and future tenants is equally important and should be included in tenant screening processes as well as lease terms.

4 – Take Immediate Action

Whether or not contamination is caused by current or previous tenants, commercial real estate owners should take immediate steps to contain any known issues. Doing so is critical to avoiding the spread of hazardous materials. It can also help with minimizing liability.

5 – Purchase Environmental Risk Liability Insurance

Another great way of minimizing environmental liability in Boston commercial real estate investments is to purchase insurance that specifically covers this risk. The site assessment mentioned in #1 above, also known as a Phase I audit, is normally required when applying for a policy. Premiums will vary depending on the property and its perceived risk.

Summary of Minimizing Environmental Liability in Boston Commercial Real Estate Investments

The key to smart investing is to take precautions and minimize risks whenever possible. The above environmental liability precautions for Boston commercial real estate investments are merely a few possible steps that you may take. Consult with a Massachusetts attorney if you have particular questions or concerns about environmental liability in your commercial real estate investments.