An environmental lien is a legal claim against a property for damages or other environmental harm caused by the owner or previous owner of the property. Environmental liens can be placed on a property by a government agency, such as the Environmental Protection Agency (EPA), or by a private party who has suffered damages as a result of environmental contamination on the property. The purpose of an environmental lien is to hold the owner of the property responsible for any environmental harm and to ensure that the property is cleaned up or remediated to protect the environment and public health. If the owner does not take action to remedy the environmental damage, the lien may be enforced through the sale of the property to pay for the clean-up costs.
Why should I care about Environmental Liens?
You should care about Environmental Liens because you don’t know about them.
An environmental lien represents a stealth impediment on the value of a commercial property. Think of it as a landmine for property value. A landmine in a military sense is an explosive that hides underground and indiscriminately kills whoever steps on it. Much of an environmental consultant job is to find, evaluate and defuse landmines of an environmental nature. Buyers often get fixated on the quality and suitability of the location and facility they are buying. Quite understandably, they get distracted from the potential risks posed in the soil and groundwater from contamination which may have been left by the former owner or adjacent neighbors. Environmental consultants like A3E perform a Phase 1 Environmental Site Assessment to bring attention to any Recognised Environmental Concerns (REC) they might find. Generally it’s up to the buyer to discount the value of the property to address the costs for analysis and remediation of the RECs. To close the loop on our landmine analogy, buyers look for risks above ground which they CAN see and environmental consultants look for risks below ground which buyers CAN’T see.
There’s a hybrid risk however. It’s part environmental risk and part financial risk.
It is possible that your environmental consultant finds environmental impacts on a property you’d like to purchase. We could find they’ve been remediated to your state’s standard. Something we may not know is the entity that did the remediation was the government. And the government wants the money they spent back. That’s an environmental lien.
Is an Environmental Lien part of the ASTM Standard for Phase 1 Environmental Site Assessments?
An environmental lien is not specifically mentioned in the ASTM Standard for Phase 1 Environmental Site Assessments (ASTM E1527-13).
Assets Not Liabilities
The ASTM E1527-13 standard is a widely used industry standard that provides guidance on conducting a Phase 1 Environmental Site Assessment (ESA). A Phase 1 ESA is a preliminary assessment of a property’s potential environmental liabilities, and it is often used as part of the due diligence process when purchasing or financing a property.
The purpose of a Phase 1 ESA is to identify and evaluate the potential for environmental contamination on a property and to assess the potential for environmental liabilities associated with the property. The standard outlines a systematic process for collecting and evaluating environmental data and information about the property, including a review of government records, physical site inspections, and interviews with knowledgeable parties.
The standard does not specifically mention environmental liens as a focus of the assessment, but it does require the assessment team to review certain government records that may include information about environmental liens. For example, the standard requires the review of records related to enforcement actions and potential or actual releases of hazardous substances, which could include information about environmental liens.
Overall, while an environmental lien is not specifically mentioned in the ASTM E1527-13 standard, it is important to consider the potential for environmental liabilities and the risks associated with environmental contamination when conducting a Phase 1 ESA.
How Common Are Environmental Liens?
Not very common. We have 20 people performing environmental due diligence, some of them have 22 years of experience. As far as I know, nobody has ever seen an environmental lien in conjunction with their job.
How do I find if a commercial property is encumbered by an Environmental Lien?
A title search should reveal if the property you are looking to purchase has an environmental lien placed against it. A3 Environmental Consultants can run a database search for your property address to get you that answer. A lien search will cost you $375 and we can have it done in 5 business days.
How do I remove an Lien from my property?
First, speak to an environmental lawyer. This is out of our wheelhouse. However, typically a lien can only be removed when someone pays the lienholder. Generally these payments come out of the proceeds of a sale of the liened property.
Why do Environmental Liens Exist in the First Place?
Environmental liens are an important tool for protecting the environment and public health. By holding property owners accountable for the contamination they have caused, environmental liens help to incentivize responsible environmental practices and discourage harmful activities that could damage the environment. By supporting the use of environmental liens, you can help to protect the environment and promote sustainability in your community.
