If you intend to buy or sell a commercial or industrial property, you should be prepared for the transaction to be held up while potential pollution exposures are investigated. Problems can stem from the failure of prior occupants or owners of the property to deal with pollution problems and comply with environmental regulations.

Exposures may be obvious in the case of industrial properties. Leaking underground storage tanks and piping, hazardous waste disposal pits, improper disposal of solvents leading to soil and groundwater contamination are just three self-evident exposures to liability. However, buildings that house retail, office and similarly less hazardous occupancies can be a risk too. The most likely is sick building syndrome. This is the result of poorly maintained heating, ventilation or air conditioning systems.

If any pollution exposure is discovered, costly clean up and remediation costs will have to be incurred by the vendor before a purchaser of the lender is likely to commit to a real estate transaction. As a purchaser, you would be taking a big risk today to proceed with a transaction without having an environmental audit carried out on your account. This should investigate the source or any contamination discovered as well as its extent. Frequently, adjacent properties run off effluent into a neighbour’s and are found to be the origin of the problem. In such a case, you may have legal recourse against the polluter but at the undoubted cost of delaying the sale.

As a vendor, you will find no coverage for liability exposures under your Commercial General Liability policy. You need the appropriate form of Environmental Liability coverage to protect you. Its exact scope will vary from case to case so you should ask for a specimen policy wording to accompany any premium quotation you obtain. We will be happy to help you understand its terms and conditions before you choose a policy to suit your needs.

To avoid unpleasant surprises, it’s important to work with a professional in this area.  

Additional questions? Ask us, we’re here to help. For additional information, no-cost advice or for your free, no-obligation insurance quote,
please call Dan Lawrie Insurance Brokers toll-free at 1-800-661-1518. E.&O.E.