In my last post I talked about a recent statute which addressed the issue of disclosure of environmental issues in a property sale. Now I would like to address protection from existing contamination on a site being purchased. Many prospective purchasers, in deciding whether to buy a property, want to know if they can be responsible for contamination at a property they purchase, even if they had no hand in creating the contamination. The short answer is yes! Even if the buyer did not create the condition, he or she can be responsible for it. Under Connecticut statutes, any person who is “maintaining any facility or condition” which is a source of pollution can be required to clean it up.  Owning the property is the same as maintaining the source of pollution.

 

So how do you protect yourself? One way is to be 100% sure that there is no contamination on the property. That, of course, isn’t always possible. That is especially true if you know there was contamination on the site previously but it was supposedly cleaned up. Even the most thorough testing and remediation can miss something, although if the work is done by a competent environmental firm that should not happen.

 

There are some limited statutory protections in Connecticut. Section 22a-452e of the Connecticut statutes provides some protection to “innocent landowners.” To qualify as an innocent landowner, you must have purchased the property with no knowledge of the existing contamination and also must have conducted some due diligence in accordance with “good commercial practices.” So the buyer must have checked the site out and found nothing.

 

The protection afforded by this statute, however, is very limited. Under Section 22a-452e, if the state incurs clean up costs, the state can still file a lien against the property for those costs. The property owner cannot be assessed costs over and above the value of the property.  But your equity is still very much at risk. In addition, if the contamination has traveled into the groundwater or somehow affected a neighboring property, no protection is afforded.

 

A more recent statute, Section 22a-133ee offers some liability protection if the right conditions are met. If a person purchases a property that has contamination or has contaminated adjacent property, the owner will not be liable for damages to an adjoining property owner if the owner did not create the contamination, the site has been remediated, and the DEP has approved the remediation. These are pretty stringent requirements, especially the part where DEP has to sign off on the final report. In many clean ups the remediation can now be supervised by an environmental consultant and the DEP has no active role. In that case it might be sufficient if the final report has been submitted to DEP and DEP has elected not to audit the report. But the law isn’t clear about that.